Shippers, please ask yourself this question: “are you living up to your delivery promises?” Or is it a case where your delivery promises are just words in the wind. Consider Amazon, the master of eCommerce, constantly raising the bar by meeting and often exceeding their on-time delivery (OTD) commitments. They are completely aligned with their customers’ expectations. Namely, there’s no excuse for a poor delivery experience.
It is time for shippers to start meticulously measuring their on-time delivery performance. Indeed, many shippers either do not have the data to measure their on-time delivery performance or do not know how to go about it. Further, even if they do measure on-time performance, they do not trust the results. Worse, even if they do measure correctly, they often struggle with conducting an effective root cause analysis to take corrective actions.
To help shippers improve their on-time delivery, in this article I’ll detail common mistakes with measuring on time delivery performance. Also, I’ll 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.
- 4 Major Benefits Of Measuring eCommerce On-Time Delivery Performance.
- 5 Data Analytics Practices for Best Measuring eCommerce On Time Delivery
- 1. Date Shipped For Measuring On-Time Delivery.
- 2. Date Delivered For Measuring On-Time Delivery.
- 3. Promise Delivery Date For Measuring On-Time Delivery.
- 4. Delivery Exception Analysis For Root Cause Analysis And Corrective Action.
- 5. Order Fulfillment Click-To-Ship KPI For Root Cause Analysis And Corrective Action.
- Use Your On Time Delivery Analytics To Start Measuring And Minimize Delivery Exceptions.
Common Mistakes When Measuring eCommerce 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. 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 promise 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.
- 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.
- 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.
- 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.
- Competitive Advantage. In today’s competitive eCommerce landscape, businesses that offer fast and 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.
Also, let’s talk about parcel service guaranteed refunds. You may have noticed that I did not include parcel service guarantee refunds as a benefit to measuring on-time performance. This is because these refunds are only a small portion of the cost saving. Further, these refunds can be a distraction for shipping managers. This is because if shipping managers are focused on maximize service refunds, they are not focused on minimizing service failures.
5 Data Analytics Practices for Best Measuring eCommerce On Time Delivery
Again, there can be a lot of mistakes made when measuring on-time performance. A key way to avoid mistakes 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 may be contributing to delays or other 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.
The key data elements when measuring on time performance is the ship date, the delivered data, and the promised date. 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 For Measuring 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 no ship date information at all from 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. The key is to demand this “hard” ship date from your carrier or shipping operations. Otherwise, you need to beware that your on time performance rate is suspect.
2. Date Delivered For Measuring 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, a 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. Promise Delivery Date For Measuring On-Time Delivery.
This can be tricky for some operations. If you have a mature eCommerce operation normally the order fulfillment system generates the promise date and that is provided to the end-customer. If you have a well run operation, this promise date in your order fulfillment system will match what the delivery carrier’s estimated delivery date is. Of note, the promise date can change if there is some type of shipment or delivery exception.
Remember, the carrier’s promise date is not necessarily your company’s promise date. Hence, it is the eCommerce operation that is responsible for determining the promise date. Indeed, it is the shipper who can best determine the promise date balancing it against customer desires, cost efficiency, the competition, and what is achievable.
4. Delivery Exception Analysis For Root Cause Analysis 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 explanation of delivery exceptions, see my article, eCommerce Delivery Exception Mistakes To Avoid And How To Handle.
5. Order Fulfillment Click-To-Ship KPI For Root Cause Analysis And Corrective Action.
Often, many shippers are quick to attribute delivery exceptions to the carrier. However, this viewpoint isn’t always accurate. In fact, for numerous 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. This data can be utilized to establish dashboards and performance scorecards for various metrics like carrier performance and order fulfillment. This includes KPIs such as on-time pickup and delivery, and claim-free delivery. For example, 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 TowardsDataScience’s 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 more articles on shipping.
Greetings! As an independent supply chain tech expert with 30+ years of hands-on experience, I take great pleasure in providing actionable insights to logistics leaders. My background includes implementing 100s of innovative solutions using emerging technologies and a data-centric development approach. I have also provided business intelligence (BI) solutions for 1,000s of shippers. For more about me, click here.