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10 Mistakes Companies Should Avoid When Delivering Their Goods

For manufacturing and distribution companies, business success is highly dependent on them ensuring that their goods consistently and efficiently get to their customers on time, with the correct specifications and with no defects.

For manufacturing and distribution companies, business success is highly dependent on them ensuring that their goods consistently and efficiently get to their customers on time, with the correct specifications and with no defects. However, for some companies, this is easier said than done. And this is usually because these companies make mistakes in the management of delivering their goods.

Here, I share 10 mistakes that companies should avoid in their delivery management.

1. Not considering the importance of the delivery service on customer satisfaction and retention

This is perhaps the biggest mistake since it usually contributes to the company under-investing in resources and systems to ensure that their customers’ orders are consistently delivered accurately and efficiently. Business owners and managers who make this mistake tend to place a much higher emphasis on business processes that more directly support closing the sale with the customer; and much less on after-sales activities. Reasons for this bias vary. They range from simple ignorance of the impact that delivery effectiveness has on their customers’ loyalty, to a deliberate decision to spend much more for customer acquisition than customer retention because they believe that that approach is best for accelerated business growth.

For whatever reason, when a company shows that it is unable to consistently meet agreed delivery terms, it is essentially inviting its customers to consider competing products. And, of course, no matter how well a company can acquire new customers, that company will be hard-pressed to grow its business if it struggles to retain customers.

2. Not factoring true delivery costs when pricing goods to delivery customers

I tend to see this mistake with fledgling business owners that outsource their goods delivery process. And it is usually because of them being so eager to land an order with a major retailer that the business owner focuses solely on the lowest margin he can accept, and completely overlooks the cost to transport the goods to the retailer. In such instances, the business owner may find that when they factor in the full cost to deliver the ordered goods to the retailer, their profit on the order is significantly lower than previously estimated.

However, it is not only the inexperienced and hungry entrepreneur that is vulnerable to this mistake. Larger and more established companies – especially those operating their own fleets – can lose sight of their true delivery costs and therefore run the risk of agreeing to order and delivery terms that are unprofitable.

3. Offering rates that are too low to trucking service providers

Of course, all business owners will seek to minimize their operating costs. However, you also get what you pay for. Therefore, companies that aggressively negotiate lower rates with trucking service providers will eventually attract only truckers with low service quality and/or low vehicle quality. This is because when truckers agree to rates that are too low to adequately cover direct and overhead costs, they will begin to limit their spend on personnel (driver and sidemen) and maintenance for their vehicles.

By lowering their spend on their crews, truckers will have difficulty recruiting and retaining drivers and sidemen that are highly service-oriented, are courteous and professional when engaging the clients’ customers and have the critical thinking ability to resolve unusual challenges. This lower skill level for the crew will negatively impact service quality over time and can hurt the company’s customer satisfaction.

By reducing spend on maintenance of their vehicles, contracted truckers significantly increase the likelihood of their vehicle breaking down while making deliveries. Of course, this puts the delivery reliability of the company in jeopardy.

Also, a trucker who is forced to limit spend for maintenance will certainly defer bodywork repairs for the vehicle. Over time, this will result in his vehicle looking run down. For companies using trucks in this condition to deliver their goods, this can have an adverse impact on the image of the company and its brands. I recall speaking to a trucker recently who was seeking a delivery contract with a very prominent company and he expressed shock and disappointment upon seeing that most of the contracted trucks he saw at the headquarters were in poor condition. He then went on to note that when he looked at the rate sheet for the company, he understood why the trucks were in poor condition. The rates were so low that it was impossible for the truckers to properly maintain the truck and cover costs for fuel and salaries.

4. Not ensuring that delivery vehicles are well maintained

As stated previously, a company that uses poorly maintained vehicles to deliver its goods risks suffering delivery delays due to breakdowns as well as risks having its image impaired by being associated with a vehicle in poor condition. This takes on even greater importance for companies that own and operate their own fleet of delivery vehicles because these vehicles are usually conspicuously marked with the company’s logo and product brands. There are few things worse for a brand than being associated with a broken down and beat-up vehicle.

5. Not vetting truck drivers

Whether a company uses its own trucks or contracts independent truckers to deliver its goods, the drivers play an integral role in getting the goods to the company’s customers safely and on time. Also, drivers’ demeanor and attitude greatly shape the delivery experience for the receival personnel of the company’s customers.

Additionally, unscrupulous drivers are usually key participants in ‘inside’ schemes to pilfer goods from companies’ warehouses.

Therefore, when companies fail to properly check drivers’ driving records, employment history and even criminal records, they expose themselves to significant risk of losses from damaged goods, customer attrition and even stolen goods.

6. Scheduling too many stops for trips

In an effort to maximize the utilization of available truck capacity, some companies try to place as many customer orders as possible on a single delivery truck. However, sometimes delivery wait times and road traffic conditions prevent truckers from completing all the deliveries thereby forcing them to return the undelivered goods to the company’s warehouse. This leaves the affected customers dissatisfied and costs the company more because two attempts are then needed to deliver one order.

