Courier Management Systems: All The Basics For 2023
Managing a courier business is a bit like coaching a sports team: You need to develop the plans and strategies that will help your team to victory, get everyone working towards the same goal, and give your players all the tools and training they need to succeed. You need to evaluate the team’s performance after every game and identify ways to improve. And finally, you need to do this while adapting to constant changes in playing conditions and opposing team tactics.
Sound like a lot? It is! Fortunately, today’s courier businesses, like sports coaches, have access to technology systems to help manage all this complexity. In this post we’ll talk about what courier management systems do, the key metrics and KPIs you need to track, and what to look for in courier management software.
What is courier management?
Courier management is the process of making sure a delivery service runs smoothly and gets packages to their destinations on time. Some key aspects of courier management include:
- Route planning and optimization: Courier managers need to plan the most efficient routes for delivery. This helps save time, gas, and money.
- Parcel tracking and tracing: A delivery business needs systems that will track and monitor the progress of each parcel through the whole delivery process. Ideally, real-time updates let both the courier company and the customers know what's going on with their shipments.
- Customer service: Provide a great customer experience by making sure customers know exactly what’s happening with their deliveries. This includes timely information about shipment details, delivery status, and any potential delays or problems.
- Team management: There are lots of people involved in delivery operations, from drivers and dispatchers to customer service representatives. Courier management involves scheduling shifts, handling payroll, and monitoring performance.
- Fleet management: Delivery vehicles need to be well maintained so they’re safe to drive, and to control costs. Regular vehicle inspections and maintenance are a big part of courier management.
- Compliance: Depending on the kind of courier business, managers need to ensure the company follows all the relevant local, regional, and international regulations. This includes customs, security, and safety requirements.
- Billing and invoicing: Courier services need managers and other staff to help calculate delivery costs and pricing, generate invoices, and collect payments.
- Technology integration: Managers in courier companies usually need to choose, implement and maintain software solutions to help streamline different aspects of the business. These usually include route optimization, scheduling and customer service.
The right courier management system can help a company operate more efficiently, lower their costs, improve customer satisfaction, and stay competitive.
Five important metrics to track in courier management
As a sports coach, you’d need to track a lot of metrics to know if your strategy was succeeding — now just how many games you win, but also things like goal attempts, or how often your team is in control of play. The same thing goes for courier management. There are two financial metrics, two people related-metrics and one time metric you need to be watching:
1. Gross margins on deliveries
Gross margin is the difference between the revenue generated by deliveries and the direct costs of those deliveries. For couriers, those costs will include things like fuel costs, vehicle maintenance, driver wages, and packaging materials.
Gross margin for deliveries is expressed as a percentage of total revenue. Here’s an example:
- A courier company earns $10,000 in revenue from deliveries.
- The direct costs for those deliveries add up to $6,000.
- The gross profit is $4,000 ($10,000 - $6,000).
- The gross margin is 40% ($4,000 / $10,000 x 100).
2. Cost per delivery
To increase your gross margin on your deliveries, you can do one of two things: increase your delivery fees to earn more revenue, or reduce your operating costs. Increasing fees can backfire if you end up losing customers, so lowering your cost per delivery is always the first thing to try.
Cost per delivery is simple to calculate: it’s just your total direct costs divided by the number of deliveries you make. If your cost per delivery is higher than your revenue per delivery, you know it’s time to take action to improve your delivery efficiency.
3. On-time deliveries
What proportion of courier deliveries are on time? This is a critical metric to track because it directly affects customer satisfaction and reputation, which in turn affect business growth. It’s also a good marker of how efficient your systems are, and how accurate your route planning is.
What’s a good on-time delivery ratio? The industry consensus is to aim for 95% or higher. For example, during the 2022 holiday season in the U.S, industry news site ShipMatrix reported that UPS delivered 97.5% of parcels on time, followed by FedEx (95.2%) and the U.S. Postal Service (94.3%).
4. Customer satisfaction
We admit it’s kind of obvious, but it’s worth repeating: delivering a good customer experience along with the parcel helps a courier company stay competitive.
There’s no need to run an expensive customer satisfaction survey to keep an eye on this metric. Nowadays there are plenty of ways to find out how happy your customers are:
- Create a simple survey on your website and ask customers to rate your service after a delivery is completed.
- Monitor customer reviews and ratings on Google, Yelp, Trustpilot and other sites.
- Collect data from your customer support staff.
5. Driver happiness
This doesn’t get as much attention as customer happiness, but it’s just as important. There’s a global shortage of delivery drivers which has supply chain experts worried. In that context, retaining experienced drivers is important to the future of any courier business.
Wages are one important component of driver happiness, but working conditions like shift length, break times, vehicle maintenance, and safety standards are also critical. To monitor driver happiness, just ask! Also watch your turnover rates, and monitor customer feedback for information that may reveal how drivers are feeling.
