Solving Logistics Customer Pain Points with Technology
How technology & analytics play roles in building smart logistics
With the rise of the internet economy, logistics nowadays has become a key stakeholder in online shopping. Especially during the pandemic, people rely more to shop their daily needs online and expect the goods to be delivered timely and safely onto their doorsteps. However, if it is not executed well, logistics can be very costly and may cause some products to be spoilt during delivery.
To maximize our customer experience and increase their satisfaction with our service, let’s identify: What are the potential pain points in logistics? Then, how should we respond to and solve them?
The Potential Pain Points
1. Speed
Late deliveries will annoy the customers. Especially for certain product categories, such as F&B or groceries that have an expiration date, gifts/hampers that will lose their meaning if the delivery is overdue, or any urgent needs. Customers have an expectation for a delivery to be arrived within a few days (or hours), depending on the service level we’ve promised and also based on benchmarking to our competitors.
2. Price
When it comes to benchmarking, customers tend to have an expectation relatively on how our competitors perform. For example, if competitor A can provide same-day delivery for $10, customers will be unwilling to pay if we offer a 2-day delivery service for $10. They expect us to be able to deliver on the same day as well.
3. Safety
Speedy delivery will become meaningless if the package is damaged. To ensure the safety of a package, we need to maintain the end-to-end delivery processes: Starting from having safe packaging, sorting the pile of packages, pooling and storing them, until the handling process to the customer.
4. Tracking system
Having your package handed over to the courier and not knowing its current position before delivered to the recipient, is like a black box to the customer. This will lead to the feeling of uncertainty and customers start to doubt in anxiety. We need to provide the information about where the package is currently is and let the customers know that their package is still on track and will be delivered on time.
5. Route coverage
Even if we offer the fastest delivery and handle the package safely, this will also be meaningless if we can’t reach the customers. We need to ensure that both origin location (customers who will ship the package) and destination location (customers who will receive the package) are covered by our service.
Most logistics service has two options to reach the customers: drop-off and pick-up. Drop-off means the customer can come to our branches to drop-off their packages, while pick-up means we come over to customers' location and pick up the packages to be shipped. We need to ensure that our branch locations or pick-up points are accessible to the customers.
6. Return
Customers will always have a what-if scenario: What if I am not satisfied with the product I buy? What if the product is defective and I need to make a complaint? Will I be able to return the package to the sender? A clear return procedure is required to be developed and communicated to the customers, so that they feel more protected from any risk.
How Tech Offers Solutions
Optimize capacity
Tech enables us to identify which routes are the most concentrated (from and to what cities/districts) and how much capacity should we allocate to each route. We can allocate maximum capacity to the most concentrated routes and during specific pick-up and delivery times with the most customer demands as well. Therefore, by having an optimized workforce capacity, we are able to offer a more competitive price without reducing the service quality.
Develop tracking system
An automated tracking system will give a sense of trust and certainty to our customers. Moreover, it can also help us to identify which certain journey that causes a bottleneck in our logistics system. As an example, from the diagram below, there are many steps included during the logistics journey in delivering a package. From the tracking system, we can determine which journey takes time longer than expected. Therefore, we can immediately address the root cause and improve the lead time.
Automation and database system
Many manual works in logistics can be automated, such as inputting the invoice number, scheduling which packages to be delivered and to where, assigning the couriers, and updating the tracking status. Developing a smart logistics system will not only cut down the manual works, but also enable us to build a database system that can be beneficial for further analysis:
- Which routes contribute the most to late deliveries?
- How long is the total distance traveled by each courier? And how does it compare to the total time spent and the number of packages delivered?
- What service is the most preferred by customers in certain areas? (e.g. same-day, economy, regular, etc.)
- Where should we open another branch to give more accessibility to our customers?
By enabling technology and analytics to answer these questions, we are able to make faster and more accurate decisions to grow our business: From where should we expand our route coverage, which logistics journey should be improved to increase our speed, which activities are inefficient and costly, up to where are the routes that often encounter complaints and returns.
