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Measuring Ecommerce On-Time Delivery: Instructive Advice To Best Avoid Pointless Mistakes

It is essential for shippers to meticulously measure their on-time delivery performance, and do it right. Otherwise, as Peter Druker says, “If you can’t measure it, you can’t improve it.”

Indeed, many shippers either lack the data to assess their delivery performance or are unsure how to proceed. What’s more, even when on-time performance is measured, they doubt the results due to poor data quality. Worse, even if they do measure correctly, many shippers struggle with conducting an effective root cause analysis to take corrective actions.

In this article, I’ll detail common mistakes with measuring on time delivery performance. Indeed, measuring OTD may seem easy, but it has many pitfalls. So, join me as I detail the 5 best data analytics practices to accurately measure on time delivery. Lastly and more importantly, find out how to use on-time delivery data to identify root causes of delivery failure and take corrective action.

Common Mistakes When Measuring eCommerce On Time Delivery.

measuring on-time delivery

First, the best way to measure on-time delivery is to use key performance indicators (KPI). Indeed, on-time delivery KPIs are crucial metrics for measuring and evaluating the efficiency and effectiveness of a company’s eCommerce delivery process. Specifically, this metric measures the percentage of orders delivered on or before the promised delivery date. For a detailed explanation of KPIs, see my article, The Best On-Time Delivery KPIs To Make Your Customers Delighted.

Now, measuring on-time delivery performance is not easy. This is because of many factors to include determining what to measure and getting access to the data you need. As a result, it is easy to make mistakes. Positively, most measuring mistakes are either the result of you incorrectly measuring your OTD performance or not being able to measure at all.

To detail, mistakes include inaccurate shipment status data and measuring against the wrong promised date. Also, many shippers measure OTD using the wrong standard that either results in unnecessary costs or results in unhappy customers. For more details on mistakes made when measuring on-time delivery, see my article, Measuring On-Time Delivery: 9 Mistakes You Want To Avoid For More Reliable Delivery Results.

Measuring On-Time Delivery: 9 Mistakes You Want To Avoid For More Reliable Delivery Results.

It’s quite astonishing how often mistakes occur in measuring on-time delivery performance. This is especially surprising considering that eCommerce executives have no trouble tracking website metrics like shopping cart abandonment and customer churn rate.

As someone who has worked with thousands of shipping operations, I can attest to the prevalence of errors in tracking on-time delivery performance and the damage this causes shipping operations. Click here for the top 9 most common mistakes made in this area. Additionally, I’ll provide examples and resources to help you avoid falling into these traps.

4 Major Benefits Of Measuring Ecommerce On-Time Delivery Performance.

“If you can’t measure it, you can’t improve it”

Peter Drucker

Measuring ecommerce on-time delivery performance is crucial for businesses. In fact, improving your ecommerce delivery operation is the number one reason to measure OTD performance. This Key Performance Indicator (KPI) enables you to identify the root cause of delivery exceptions and to take corrective action. As a result of continuous operations improvement, the following benefits will occur.

Benefits Of Measuring And Optimizing Ecommerce On Time Delivery. 
  1. Delight The Customer. On-time delivery is one of the most important factors that contribute to customer satisfaction. When customers receive their orders on time, they are more likely to be pleased with their shopping experience and become repeat customers.
  1. Brand Reputation. Late deliveries can damage a business’s reputation and lead to negative reviews and word-of-mouth publicity. By measuring on-time delivery performance, businesses can identify areas for improvement. More importantly, they can take steps to prevent shipment delays in the future.
  1. Cost Savings. Late deliveries can result in additional costs for businesses, such as express shipping fees or refunds for dissatisfied customers. By improving on-time delivery performance, businesses can reduce these costs and improve their bottom line.
  1. Competitive Advantage. In today’s competitive ecommerce landscape, businesses that offer fast, reliable delivery are more likely to attract and retain customers. By measuring on-time delivery performance and making improvements, businesses can gain a competitive advantage.

Additionally, let’s discuss the subject of guaranteed service refunds (GSR). You might have noticed that I have not listed these refunds as a benefit when evaluating on-time delivery performance. The reason is that such refunds often represent only a minor portion of potential cost savings. More importantly, focusing on obtaining these refunds distracts shipping managers from their main objective. Without a doubt, if shipping managers are fixated on maximizing service refunds, their attention is diverted away from reducing instances of service failure.

5 Data Analytics Practices for Best Measuring Ecommerce On Time Delivery

Again, businesses can make a lot of mistakes when measuring on-time performance. The primary way to avoid mistakes in measuring OTD is through effective data analytics. First, you need to collect the right data that is both complete and accurate. Next, you need to measure the right data to both measure OTD performance and identify the root cause of a delivery failure. 

Data analytics involves analyzing shipment data to identify patterns and trends that are contributing to delays or other customer-facing issues. By understanding the root cause of delivery exceptions, businesses can take targeted actions to address the underlying problems and prevent similar issues from occurring in the future. 

“When measuring OTD, the crucial data elements are dates: when shipped, delivered, and promised. “

When measuring OTD, the crucial data elements are dates: when shipped, delivered, and promised. Also, it is important when measuring on time performance to concurrently measure your order fulfillment click-to-ship rate. This is because your order fulfillment center is a key component of the promised delivery date that you provide to your customer. Lastly, your analysis needs to look at delivery exceptions to determine root cause of delivery failures so to take corrective action. Below are some data analytics tips for measuring on time delivery performance and diagnosing the root cause of a delivery exception.

