Embracing a Diverse Delivery Network
The foundation of your supply chain is your delivery network. Everything rests on your final mile delivery carriers. Using a single source to make your deliveries is like placing the entirety of your supply chain on one pillar… it may rest for a moment, but the slightest shift in wind can bring it all down.
We recently spoke with Nate Skiver, owner of LPF Spend Management, to learn his advice on building a successful diverse carrier network. Review some of his key takeaways below before listening to the whole webinar here.
Why you should diversify
Nate covered three of the main reasons why a shipper would want to diversify -- capacity, service, and expense.
Capacity
We’ve all seen the consequences of not having enough capacity to meet demand (Holiday season 2020, anyone?) Resting your faith in a few carriers to make your company deliveries is a dangerous game. Spreading out your capacity over several providers can provide protection.
Service
Utilizing one or two providers gives limited control over enforcing compliance metrics. Consistently late and undelivered packages can impact service and your bottom line. The control over compliance and customer satisfaction gained when diversifying can be the impetus to make a change.
Expense
During the webinar, Nate added that though moving to a diverse network may not always provide up-front, immediate cost savings on package delivery, the auxiliary costs associated with the final mile may go down when diversifying.
Step one in diversifying: Goals
“Goals and objectives are a key part of the process for carrier diversification… That’s where some either fall short in that process or don’t start in the right way,” said Nate Skiver.
Determine what these goals are by starting with the why behind your need to diversify. Why are you moving away from your single-carrier network? Let’s look at the three prominent reasons from above:
Capacity
Establish 150% coverage in all major markets
100% coverage nationally
Service
Improve on-time delivery times to 98%
Decrease damaged packages by 10%
Increase customer satisfaction ratings by 8%
Expense
Reduce surcharge and accessorial costs by 50%
Decrease damaged packages by 5%
Improve on-time deliveries by 8%
Your goals will direct everything else in the diversification process. Nate added, “It starts with the goals that have been defined. That should be the guard rails to help narrow the scope of carriers to consider.”
Throughout the process, refer back to your established goals to ensure you’re headed in the right direction.
Step two in diversifying: Carrier Selection
Nate Skiver noted that the carriers you select should be more than just a service provider, they should be a partner, and this is a key part of the carrier selection process.
“There are many carriers who can pick up and deliver packages. Some of them do it better than others. Broadly speaking, they should all be able to do it well. From more of a relationship standpoint, it’s important to seek out carriers that are more than just delivery providers; they should be partners,” said Nate.
He continued to make the point that a carrier relationship can impact many parts of the customer delivery experience, including protecting capacity.
When it comes to selecting carriers, Nate mentioned bringing in a 3rd party to assist in the process can be of benefit. He noted, however, that regardless of how it’s done, it’s more important to “vet and qualify those carriers at a granular level.”
Things to look for include alignment of services, delivery needs, communication and, as previously mentioned, a solid relationship.
Step three in diversifying: Process over project
It is important to consider diversifying your delivery network as a process, rather than a project. That is to say: it’s an ongoing event, something to be monitored, measured, and iterated as needed.
As a part of this process, consistently communicating with your carriers sets the tone for a fruitful relationship and even one that protects your capacity in an unexpected surge of demand.
“One of the biggest challenges in the process is consistent engagement. That goes back to having clearly defined resources who are constantly engaged with those carriers, holding them accountable, and also having a very clear cadence on meeting.”
Every good relationship has boundaries. With your delivery carriers those can be defined as accountability or compliance metrics. Consistently providing feedback (positive and negative) on those metrics, can strengthen your relationship and customer delivery experience.
As part of the process, consistently revisiting your initial goals and comparing progress to them can ensure a successfully diversified network.
Embracing diversity
Utilizing a comprehensive network of delivery carriers is like having several pillars supporting your supply chain, it’s a structure not easily shaken. Using the steps and tools Nate Skiver discussed, your company can enjoy the benefits of diversification including higher capacity, improved service and lower expense.
If you’re ready to diversify your delivery network, eTrac can provide the visibility tools and comprehensive network of carriers you need to reach the final mile faster. Using any TMS, eTrac connects you with carriers on their operational system -- your fleet or our network -- allowing for unprecedented order visibility, exception management, and compliance tools. See a demo of eTrac here.