Seeing is Foreseeing: Managing Delivery Exceptions Before They Occur

Last year, the global supply chain came to a halt when the shipment was stuck in the Suez Canal. The event may have brought supply chain logistics into international headlines for a couple weeks, but major blockages like this are not the only thing that gets in the way of on-time delivery.

Delivery exceptions are unexpected delays in delivery—and there are often quite a few factors at play.

US ecommerce sales will cross $1 trillion for the first time in 2022. Prior to the pandemic, we did not forecast ecommerce reaching this milestone until 2024. – E-commerce Forecast, 2022, e-marketer, October 2021.

Source: Insider Intelligence

As e-commerce is set to grow exponentially in the coming years, delivery exceptions are bound to increase. Which makes it all the more important to manage delivery exceptions without compromising the customer’s experience.

What is a delivery exception?

Shipment or delivery exceptions are circumstances where packages are temporarily delayed in transit due to unexpected events. They are roadblocks that halt the progression of deliveries to their destination.

Example:

Peter makes an online purchase of a formal suit and as he waits for the product to be delivered,  unforeseen weather conditions like heavy rainfall might cause a slight delay for the delivery to progress to the next stage.

What started as a three-day delivery turns into five days due to this unexpected event of heavy rainfall, leaving Peter in the dark about his order.

Why do delivery exceptions occur?

When there is a shipment exception, it means something has gone wrong in the delivery process. Some reasons for these delivery exceptions include:

• Incorrect or unreadable shipping addresses
• Inclement and severe weather conditions 
• Missing or incorrect documentation
• Damaged, missing, unreadable and incomplete labels on shipment packages
• Federal, domestic and cross-border holidays 
• Customers unavailable to receive the delivery at the given address
• Delays due to customs like port congestion, lack of paperwork, incorrect tariff code, etc.
• Security or regulatory delays such as when packages don’t meet labeling and shipping standards 
• Danger of animal attack or interference of domestic animals like cats, dogs, etc. 
• Unexpected roadblocks, traffic, or vehicle breakdowns

What happens if businesses do not manage these delivery exceptions?

The last thing a business wants is its product not reaching the customer on time because it does not generate revenues or build a positive brand image.

“It takes 12 positive customer experiences to make up for one negative experience.” -Ruby Newell-Legner’s “Understanding Customers”.

If you don’t manage delivery exceptions effectively, it causes a number of problems such as:

• Poor ratings on overall customer experience 
• Additional time spent in delivering parcels, which increases overhead costs
• Delivery delays that cause wastage of resources and reduce potential revenues
• Request for cancellation due to missed deliveries or multiple failed delivery attempts 
• Call for refunds, which reduces profit margins

Inability to manage exceptions before they occur = Lack of last-mile visibility

Michael places an order for groceries through the e-commerce website of a retail store. Given his location, the store promised that it would deliver the order within the next two hours after he checked out.

He keeps checking the current delivery status of his order. Even after 2 hours of checking out, the status is shown as being packed. He calls the store to know whether his order is sent for delivery. The store representative replies that the order has already been dispatched. But the live tracking of the store still shows as being packed.

Additionally, the delivery staff dealing with his order is facing roadblocks, unexpected traffic and heavy rainfall too. Due to these exceptions, the delivery gets further delayed by another hour and Michael does not know when his order will be delivered. Frustrated, he cancels the order and places another one with a different store.

Customers want timely communication on the status of their orders. The example above shows the cost of not providing such updates to today’s discerning consumer. From a business perspective, without knowing the latest updates on the delivery progress, you cannot operate efficiently. Updates on delivery progress involve knowing the answers to questions such as:

• Where are your assigned orders now?
• What are your on-ground delivery staff doing?
• How long is it taking for delivery agents to complete the assigned deliveries?

From the above scenario, it is evident that the store was unable to manage its delivery exceptions due to its lack of last-mile visibility. Had the store found a delivery exception before it occurred, it could have mitigated or at least informed the customer and not lost their trust.

Last-mile visibility is the ability of businesses to quickly track, manage, and share the live insights of on-ground deliveries with its internal teams and customers. It is the primary aspect that differentiates the business that reactively responds to its delivery exceptions and those businesses that proactively manage such exceptions before they occur.

Meet customer expectations with last-mile visibility

As customers increasingly demand flexibility around their delivery options, last-mile fulfillment has become more dynamic than before. The ability of brands to adapt to dynamic customer preferences has turned out to be the key differentiator for last-mile success.

Lack of last-mile visibility brings down the efficiency of delivery operations and makes for a poor customer experience. Find out why it’s important for businesses to achieve last-mile visibility.

1. Proactively respond to delivery exceptions

With last-mile visibility, you can solve delivery exceptions before the customers knew that they existed. Last-mile visibility quickly alerts your team when a parcel gets stuck in transit. It lets you take additional efforts and arrangements for sending a replacement through same-day deliveries to make sure that orders reach on-time.

By achieving last-mile visibility, you can send proactive notifications like discounts for your next purchase, even if there are unanticipated obstacles to timely deliveries. It allows delivery agents and support representatives to handle delivery issues and mitigate negative impact of deliveries, thereby keeping the customer experience intact.

