Geography Drives Home Delivery Strategy
It seems to me that many companies implementing home delivery strategies are trying to ignore the impact that geography has on cost and customer service. The fear of not offering, same day, next day or even a uniform home delivery service across a broad market or nationwide is driving these companies to make poor delivery strategy choices. It’s time to reassess the impact of geography and whether a uniform service and delivery strategy is best for your customers or company.
For example, a company in the process of implementing a nationwide home delivery service was evaluating the delivery performance in 2 of its markets. One market (a region) was performing well in terms of cost and service. The other was struggling to meet customer service targets and keep costs down. When I looked at the geography of the 2 markets, it was immediately apparent that one was conducive to short lead-times, tight delivery windows and more reliable delivery and the other one was not. The better performing market was not only dense, it was compact and there were not a lot of physical limitations to moving easily throughout the market. The poorly performing market was much wider spread, with a few pockets of density and a lot of physical limitations such as bridges and lakes that constricted easy movement. All things considered equal, one market was destined to be a winner and the other one would struggle to adequately serve customers and cost more doing it.
While it would be great to offer all customers the same home delivery service levels, it may not be practical or cost effective and could possibly damage your customer relationships. Companies with divergent geographies in the markets they serve should consider multiple service strategies to best serve individual markets and minimize the cost to serve. For example, the geographically ideal markets should get the same/next day and one hour delivery window offerings. In the case of the less than ideal markets, the home delivery service offerings should be more limited (e.g. next day and four hour delivery windows) to help ensure that deliveries can be made as promised and deliveries costs are properly managed. My experience says that home delivery service policy can be localized and customers value delivery execution as promised more than they do making more aggressive promises and not consistently keeping them.
Another way to offer greater services and minimize costs in geographically diverse markets is to use multiple transportation modes in a home delivery strategy. For example, private or dedicated fleets might be highly effective in a dense part of a market, but not adequate for widely dispersed customer bases or specific regions. In addition, the ability to be more reactive to customers is a function of being able to service an area on a frequent basis. Commercial carriers can leverage their transportation density in particular lanes to offer faster service to specific customer geographies, and most likely more effectively too. The challenge in a blended home delivery transportation mode strategy is to ensure that the modes deliver a similar “door step” level of service and provide the electronic tracking and proof-of-delivery information critical to the customer’s home delivery experience expectation.
Home delivery is experiencing a renaissance of invention and there are many new delivery models being developed that are dramatically improving the customer experience. However, geography is a “natural law” that cannot be ignored in last-mile logistics strategies. How is your company adapting its home delivery strategy to address geographic diversity? Let me know.