Over the last 10 years, I’ve had the chance to work with companies that have turned home delivery into a competitive advantage or reduced their costs by using counterintuitive strategies and tactics. On a recent trip to Europe, I had a chance to catch up with a customer who, for several years, has been using the concept called the “eco-friendly” delivery option to steer its customers’ delivery choices to improve productivity. The results they shared were compelling as “eco-friendly” deliveries use 20% less travel than regular deliveries. What is also amazing is the large percentage of their customers who self-select the eco-friendly option. Let me explain why this approach is good for the customer, the environment and delivery operations.
What is an “eco-friendly” delivery option? Eco-friendly delivery options are those delivery choices that use the least number of miles and, hence, carbon to complete the delivery. Eco-friendly options are presented to the customer along with other delivery options during the buying process, so they can knowingly select the delivery choice that benefits the environment while satisfying other date and time window needs. With an increasing number of people concerned about the environment and looking for ways to minimize their carbon impact, eco-friendly options are a popular choice. Because they require the least distance to make the delivery, eco-friendly deliveries are also the most cost-effective. You could say that eco-friendly delivery options are the nexus of customer choice, environmental responsibility and efficient delivery operations.
Eco-friendly delivery options are more cost-effective because they increase delivery density. The more deliveries in a denser geography, the greater the ability to reduce the miles per delivery and hence cost. By steering customers to more efficient delivery options, the delivery routes are also more efficient. Everyone in logistics knows the concept of delivery density, but few proactively practice it when providing customers delivery options, especially in retail, because of the misperceptions about customer delivery choice.
The key to the eco-friendly concept is determining delivery options that have the shortest distance and hence lowest carbon footprint, and presenting these to the customer in real-time. The only way to determine the shortest distance to deliver is by understanding the existing orders and their associated delivery routes. The implications are the following:
- Delivery appointment must be assigned to routes as they are booked, not at some later time
- Delivery options need to be dynamically generated during the order process because every customer will have their unique combination of goods and delivery address, and because the existing order book is constantly changing
- Traditional batch-based route planning won’t work in this dynamic environment because it happens after appointment bookings are made
- Geographic-based appointment scheduling (e.g., many deliveries in a zip/postal code in a given time window) won’t provide enough accuracy to capture the lowest distance options and will result in capacity underutilization
At this point you might be thinking that eco-friendly deliveries mean slower deliveries and wide time windows. It’s actually the opposite case. Because eco-friendly delivery options are dynamically determined, the least distance options might be as fast or tight as your logistics operations can handle. Consider this, if your fastest service was next day and with an hour delivery window, and the customer selecting a delivery time was very close to an existing delivery appointment, then that next-day, one-hour eco-friendly option could be presented and executed.
Eco-friendly delivery options are just one of the many counterintuitive home delivery strategies that are reshaping the notion of improving customer service and minimizing logistics costs. Once you understand that customers want delivery choice—more than just faster—and one of them helps the environment, then your company will find out that green has two meanings. What counterintuitive home delivery strategies are your company employing? Let me know.
As Executive Vice President, Marketing and Services, Chris Jones (CJones@descartes.com) is primarily responsible for Descartes marketing activities and implementation of Descartes’ solutions. Chris has over 30 years of experience in the supply chain market, including the last 10 years as a part of the Descartes leadership team. Prior to Descartes, he has held a variety of senior management positions in other organizations including: Senior Vice President at The Aberdeen Group’s Value Chain Research division, Executive Vice President of Marketing and Corporate Development for SynQuest and Vice President and Research Director for Enterprise Resource Planning Solutions at The Gartner Group and Associate Director Operations & Technology for Kraft Foods.
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