2. Stick to Expected Time of Arrival (ETA) targets

Visibility helps you avoid unexpected stoppages, route diversions, idling, and high traffic restrictions that stop you from reaching your destinations on time. It enables operation managers to check if their fleet has met the ETA targets. Even if they have not met these targets, it lets them analyze the prime reason for it and rectify them.

3. Continuously track crucial delivery metrics

To manage delivery exceptions before they occur, and to get a complete picture of them, operation managers should have regular updates on key delivery metrics. Some of these include:

• First Attempt Delivery Rate (FADR)
• ETA adherence
• Route efficiency 
• Driver productivity 
• Missed deliveries 
• Average cost-per mile
• Vehicle downtime
• On-Time In-Full delivery rate (OTIF) and so on

4. Enable proper internal and external communication

Businesses incur high overhead costs when they do not have proper internal and external communication. Internal communication takes place with stakeholders, operation managers, CEOs, and other teams.  Whereas external communication happens with stakeholders outside the organization, especially the customers.

With real-time visibility, you can keep customers in the loop and inform them when there are unexpected delivery delays of a reasonable nature. Its added transparency improves customer engagement and boosts loyalty.

Real-time visibility also improves communication within the internal teams of the organization. When other teams know that there is a delivery exception, they can quickly adapt their operations in a unified way.

With real-time visibility, the finance team can plan their expenses and budgets for likely delivery exceptions. The customer service team can reach out to customers with numerous offers like refunding a percentage of shipping charge etc. All of these proactive efforts facilitate reduced costs, wastage of resources and an improved customer experience.

How does last-mile visibility help you handle delivery exceptions before they occur?

Have you ended up delivering products to a customer’s house despite knowing they are unavailable?

Have you received too many calls from frustrated customers demanding updates on their orders?

Have you received more complaints about packages stuck in transit and not reaching customers on a promised date?

If your answer is ‘yes’ to even a single question, you are struggling to manage delivery exceptions.

The first step to manage these delivery exceptions before they arise is to invest in visibility. Here are three ways last-mile visibility helps your business handle delivery exceptions before they arise.

Data insights + Machine Learning = Increased ability to predict SLA breaches

The success of a last-mile delivery operation depends on how effectively a business fulfills its SLAs. An increase in delivery exceptions increases the likelihood of SLA breaches, which in turn leads to a fall in customer satisfaction and business revenues. The need of the hour for modern enterprise businesses is the improved ability to predict SLA breaches.

Last-mile visibility helps you generate comprehensive data insights on your current and past deliveries. Applying machine learning algorithms to these data insights enables you to find out when you faced the most number of SLA breaches and prepares your business for them in advance. As more data is added, it increases the ability to predict SLA breaches and prepare your on-ground staff and internal teams to deal with them effectively.

Frequent last-mile inefficiencies + time = High operational costs

Last-mile delivery is a business with low profit margins and increasing fuel costs add more pressure to its operations. Frequent inefficiencies spike up your operational costs, especially when you manage a large fleet and deal with massive order volumes on a daily basis. The best way to stop last-mile inefficiencies from eating up your business revenues is by investing in real-time visibility.

By giving a micro and macro view of delivery operations, last-mile visibility helps you quickly detect common delivery problems that lead to shipment exceptions like route diversions, unnecessary delays, excessive idling, high fuel consumption, and so on. All these insights on last-mile inefficiencies enable you to quickly identify the primary cause of delivery exceptions and plan optimal delivery routes accordingly. It also helps you plan and reward incentives for drivers who completed a maximum number of deliveries and saved operational costs.

By generating insights on last-mile inefficiencies, real-time visibility helps you rightsize your fleet, and plan a long-term strategy for saving your delivery costs.

Assists on-demand decisions for last-minute delivery requests

Being an operation manager, it becomes extremely difficult to manage delivery exceptions especially when there is a sudden inflow of last-minute delivery requests. It is a huge challenge for them to handle these high-priority last-minute delivery requests and make effective on-demand decisions for it. Visibility has been the partner behind the success of businesses handling last-minute delivery requests effectively.

With its real-time tracking abilities for delivery operations, having visibility helps you assign last-minute delivery requests to riders based on vicinity, driver availability, Hours of Service (HOS), time window, vehicle capacity, traffic restrictions, and so on. It helps you build a balanced, and realistic order schedule for standard deliveries, rescheduled deliveries, delivery exceptions, and last-minute delivery requests.

Getting on the path to managing delivery exceptions successfully

The first and most important step towards managing delivery exceptions is to know how, why, when, and where they occur. Visibility is that magnifying glass for your business that helps you spot the minute reasons for your delivery exceptions.

Locus’ dispatch management platform provided the much-needed visibility to on-ground professionals, managers, and enterprise stakeholders. With its advanced Artificial Intelligence (AI) capabilities and live tracking capabilities, you can access timeline views to act quickly in case of route deviations or SLA breaches. It enables you to generate custom reports on on-ground performance like route history, mileage metrics etc. that helps you identify patterns of delivery exceptions and make strategic decisions to manage them.

Want to predict delivery exceptions and skillfully manage them before they strike?  Try a demo with us!