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What is delivery management?

Published on: December 6, 2023

Updated: January 17, 2024

Delivery management refers to the process of delivering a product to the customer. In the context of ecommerce and logistics, delivery management focuses on the systems and steps required to ensure that goods ordered online are packed, transported, and ultimately delivered to shoppers as efficiently as possible.

For obvious reasons, delivery management is a critical component of any ecommerce operation, because it directly impacts customer satisfaction.

What are the components of delivery management?

Delivery management componentDescription
Order processingThe system processes and verifies online orders
Pick and packProducts are retrieved from storage and packed securely for dispatch
DispatchOrders are sorted for transportation and delivery
Route planningDetermine the most efficient routes for orders
Order trackingMonitor delivery statuses and communicate with customers
Last mile deliveryThe package is delivered from a local distribution center to the customer's doorstep

Contrary to what some might think, delivery management doesn’t just take place at the last mile. The whole process starts earlier in the post-purchase journey. Let’s take a look at some of the key aspects of delivery management:

Order processing – Once an order is placed online, the system must process it, which can involve payment verification, stock checking, and order confirmation.

Pick and pack – This is the stage when products are retrieved from storage (often in a warehouse) and packed securely for dispatch. Efficiently picking and packing orders can significantly speed up delivery times.

Dispatch – After packing, orders are sorted for delivery. This can involve grouping orders by destination or choosing the most appropriate courier or transportation service.

Route planning – For companies with their own fleet of delivery vehicles, determining the most efficient routes is crucial to ensure timely deliveries and minimize transportation costs.

Order tracking – Sometimes called parcel monitoring, this stage involves tracking the order as it moves through the carrier’s network. It’s best to provide parcel tracking automation capabilities so customers can view the status of their delivery.

This increases transparency and can help manage customer expectations—something that’s incredibly important during the post-purchase process. Our data shows that 53% of consumers say that the post-purchase is the most emotional part of their shopping journey.

Last mile delivery – The “last mile” refers to the final step of the delivery process when the package is delivered from a local distribution center to the customer’s doorstep. It’s often the most complex and expensive part of the delivery process.

Unlike bulk transportation, which moves large quantities from one warehouse to another, the last mile involves multiple stops with fewer packages per stop, which increases the time and cost per delivery.

In any case, it’s best to offer last mile tracking to ensure customers can prepare to receive their orders.

Why is delivery management important?

The ecommerce landscape has gotten a lot more competitive. Customer expectations are higher, the costs of doing business are increasing, and the margins for error are shrinking. Effective delivery management can help you overcome these challenges, putting you in a better position to thrive.

Here are the reasons delivery management is important:

Efficient delivery management improves customer satisfaction

Customer review about the delivery experience

Timely and accurate deliveries directly influence customer satisfaction. If customers receive their orders when and how they expect, they’re more likely to become repeat shoppers and recommend you to others.

Helps you improve operational efficiency and reduce costs

Effective delivery management ensures that resources–whether they’re vehicles, personnel, or distribution centers–are used efficiently. This efficiency can lead to reduced ecommerce expenses and increased profitability.

Enables you to enhance your brand reputation

Consistent, reliable delivery performance enhances your company’s reputation. On the flip side, frequent delays or mistakes can harm a brand, sometimes irreparably.

Research shows that a significant proportion (69%) of shoppers would reconsider making a purchase if there’s a delay beyond two days of the promised delivery time.

You can scale more effectively

As your business grows, your delivery needs become more complex. When you have effective delivery management practices from the get-go, your systems and processes can scale with you, thus accommodating higher volumes and more complex logistics requirements.

Helps you be more sustainable

Efficient delivery management can reduce the environmental footprint of your business. Optimized routes mean fewer emissions, which helps minimize your environmental impact.

According to the U.S. Environmental Protection Agency (EPA), transportation accounted for the largest portion (28%) of total U.S. greenhouse gas emissions in 2021. Efficient route planning can help reduce these emissions by ensuring vehicles travel fewer miles.

