How to fall back in love with shipping allocation

Dan Greenall
8 July, 24

Sometimes it feels as if every other week is a form of peak season for retailers. From the Christmas period and Amazon Prime Days to individual peak days such as Valentine’s Day and Mother’s Day.

On one hand, this is a good thing for retailers: peak season equals extra revenue. On the other hand, an increased number of orders leads to more resources being needed, more scrutiny being placed on processes, and more delivery pressure.

These feelings may cause retailers to fall out of love with peak periods, but it doesn’t have to be this way. Rather than moments for headaches, these are opportunities for retailers to shine. With the right processes and technology, businesses can meet customer expectations and provide them with truly special experiences.

The problems retailers face during busier periods

The rising tide raises all ships, and peak season demand means increased potential for problems. Firstly, increase in demand is usually greeted with tighter capacity. This can often lead to stock shortages. What’s more, this strain is felt by all parties. Tighter capacity in logistics and warehousing, which not only limits the physical space for inventory but also exacerbates logistical challenges, leads to delays in delivery. Customers therefore must endure longer waiting times and are subject to more errors.

This occurs while customer service teams manage this inflection, sorting through “Where is my order?” (WISMO) requests as they try to prevent any impact on customer satisfaction.

And these are just the direct threats. When you add an increase in freight rates and higher congestion at distribution centres, it’s easy to understand why retailers may be falling out of love with peak periods. It’s a period that requires not just robust planning and efficient supply chain management, but a high degree of agility to manage the problems that will undoubtedly arise.

The pitfalls of existing carrier allocation methods

If a retailer doesn’t have smart allocation capabilities, allocation is often done in a more rudimentary way. This is likely to be direct carrier integration, where the retailer has performed extensive technical development work to build a one-to-one link into the carrier’s system. Here, a consignment or shipment is automatically allocated directly to one specific carrier, regardless of size, weight, dimensions, destination, or cost.

At the heart of some of the issues that arise is the fragmentation of communication and information sharing across various systems. Progression of digital solutions has caused an increase in the volume of touchpoints and data triggers in a typical shipment. With legacy systems in place, it will be difficult for retailers to effectively link purchase orders, forecasts, and carrier allocation.

For example, when carriers provide updates, like container statuses, the data often requires manual re-entry into different systems, typically through time-consuming and error-prone processes. This drains resources and means forecasts perpetually lag, diminishing the relevance and impact of data. Some retailers may not be agile enough to adapt to the dynamic nature of shipping logistics during these peak periods.

Complicating matters further is a lack of standardisation in the shipping process. Different carriers operate with varying contract terms, definitions, and cost structures, making it challenging to streamline allocation.

Without standardised processes and metrics, managing interactions with multiple carriers is complex. The absence of a unified system to interpret and utilise this information also makes it less valuable. The result is a fragmented, inefficient allocation process, marked by misallocated goods and reduced operational effectiveness.

How businesses can use smart allocation

With smart allocation via a robust, reliable software system, retailers can find a carrier that can reduce the amount of failed delivery requests, fill trailers efficiently, and reduce the overall cost of the process. The software can integrate with carrier databases and track their recent performance, such as on-time delivery rates and capacity. You will also get better data insights, as the system can analyse which carriers are reliable and suitable for allocation. Let’s break this down further.

Firstly, it assesses the availability of carriers, determining which ones can genuinely fulfil their delivery commitments. This step ensures that the promises made by carriers align with their actual capacity to deliver, thereby increasing reliability and reducing the risk of failed deliveries.

Next, smart allocation incorporates blocking logic, which considers specific rules and preferences, such as avoiding certain carriers on weekends or prioritising specific carriers for next-day traffic. This approach enables businesses to tailor shipping strategies to their unique operational needs and customer expectations.

Finally, smarter allocation enables retailers to conduct a thorough analysis of cost efficiency. Here, the goal isn’t simply to find a carrier, but to identify the service that offers the best balance between cost-effectiveness and quality of delivery. By prioritising cost efficiency without compromising on service standards, businesses can reduce carriage costs while maintaining high customer satisfaction levels.

The bottom line

With smart allocation, there is a tangible reduction in failed delivery attempts. As far as starting points go, it’s an excellent solution for retailers to have in their corner as they prepare for peak periods. The overarching benefit is a noticeable decrease in carriage costs, achieved by optimising every aspect of the shipping process.

This is crucial for retailers in peak periods. Good experiences are fine. Exceptional experiences are better and ensure that you stand out from the crowd. While retailers can’t prevent every problem that arises, they can invest in systems that will make it easier for them to be managed when they do.

By embracing smart allocation, businesses can navigate increased demand more effectively, ensuring timely deliveries within budget, and better meeting customer expectations.

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