Exceptions and Risk Management in Delivery and Logistics

Exceptions and Risk Management in Delivery and Logistics

Missed deliveries, service providers running late, and other exceptions can cost brands and logistics providers millions of dollars in extra overhead and lost revenue. Covid-19 has exacerbated the issue of lost packages, as packages get lost in the tumult of staging, or stolen on the porches of customers who wanted contactless delivery. Thankfully, there are operational processes that can be put in place to keep exceptions rare and drive down the subsequent cost to your business.

Why does it matter when things go wrong?

Approximately 5% of online deliveries fail on the first delivery attempt, according to a Loudhouse survey. In urban areas 15% of all types of deliveries fail to reach the customer on the first attempt for a variety of reasons, including theft and delivery to the wrong location.

The stats for failed delivery attempts rise for furniture, appliances and other large items which required larger delivery windows and absolutely necessitate that the customer be home. And while we are still understanding the impact of Covid-19 on delivery operations, the rise of contactless delivery – when not properly managed – does nothing to improve the situation, as packages are left on front porches unattended to prevent physical contact between delivery providers and customers.

Failed delivery attempts are just the tip of the exception iceberg. Orders can get lost, misdirected, or damaged anywhere along the delivery flow, from the warehouse or store staging area, to when it’s bouncing on a truck, to when it reaches the end customer’s door. With service deliveries, one extra-long assembly or installation will cause a technician to be late to multiple other appointments. Trucks that get filled with too much inventory, or which or can’t fit planned orders due to the size and shape of larger items, lead to late deliveries and horrible customer experiences.

Drivers get flat tires. Roads become blocked. Customers are not home to sign for packages or let in delivery personnel at the scheduled time. The list goes on.

The impact to your business is clear:
Inefficiency – managing exceptions is resource intensive and diverts resources that you don’t have to spare. Moreover, many organizations lack the resources to handle exceptions.
Wasted resources – every exception causes delays, which in turn cost you potential revenue.
Loss in overhead – every additional truck roll or delivery run, and every additional minute spent by a dispatcher or support team member, adds up to your overhead bill.
Bad customer experiences – any exception to an on-time delivery can result in customer churn and bad ratings – even if the fault lay with the customer, or another customer earlier in the delivery run.

So how can businesses minimize the costs and inefficiencies surrounding exceptions – not to mention brand damage control?

The most effective exception management strategy takes a dual approach: preventing them from happening in the first place, and better managing them when they do occur.

How to better manage delivery and logistics exceptions

To both react to and mitigate exceptions, you will need three basic elements:
1. Reporting what has happened;
2. Alerts to better manage exceptions that are in progress, and
3. Programmable Logistics use automated workflows to both better address exceptions in real time, and prevent them from happening.

Reporting: Collect, analyze, and understand your data

Do you know when deliveries fail most frequently, and why? The first step is to pinpoint where in the delivery flow these exceptions occur, and why. Based on this data, you can often take steps to create better, alternative scenarios.

For example, if first delivery attempts fail because customers aren’t home, you may want to consider adding a way for them to notify you and change the delivery window or date. Adding more scheduling and communication tools can solve this problem and mitigate future missed deliveries.

Similarly, if your solution to absent customers was to leave the package at the door, and it gets stolen, provide alternative solutions like lockers or local retail locations where they can be picked up.

End-to-end data collection from your supply chain, and accurate reporting will provide insights that help you implement operational processes and better avoid exceptions in the first place.

Send real-time alerts to react quickly

To deal with exceptions that are already happening, you need real-time visibility. Many technology providers for delivery operations offer real-time notifications that alert the relevant stakeholders to a problem so it can be dealt with quickly, efficiently and cost-effectively.

For example, if a driver or technician is running late, they – as well as the dispatcher and customer – can be notified via live alerts. These alerts or notifications can be customized per persona; for example, when a driver is running late, customers can receive a notification along with a link to reschedule their delivery, or reroute it to an alternative location for convenient pickup. Logistics providers may want to provide shippers with real-time alerts as well, or alternatively, wait until an issue has been resolved before updating them.

To be useful at scale, these alerts must be sent out via customized triggers which alert the right people with the right notifications at the right times. For example, if a delivery is running late, a logistics provider may move a delivery automatically to the next time slot, or engage a 3PL to cover the excess demand. A parcel delivery might require an automated ‘you’re running late’ alert two minutes before they are scheduled to start the next delivery, but a longer on-site service might need a longer 10-minute time buffer between the warning and the time they must leave for their next appointment.

To work, these triggers will rely on speed, accuracy, and customization. The best way to ensure these factors is to use automated exception workflows

Programmable logistics: Automate your exception handling

Like most things in logistics, technology will help you better manage exceptions. Start by using your historical data to identify the things that go wrong, and address them by creating workflows with automatic responses.

These if/then workflows should account for every scenario that you experience with regularity. For example, when customers aren’t home to pick up an order, or when an item is damaged in transit, a smart exception flow will provide drivers with explicit instructions on how to proceed.

These workflows will then trigger alerts and action items as discussed. For example, if a technician is installing a dishwasher or a white glove provider is assembling furniture and running late, they should receive an automated alert to wrap up in time to leave for the next stop. If the driver needs more time to complete the service, they can have an option to press ‘I need more time’, which triggers a fallback flow – alerting the next customer of a delay, or pushing the next stop to a later window.

Like most things that work well, these workflows will require both data and technology to run smoothly. You will need to accurately estimate time to deliver, time on site, and time to base for each type of delivery and service, as well as insights into the common issues your delivery operations face, and the factors that cause them.

Predictive Alerts: The smart option

There is a fourth element to managing exceptions: predicting and avoiding them. Beyond the capabilities listed above, this will require machine learning and other AI solutions that use algorithms and your historical data to predict when exceptions will occur. Then, your system can send out automated alerts to teams in order to prevent the exception: unloading and rerouting large items on a truck filled beyond capacity; alerting drivers when they’re behind schedule in their delivery, and other notifications that can prevent bad delivery experiences and expensive delays.

Exceptions will always occur to some extent, and operational managers do their best to avoid these situations. But when they do happen, implementing these strategies and technologies will soften the impact to your business, keep customers satisfied, and ensure that delivery issues are the exception rather than the rule.

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Bringg’s delivery orchestration platform helps businesses predict and prevent exceptions with customized, automated response workflows built to fit your business priorities. Our delivery and fulfillment technology uses data analytics to optimize the entire delivery flow, from backend operations, through dispatching and routing, real-time automated alerts, and custom BI and reporting dashboards for multiple stakeholders.To learn more, explore our delivery and fulfillment platform or schedule a meeting with a Bringg representative.

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