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Is on-time delivery sustainable over the peak period?

By Will Gillingham

Since June 2018, the IMRG MetaPack Delivery Index has reported a level percentage of successful on-time deliveries at around the 90% mark. However, this is notably down on the same period two years ago, when on-time deliveries were consistently around the 94% mark for many months of the year.

While order volumes tend to be a bit lower for retailers and logistics companies across the summer months, the cusp of peak invites the question: is the retail industry ready for the annual peak in order volumes, particularly the huge concentration that typically occurs around Black Friday week?

As the graph below illustrates, the percentage of on-time delivery was at a comfortable 94% in the months leading into peak trading 2016, before plummeting somewhat throughout 2017 and never recovering fully to its previous success rate. Successful delivery in 2017 (perhaps inevitably) reached its lowest-ever rate in December that year (though no-one seemed to notice).

While in 2018 we’re moving into the peak period at a stronger level of successful delivery compared to this time last year, the volume of orders is much higher, particularly next-day and specified-day services, which recently posted the highest usage in the history of the IMRG MetaPack Delivery Index (55% for UK-delivered volume in September).

And so, the question is raised: is the UK delivery infrastructure prepared for 2018’s peak? Is the volume of orders which are going to be received sustainable, or will this year post a record low for on-time, successful delivery? We approached our community of logistics companies for their expert insight.

Firing on all cylinders

The answer is a defiant, and resounding, yes. Despite the predicted record-breaking swell of deliveries, the UK delivery infrastructure isn’t only prepared, but possibly the best-prepared it’s been in a number of years.

Tim Robinson, CEO of Doddle: ‘We believe the UK delivery sector is structurally better prepared than ever before this year to cope with what we also believe will be a healthy year. The infrastructure is there: a number of new, high-profile, national and regional hubs went live in 2017. One year on, these tried and tested facilities will provide the basis of a stable plan.’

Tom Forbes, VP Customer Delivery and International of MetaPack, corroborates Robinson’s view, stating that MetaPack have been ‘overhauling all parts of their system to be prepared since the beginning of the year’. The sentiment is again reiterated by Martin Brickell, Director of Total Logistics, who claims that among the logistics industry, there has been ‘far better planning than ever before’. Brickell continues: ‘Indeed, as the industry has matured, the issues of a few years ago should be overcome, provided, of course, that reality reflects the best laid plans’.

A comforting premise as we enter into the peak period, then. But what precisely is it about this year which has all but guaranteed it a success? Are there any pitfalls along the way which could turn the tide for worse?

Flowchart

The hallmarks of success

Visibility

Twelve months is a long time in retail (consider how different the overall mood has been in 2018 vs last year) and technological advancements are always occurring, at varying speeds perhaps, in the logistics space. The potential for real-time in-transit tracking is one area that continues to grow in importance, for both customers and businesses. 

Robinson suggests this visibility helps to create a relaxed atmosphere: ‘Over the past 12 months almost all of the major carriers have released significantly improved consumer-facing technology, giving consumers greater choice, visibility and certainty than ever before. A new pragmatism is there: there’s increasing evidence that the visibility that new technology has given consumers has made them more relaxed about accepting longer delivery windows in the aftermath of Black Friday and in the lead-up to Christmas.’

BluJay discuss one such technology which is driving this closeness between the three parties (supplier, carrier, and customer). Sian Hopwood, SVP B2B Operations, BluJay: ‘Combining EDI (Electronic Data Interchange) with drop-shipping reinforces the benefits of both processes. In fact, the delivery process is harmonised with technology, which provides a stable flow of information resulting in improved visibility. This makes it easy to process orders faster and with improved service to customers, including extras such as automated delivery confirmations and delivery tracking. This visibility is crucial to business success when peaks in demand occur.’

This year may be one in which we see technology enabling the delivery process to be mapped out in more granular levels of detail, from depot to door. But it’s not the only evolution which delivery has brought about: it’s also had a sizeable effect on seasonal staffing.

Pointing at map

Staff

Technology has eased, and in some cases abolished altogether, the onboarding process of seasonal staff. Where in the past, temporary recruits would have to be trained for a period of time prior to the peak season (perhaps eating into valuable time and resource), these are not factors which the retail industry has to worry about anymore.

Justine Clark, Industry Marketing Manager – Transport and Logistics, Europe, Honeywell Safety and Productivity Solutions: ‘Voice technology can make the onboarding of seasonal workers much quicker and easier while reducing picking errors to a minimum. As the simple instructions they receive via headsets guide them throughout every step of the job, new employees can easily perform tasks such as picking from day one with little or no training while ensuring high levels of accuracy.