1. Date Shipped: Accurately Measuring It for On-Time Delivery.

90% of the time it is easy to determine the date shipped. The carrier provides a “hard” ship date – i.e. the date and time they picked up and took possession of the shipment. The other 10% of the time the date and time shipped are ambiguous.

For the other 10%, you have limited ship date information (when the carrier took possession) from either the carrier or your shipping operations. As a result, some shippers will use the date on the Bill Of Lading (BOL) or the electronic manifest date (the time the shipping label was created) as the “official” ship date. As best, these “soft” ship dates are better than nothing. Worse, these “soft” ship dates can skew your OTD measurements. What is critical is to work with your carrier and shipping operation to obtain a “hard” ship date. Otherwise, you need to beware that your on time performance rate is suspect. 

“… work with your carrier and shipping operation to obtain a “hard” ship date.”

2. Date Delivered: Need To Capture In Order to Measure On-Time Delivery.

This is usually fairly easy as most carriers provide a “hard” delivery date and time.The reason for this is because most delivery drivers scan the shipment barcode at the point of delivery or they get a delivery signature, or a picture of the package as the proof of delivery (POD). Again, if you are not getting good delivery data, you need to invest time and work with the delivery carrier to get that information.

3. Promised Delivery Date: This is Provided by the Shipper, Not the Carrier.

“… the carrier’s promised date is not necessarily your company’s promised date.”

Determining the promised data can be tricky for many operations. If you have a mature ecommerce operation, normally the order fulfillment system generates the promised date and that is provided to the end-customer. If you have a well run operation, this promised date in your order fulfillment system will match what the delivery carrier’s estimated delivery date is. Of note, the promised date can change if there is some type of shipment or delivery exception.

Remember, the carrier’s promised date is not necessarily your company’s promised date. Hence, it is the ecommerce operation that is responsible for determining the promised date. Indeed, it is the shipper who can best determine the promised date balancing it against customer desires, cost efficiency, the competition, and what is achievable.

4. Delivery Exceptions: Key to Capture These Events for Analysis to Identify Root Cause and Corrective Action.

Sometimes delivery or shipment exceptions are hard to measure. If either the shipper or the carrier has immature IT systems, these exceptions may either not get recorded, nor communicated to key stakeholders.

Of note, usually only about 50% of these delivery exceptions can be attributed to the carrier. Other reasons for delivery problems can be because the business was closed. Or it could be because of something out of the carrier’s control such as bad weather. Or worse, it could be you, the shipper, that caused the issue such as a bad shipping label or the address is incorrect. For a detailed discussion on delivery exceptions, see my article, eCommerce Delivery Exception Mistakes To Avoid And How To Handle.

5. Order Fulfillment Click-To-Ship Analysis: Identify All Delivery Exceptions, Not Just Caused By the Carrier.

Often, many shippers are quick to attribute delivery exceptions to the carrier. However, this viewpoint isn’t always accurate. In fact, for many ecommerce operations, over half of the delivery exceptions are unrelated to the carrier. Therefore, it’s crucial to obtain shipment data from your order fulfillment system when evaluating on-time delivery performance.

Specifically, this data should encompass various aspects of the order. This includes the initial delivery date promised to the customer and the duration required to fulfill the order. Also, you need data on any returned shipments, and any other order defects like damages or incorrect picks. By focusing on these details, you gain a more precise understanding of delivery performance and can better work toward improving it.

In summary, by accurately tracking key shipment events, you can pinpoint issues causing delayed deliveries. With accurate, complete data, shippers can establish dashboards and performance scorecards for various metrics like carrier performance and order fulfillment. For example, this can includes KPIs such as on-time pickup and delivery, and claim-free delivery. Moreover, you can use delivery performance key performance indicators (KPIs) such as on-time pickup, on-time delivery, and exception / claim-free delivery.  For a detailed explanation of KPIs, see my article, The Best On-Time Delivery KPIs To Make Your Customers Delighted.

For more information and viewpoints on measuring on time delivery performance, see Samir Saci’ article Logistic Performance Management Using Data Analytics, Descartes’ Analytics For Improving Carrier and Supplier Performance, VisualSouth’s How to Measure the On-Time Delivery KPI and Stacey Barr’s How To Meaningfully Measure On Time Delivery Of Anything. Also if you need help, there are companies like ShipMatrix that can help you get the right shipment status data, measure on time performance, and do root cause analysis.

Use Your On Time Delivery Analytics To Start Measuring And Minimize Delivery Exceptions.

So now you know how to accurately measure service performance. The next step is for your to focus on minimizing delivery exceptions. You do that by digging into your on time delivery data to identify root causes of delivery failure. From there you can take corrective action to minimize delivery exceptions in the future. For more details on how to handle delivery exceptions, see my article, eCommerce Delivery Exception Mistakes To Avoid And How To Handle.

eCommerce Delivery Exception Mistakes To Avoid And How To Handle.

Nobody wants their eCommerce customers to experience a delivery exception. But, honestly, what are YOU doing to avoid it? Click here to find out how delivery exceptions are impacting your business, as well as the various types of exceptions that can occur. Moreover, learn how to scrutinize your shipping data to sidestep delivery exceptions, and how to respond when shipping exceptions do emerge.

For more from SC Tech Insights, see the latest articles on shipping.

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