The rise of the consumer and immense power in the hands of buyers represents a significant change to standard supply chain management. It’s not enough to simply offer a fantastic product. Instead, companies need the most affordable rates possible to stay competitive, and in today’s world, any unnecessary expense pushes your customers closer to the point of working with a competitor. However, increasing value by gaining shipper-of-choice status with carriers is an essential step in keeping the most expensive step of logistics—final mile—under control in terms of costs. Supply chain executives also need to understand why shipper-of-choice status is more important than ever and how on-demand delivery platforms can help.
How to Realize The Substantial Benefits of Final Mile Logistics
Why Companies Are Doubling Down on Shipper-of-Choice Status
The market is strained following COVID-19, and as reported by Supply Chain Dive, “the supply-demand dynamic drove shippers to adjust their operating models and position themselves as good customers to carriers. Although the trucking market shows signs of loosening, the shipper of choice metric continues to be an important one today and in the future.” As a result, supply chain executives need an alternative to ask for discounted rates and under-the-table benefits that a carrier would not otherwise publish. In addition, this includes both contracted and spot rate savings. Yes, it sounds almost like a bribe. But if the carrier sees a shipper is working extra hard to avoid unnecessary work and make sure carriers can get in and out, they are more likely to increase work with that shipper.
It’s no different than the state of the supply and demand in any market. If the shipper has the supply and carriers need the freight, it’s likely that the cost of the supply will reflect the actual demand. Of course, there’s always a point at which the whole curve may expand and offer benefits to both carrier and shipper. That’s where the value of shipper-of-choice status becomes clear. But, how do on-demand delivery platforms make it possible?
On-Demand Delivery Platforms Enhance Customer Experiences and Save Resources
On-demand delivery is not necessarily a new concept in logistics. It includes the use of crowd-sourced supply chain networks, i.e., the Gig Economy, to move freight faster and reduce delays. These have an added advantage in building a successful last mile delivery strategy. On-demand delivery platforms are also characteristic of faster fulfillment models, and as a result, they are more likely to add value in population-dense areas.
For example, urban areas may benefit from on-demand delivery platforms that can immediately source more drivers and carriers to reduce congestion and delays. At the same time, these platforms may also be beneficial for rarely traveled routes—avoiding the added costs of traveling beyond traditional routes to deliver packages in rural areas. Regardless, the value of on-demand is clear; It provides a roadmap for reducing freight costs in all legs of transportation. As reported by Logistics Management:
“Using a crowd-sourced local delivery network, companies as diverse as retailers, the construction industry, grocers and restaurants hook up with couriers to deliver orders in hours if not minutes. One- and two-day delivery is also possible, but is not the sweet spot right now.
Each on-demand delivery company has its own electronic platform for connecting businesses and customers. From desktops to smart phones, deliveries can be scheduled, and freelance couriers assigned. The platform also allows those independent contractors to take on multiple deliveries that fit into their route.”
The applications of on-demand delivery platforms for use in the final mile space are ripe for technological disruption. In other words, it’s time to start thinking about how to improve customer experiences through faster, more personalized last mile services and last mile cost control. If it’s not yet possible to really deliver on the promise of same-day delivery, what can shippers do differently to still increase shipper-of-choice status and please customers?
Best Practices for Using On-Demand Systems to Reduce Confusion
Using on-demand delivery platforms streamlines operations, but it’s not all roses. Shippers need to follow these tips to reduce confusion and generate returns:
- Integrate the platform with all existing systems to ensure accuracy in data.
- Give supply chain partners access to the platform and share information.
- Avoid outdated data by using real-time data sharing capabilities via EDI and API.
- Always rate all shipments for all modes—reducing total landed cost for all shipments and considering the whole picture.
Reap the Rewards of On-Demand Executability in Logistics Management
Last mile and on-demand are more closely related than most businesses realize. It’s easy finding an LTL carrier or truckload that can move freight longer distances. It’s the smaller packages that are too expensive to ship by LTL and too voluminous to really use parcels that become problematic. In fact, Amazon is an expert at using the idea of on-demand delivery platforms to crowdsource final mile after freight moves from its existing network. So, why is your company still spending extra on LTL and outdated, yesterday’s-news-driven management styles for the last mile?