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 harm this causes shipping operations. In this article, I’ll discuss the top 9 most common mistakes made in this area. Additionally, I’ll also provide examples and resources to help you avoid falling into these traps in order for you to better measure your on-time performance in the future.
- Why It’s Important To Use Key Performance Indicators (KPI) To Measure On-Time Delivery Performance.
- The Consequences Of Not Measuring On-Time Performance Correctly.
- 9 Common Mistakes When Measuring eCommerce On-Time Delivery.
- 1. Relying On Shipment Status That Is Inaccurate Or Lacks Detail Scans.
- 2. Relying On Incomplete Tracking System Data.
- 3. Measuring On-Time Delivery Against The Wrong Promise Date.
- 4. Incorrectly Measuring On-Time Delivery.
- 5. Neglecting To Consider The Time To Process, Pick, & Pack An Order.
- 6. Not Balancing Costs And Setting Too High Of An On-Time Delivery Standard.
- 7. Skew Measurement To Make The Operations Look Good.
- 8. Too Focused On Collecting Carrier Service Refunds Versus Improving Performance.
- 9. Blindly Measuring Performance Because the Boss Told You To Do It.
Why It’s Important To Use Key Performance Indicators (KPI) To Measure On-Time Delivery Performance.
In the world of eCommerce, on-time delivery is a crucial aspect of customer satisfaction and loyalty. In order for businesses to continuously improve their on-time deliveries, they need to measure how well they are doing. Also, this means measuring delivery exceptions.
Indeed, the best way to measure your shipping operations is to use on-time delivery key performance indicators (KPI). With KPIs you can best evaluate both your operation’s efficiency and effectiveness. Specifically, these KPI metrics measure the percentage of orders delivered on or before the promised delivery date. For a detailed explanation of KPIs related to on-time performance, see my article, The Best On-Time Delivery KPIs To Make Your Customers Delighted.
The Consequences Of Not Measuring On-Time Performance Correctly.
Neglecting to measure on-time delivery performance correctly will have serious consequences for an eCommerce business. Moreover without accurate data, companies are unable to pinpoint shipping exceptions within their logistics operations. As a result of not measuring on-time delivery effectively, this leads to ongoing delivery problems and poor customer satisfaction. For more detailed discussion on shipment exceptions, see my article, The Horrific Delivery Exception: Exploit Shipment Data To Eliminate, Make Your Customer Experience Better.
Also, inaccurate measurements can result in wasted resources. This is because decision-makers lack the information needed to allocate funds and personnel effectively to optimize shipping operations. Ultimately, failing to track on-time performance will damage a business’ brand reputation. This is because customers will more than likely share negative experiences with others as well as not return for future purchases.
9 Common Mistakes When Measuring eCommerce On-Time Delivery.
Measuring on-time delivery performance necessitates meticulous attention to detail and a comprehensive understanding of the processes involved. In my experience, most eCommerce businesses face significant challenges in accurately determining their on-time delivery performance. There are numerous reasons for this. Primarily, shippers often lack both the in-depth knowledge and the data required to measure on-time performance effectively. It is unfortunate that many shippers do not have clear visibility into their on-time performance. Worse, it is even more concerning that some shippers do not realize they lack this visibility, negatively impacting their businesses.
Also, measuring on-time performance is an ongoing process where ideally shippers are continuously conducting post-diagnostics to root out the causes of shipping exceptions. To improve, a business must recognize the challenges associated with measuring their on-time delivery performance. To detail, below I will outline nine common mistakes eCommerce businesses make when measuring on-time delivery. Avoiding these errors serves as the first step toward businesses ensuring that their customers have a superior delivery experience and keep coming back.
1. Relying On Shipment Status That Is Inaccurate Or Lacks Detail Scans.
When using faulty or summary shipment status data, businesses lose visibility into actual delivery performance. This results in your operations underestimating or overestimating delivery efficiency. For instance, lets take the example of a delivery carrier that does not provide a weather exception scan and the package is delivered late. This results in two issues. First, the customer does not get a timely alert that their package may be delayed. Second, when shippers do a root cause analysis on these types of late packages, they can only conclude that the carrier delivery network was at fault.
2. Relying On Incomplete Tracking System Data.
If vital pieces of information are missing from a tracking system, businesses may struggle to identify areas for improvement. Also, they will fail to gain a comprehensive understanding of their overall delivery performance. For example, if a carrier or tracking system does not provide the final delivery status of a package. Do you just assume the package got delivered or do you treat this package as a delayed delivery?
3. Measuring On-Time Delivery Against The Wrong Promise Date.
Measuring against an incorrect promise date can lead businesses to believe they are doing better or worse than they actually are. As a result, it is a challenge for shippers to optimize costs. Worse, they think they are doing well on on-time performance, but their customers are disappointed. For example, an order fulfillment operation may internally measure all their orders against a 3 day click-to-delivery standard. On the other hand, this is not good, if their shipping operation is promising customers next-day delivery.
4. Incorrectly Measuring On-Time Delivery.
To accurately measure on-time delivery, companies should establish standard KPI metrics and definitions. Specifically in developing these standards, consider all relevant factors such as order processing time, transit time, and tracking accuracy. For instance, if different departments within a company use different criteria or definitions for what constitutes “on time”, it can lead to inconsistent and misleading measurements. For more advice on measuring on-time performance, see my article, Measuring eCommerce On-Time Delivery: Instructive Advice To Best Avoid Pointless Mistakes.
5. Neglecting To Consider The Time To Process, Pick, & Pack An Order.
When businesses don’t account for the time it takes to process, pick and pack orders, they risk over promising delivery estimates. As a result this leads to disappointed customers. For example, if a company promises two-day delivery but takes three days to process an order before shipping it out, it can result in late deliveries despite meeting the transit time.
6. Not Balancing Costs And Setting Too High Of An On-Time Delivery Standard.
As with any business, there is a need for cost controls while at the same time pleasing the customers. So it’s important to balance the cost of maintaining high on-time delivery with some planning and foresight. For example, don’t ship and pay for an expensive overnight 8 a.m. express package if the business you are shipping to is not open till 10 a.m. For more tips on balancing shipping costs with providing excellent service, see my article, Package Delivery – See How To Stop Surging Costs And Make Your Customers Happy for more ideas to contain shipping costs.
7. Skew Measurement To Make The Operations Look Good.
This can involve manipulating data or ignoring negative trends to make operations appear more successful than they actually are. For example, if an eCommerce operation intentionally excludes certain delayed shipments from the measurement calculations to inflate the on-time delivery rate, it misrepresents its real performance.
8. Too Focused On Collecting Carrier Service Refunds Versus Improving Performance.
This mistake occurs when businesses prioritize collecting carriers’ service performance refunds for late deliveries rather than focusing on improving their own on-time performance. For instance, if a company spends excessive time and effort pursuing refunds instead of addressing internal issues that contribute to late deliveries, it hinders overall improvement. Specifically, the company’s transportation expertise is focused on finding fault with the carrier versus focused on the entire shipping operations. From my experience, most late shipments are not caused by the shipper, but due to order fulfillment issues, bad addresses, business closed, and other delivery delays not caused by the carrier.
9. Blindly Measuring Performance Because the Boss Told You To Do It.
This mistake happens when businesses measure performance without individual employees understanding the purpose or relevance of the metrics. For example, if a manager instructs employees to track on-time delivery without providing context or explaining how it aligns with business goals, it can lead to meaningless measurements that do not drive improvement. Worst, because these employees do not understand the significance of on-time performance, they are not proactive in minimizing shipping errors.
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.
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.