Ideally, companies should use past data for delivery wait times for specific customers to help estimate the doable number of stops for each delivery route and assign those routes to suitably sized trucks. Therefore, for example, if a company has 10 customer orders totaling 10 pallets of goods to deliver on a given day but only five stops can be completed on a single route for the day, the company should ideally use two trucks each just large enough to carry five pallets instead of sending all 10 pallets on a single larger truck.

Recently, I was speaking to a potential client whose company was struggling with a myriad of problems in its delivery management. One of the challenges she cited was that too many orders were being returned undelivered because the company’s drivers just ran out of time. It turns out that the company had acquired box trucks that were much larger than what was optimal, and the warehouse personnel were, in effect, incentivized to load as much product as possible in the trucks. So, a combination of incorrectly sized vehicles and a well-intentioned but ultimately flawed incentive system were the root causes of the problem.

7. Creating inefficient delivery routes

Companies should be striving to deliver their goods from their warehouses to their customers as efficiently as possible. This means that companies should be aiming to minimize waste of time and money to deliver their customers’ orders. For many companies, average order sizes are such that goods for multiple orders can fit on a single delivery vehicle. In such instances, the challenge is to identify the optimal delivery routes. That is, which orders that, based on the respective delivery locations, can be most quickly delivered if assigned to the same truck.

Sometimes optimal routing solutions are simple – such as goods for six orders that can all fit in a single delivery truck and all the delivery locations are in downtown Kingston. However, often – especially for companies with multiple truckloads of orders for a given day – the most efficient route assignments are not so obvious. Many larger distribution companies worldwide use various software solutions to define optimal routes. The more sophisticated of these solutions are powered by artificial intelligence and utilize GPS positioning for delivery locations, and historical data on traffic patterns and delivery wait times to generate optimal routing options.

However, in Jamaica many companies still rely on persons to manually determine the delivery routes. Depending on the experience and skill of the persons doing the routing, this can result in routes with mixed levels of efficiency. Low efficiency routes will force the trucks to be driven longer distances and spend longer times in traffic than necessary between delivery locations. This drives up delivery costs and increases the risk of trucks missing customers’ receival cut-off times. In short, sub-optimal routing can end up costing companies with higher delivery costs and customer dissatisfaction due to late and even missed deliveries.

8. Not capturing and not analyzing reasons goods are returned

For various reasons, sometimes customers reject goods delivered. Reasons include incorrect items delivered, goods damaged, defective goods, and surplus quantities to name a few. Returned goods indicate that errors were made somewhere between order processing and delivery. A customer service representative may have made an error in processing the customer’s order, or a warehouse employee picked the incorrect item, or another warehouse employee loaded an item on the wrong delivery truck, or a truck driver drove too aggressively and caused goods to be damaged in-transit.

These errors may be rare and isolated. Or they may be part of a pattern and therefore indicative of weaknesses in systems and/or personnel. However, companies will not be able to identify and address such weaknesses if they do not continuously capture and analyze data for reasons goods are being returned. Therefore, a company that does not crunch this data is potentially missing opportunities to improve customer satisfaction and may be incurring avoidable costs from systemic weaknesses in personnel and systems. Simply put, this mistake of omission can potentially cost companies big money from waste and customer defection.

9. Not ensuring that goods are insured in-transit

For every goods-selling company, there is a chance of an incident that causes significant loss of goods being transported from its warehouse to its customers. These can be because of an accident with the truck, or theft (often by passersby after an accident). Although for most companies, the chances of such losses are quite small, it would be a mistake for companies to not ensure that there is adequate goods-in-transit (GIT) insurance in place for their cargo – even if it is to self-insure by maintaining a fund designated for this purpose. Considering the low cost of GIT insurance premiums relative to the value of a truckload of goods, not having GIT insurance can end up being a costly mistake.

10. Not tracking delivery vehicles

Real-time GPS tracking of the location of trucks carrying its goods has several benefits for the company. It allows the company to proactively update its customers on the expected delivery time of their orders. GPS tracking also allows the company to verify the actual routes taken by the delivery vehicles which can be useful in deterring or investigating unauthorized departures from assigned routes.

Historical data from GPS tracking systems can also be used to inform sophisticated route optimization software I mentioned earlier.

So, not tracking the location of delivery vehicles can limit the company’s ability to enhance customer satisfaction and to manage drivers’ on-time delivery performance and route adherence.

The Bottom Line

For bulk-goods-selling companies, delivering their goods to customers accurately, punctually, safely and efficiently is critical for sustained success. Companies need effective delivery management to consistently achieve this and those that can implement proper systems run by knowledgeable people and enabled by powerful information technology will outperform those that do not.

Roger Williams
CEO, Will Deliver Ltd.

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