Aids with regulatory compliance

If you ship across borders, you must ensure that deliveries adhere to regulations and customs requirements. Having a robust and well-thought-out delivery management process can help you do this.

With the right solutions, you can reduce the risk of shipment delays and avoid costly penalties.

What are the top delivery management KPIs to track?

You know what they say: what gets measured, gets managed. As such, if you want to optimize delivery management in your business, make sure you’re tracking the right metrics.

Here are the top delivery management KPIs to track.

On-time delivery rate

This KPI measures the percentage of deliveries that arrive at the expected time. A high rate indicates reliability and efficiency in the delivery process. You can calculate the on-time delivery rate using this formula:

On-time delivery rate = (Number of deliveries made on time / Total number of deliveries) x 100

For example, if out of 100 total deliveries, 95 were delivered on time and 5 were late, the on-time delivery rate would be 95%.

Delivery time

Delivery time is the average time taken from when an order is placed until it’s delivered to the customer. Shorter delivery times often lead to higher customer satisfaction, so strive to keep your delivery times as low as possible (with reasonable costs, of course).

Cost per delivery

Cost per delivery is the average cost associated with each delivery. It helps you understand your expenses better and find areas for potential savings.

Calculating cost per delivery is simple: just divide the total delivery-related expenses by the number of deliveries made during a specific period.

For example, if the total delivery-related expenses for a month amount to $10,000, and during that month 1,000 deliveries were made, the cost per delivery would be $10.

First attempt delivery success rate

This is the percentage of deliveries successfully completed on the first attempt. A higher rate here indicates fewer returned parcels and higher efficiency.

Delivery accuracy rate

This metric is the percentage of orders delivered without errors (e.g., wrong item, missing items). When your delivery accuracy rate is high, you’re in a better position to improve customer satisfaction and reduce return-related costs.

Route efficiency

This measures how optimal a delivery route is by comparing the actual distance traveled versus the shortest possible distance.

Delivery customer satisfaction score (CSAT)

CSAT can be applied in various areas of the business, including delivery management. Gathered from post-delivery surveys, this KPI reflects how satisfied customers are with the delivery process.

Delivery expense as a percentage of sales

This ratio provides insight into how much of the revenue goes towards covering delivery costs.

You can measure it by using this formula:

Delivery expense as a percentage of sales = (Total delivery-related expenses / Total sales revenue) x 100

Suppose your total delivery-related expenses for a month are $20,000 and the total sales revenue for that month is $200,000. In this case, the delivery expense as a percentage of sales is 10%.

How do you improve delivery management?

The specific steps you take to improve delivery management will depend on the KPIs you’re looking to improve.

For instance, if you want to boost your on-time delivery rate, then you might consider optimizing routes using advanced route planning software. On the other hand if the goal is to reduce your cost per delivery, then consider streamlining the packaging processor or implementing bulk dispatching.

That being said, here are some general best practices to improve delivery management.

Invest in technology

Nothing slows down a process more than manual work. That’s why it pays to invest in modern delivery management software that offers real-time tracking, route optimization, and analytics. Building a robust ecommerce tech stack means you can enhance operational efficiency while improving the customer experience at the same time.

Enhance customer communication

Branded order tracking page

Notify customers about their delivery status at various stages–when the item is dispatched, out for delivery, and any delays. (Note: be sure to comply with all consumer privacy laws when sending customer communications.)

Better yet, use a branded order tracking page for people who want to proactively check on their orders. This keeps customers informed and reduces the number of inquiry calls.

Plan for contingencies

Always have a backup plan for potential disruptions, be it adverse weather conditions or unexpected order volumes. That way, you can adapt and respond to different situations and reduce any negative impact on delivery timelines.

Proactive contingency planning also reduces the operational stress that comes with crisis management, allowing your teams to operate efficiently even under pressure.

Collect and analyze data

Study past delivery data to identify patterns and trends. Doing so can provide insights on peak times, common issues, and areas of improvement. If you’re using third-party logistics (3PL) providers, regularly review their performance. Ensure they align with your company’s standards and expectations.

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