Other technologies such as mobile computers now feature a smartphone-style, user-friendly interface that resembles consumer devices. So new employees – especially the younger ones – can benefit from using a technology they’re familiar with, which helps them get up to speed quicker and reduces downtime.’

According to Rob Barham, Group Sales & Marketing Manager of Air Business, Ireland have made the most of this streamlining of seasonal staff. As the primary European recipient of UK exports, Ireland have crafted a ‘comprehensive “peak plan” which has been actioned to ensure they can manage the influx of parcels into Ireland during peak 2018’.

Further to this, ‘they’ve hired 20% more ground staff to handle parcels as well as extra vehicles and increased processing capacity. This is no doubt replicated across the UK carrier networks.’

Success, then, is written in technology. Time-saving innovations may hold potential for benefiting the entire breadth of the delivery process, from optimising the warehouse, to packing the vans, to tracking the order all the way to the door. But is this air of positivity based on an assumption of standard delivery? Can the infrastructure hold up under the pressure of next-day delivery?

Handshake

The next-day dilemma

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When paired with a year posting a record-level of next-day delivery orders, 2018’s Black Friday can look like a particularly narrow bottleneck. But this, argues Robinson, is a misconception. While 2014 saw chaotic scenes erupting in high street stores on Black Friday itself, four years on looks to be an entirely different affair: we’re looking at Blackvember. And this mitigation of orders has removed the bottleneck quite considerably.

Robinson: ‘There are signs that Black Friday discounting will start earlier and last longer than ever before in 2018. Whilst this won’t create the buzz of a one-off shopping extravaganza – it’ll move things towards sustainable approach. Consumers can be more discerning, and the supply chain can deliver more effectively and cost efficiently.’

Paul Durkin, Director of Home and eFulfilment at Wincanton, agrees that next-day is viable: ‘In the short-medium term and for as long as the customers demand the service, yes’. But, Durkin states, it’s not a service without its strings attached. He continues: ‘The major obstacle facing next-day is who pays for the increasing costs? It’s no longer a case of customers demanding simple next-day delivery. Now customers seek choice, convenience and certainty in terms of delivery timeslots over the blanket option of next-day.’

There are a number of solutions to the increasing demand of next-day specifications. Forbes suggests a rationing of the offer: ‘Many carriers choose not to ration their capacity, so it’s assumed by retailers that capacity is unlimited. However, it is our understanding that many are talking to their larger retail customers about rationing or surcharging in order to control access to that capacity. Retailers will be presented with the options, which they will pass on to their customers. The best way for retailers to protect themselves is to adjust their delivery promises.’

Barham debates the option of temporarily cutting next-day altogether: ‘Our parent company, AnPost, carries out consumer research and they know some retailers monitor orders on an hourly basis, so they can turn off the next-day delivery option at checkout or amend their delivery promise once capacity is reached. This is one example of how to manage consumer expectation in times of greatest demand.’

Brickell, meanwhile, suggests successful next-day deliveries are subjective: ‘Maybe there needs to be a clearer differentiation between urban (city and town) versus rural for next-day and timed. Is it viable longer term to provide remote areas with the same high-level services as larger density populations?’ He argues that while this year will see the same levels of home delivery as previous years, next year may see a tectonic shift to click and collect, provided retailers have the estate to hold the ‘700-1000% capacity’.

But Clark is confident in peak next-day delivery, as long as the correct preparation has been undertaken: ‘The answer [to whether next-day is viable] is yes. All it takes is preparation. A good starting point is reviewing operations to identify outdated processes that stand in the way of achieving greater productivity and efficiency. If, for example, workers need to continuously interrupt their main tasks to consult paper checklists, fill inventory forms or read instructions, valuable time is wasted, and managers have no real-time visibility over inventory levels or progression of received orders.’

Mountain top

Peak delivery 2018 – in summary

Despite a number of caveats, the optimism is unanimous: Black Friday 2018 is looking to be one of the most successful years, from a delivery standpoint, that there has been for some time. Technology has smoothed over past challenges, and the wider spread of discounting has eased the pressure off the ability to fulfil next-day orders.

In reality, it seems, only one thing can upend the British delivery infrastructure this year, and that is, in truly British fashion, the weather. Forbes: ‘We anticipate that 2018 will be a record high for volume, more than ever before, barring an extreme weather event.’

Having had snow in the past, we can only keep our fingers crossed, hope for the best, and, if all goes well, enjoy what is being bandied around as the biggest and best (however you may interpret that) Black Friday event yet.

Will Gillingham, Content Executive, IMRG

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