What to look for in a courier management system
We’ve established what metrics you should be tracking — but how do you improve them? In this section, we’ll look at how delivery management software can help courier businesses — even small businesses — to improve their performance.
This is the basic functionality that any courier or dispatch management system should offer:
- Real-time driver tracking: Dispatchers need to know where their vehicles are without drivers needing to call in.
- Customer notifications: Clear communication about ETAs and completed deliveries is essential to keep customers happy.
- Proof of delivery: Signatures and photographs are the most common proofs of delivery.
- Reporting: End-of-shift or end-of-day reports make performance management, billing, and payroll much easier.
- Route optimization: Let the algorithm automatically determine the optimal route.
- Mobile app for drivers: Android and iOS apps for drivers have become a must-have feature very quickly. Most apps offer easy dispatch, GPS tracking and photo or signature proof of delivery.
The right software also depends on how the business and its workflows are structured, so let’s take a brief look at the two main courier business models, plus one hybrid:
Same-day real-time dispatch
Same-day dispatch is for jobs where speed really matters, or customers are willing to pay for last-minute service. If you’ve ever forgotten an important birthday and needed to arrange an emergency afternoon flower delivery, you know exactly what we’ve talking about!
Other typical examples of same-day dispatch include delivering legal documents, medical samples and medications, perishable goods or just-in-time manufacturing or repair components.
On-demand couriers need delivery management systems that can help them know where their couriers are at all times, communicate easily, schedule pickups and deliveries across a city, and get from place to place as quickly as possible.
Next-day batch routing
Next-day or later delivery allows courier dispatchers to bundle orders so that it’s possible to drive longer delivery routes with bigger loads. This can be much more cost-effective for everyone, especially if the delivery business uses route optimization algorithms to make more deliveries per route.
Couriers that do batched deliveries need systems that prioritize customer experience and route optimization.
Hybrid courier models
Modern technology is now making it possible for some couriers to offer same-day batched deliveries. For example, Routific’s customer Trunkrs in the Netherlands picks up parcels in the morning, plans and dispatches routes around midday and then delivers through the afternoon and evening. This just wouldn’t be possible without route optimization. Trunkrs has built its own software platform and uses Routific’s algorithm via its Engine API.
Courier management systems for real-time dispatch
Real-time dispatch courier services are super convenient for customers, but more of a hassle (and more expensive!) for couriers. The main reason is that when you’re doing on-demand delivery, it’s much more difficult to batch deliveries and increase the number of deliveries per hour. The most useful functionality for this kind of courier business includes any kind of automation for repetitive or time-consuming tasks, like:
- Customer self-service: The goal here is to reduce the workload in the back office, so the whole delivery process can be more efficient. Look for systems that make it easy for customers to place and pay for their own orders online. Delivery tracking links and automated status updates or notifications are an added bonus.
- Courier tracking and communication: Dispatchers need to know exactly where their couriers are, so they can assign the closest available person to any job. In-app chat makes the job easier.
The top courier management systems on the market right now are:
The auto-assign feature makes this a great option for mid-market and enterprise couriers. There’s also a live chat option inside their driver app.
On the downside, from a dispatch software point of view Onfleet isn’t as good. There’s no timeline view, the interface doesn’t show actual routes, and you can only view one route at a time so it’s hard to make changes.
Onfleet is also not an ideal solution for small courier businesses: It’s costly and the route planning functions are difficult to use.
2. OnTime 360
OnTime 360 does it all, from order taking to invoicing. It has a web portal so customers can create their own orders and log in to check progress.
The disadvantages of Ontime 360 include high cost, and very basic routing functionality.
Track-POD offers the same features as OnTime360 except for billing and invoicing. It’s easier to use and less costly, which makes it a better option for smaller courier delivery companies who need on-demand dispatch features. It’s an integrated solution that makes it easy for small couriers to automate and streamline their workflows.
4. Digital Waybill
Digital Waybill offers a web portal for customer self-service with an automatic price calculator. It also has a Quickbooks integration, easy dispatch and live tracking.
Read our comprehensive review for more details on the best courier software.
Courier management systems for next-day batch routing
Routific focuses on route efficiency, making it ideal for next-day courier services. Users appreciate its ease of use, dispatch button, driver app, and friendly support. Our Engine API also allows integration with existing in-house systems if needed. A 7-day free trial is available.
We don’t yet have barcode scanning, real-time chat, or label printing, so if these are deal-breakers for you then Routific is probably not the right choice.
Our cloud-based app is free to try for 7 days – no credit card or phone number needed, and no limits on the number of routes or stops!
Workwave offers barcode scanning and order taking, as well as the ability to reload at a depot for multiple delivery batches. Routific doesn’t offer any of these features yet, so Workwave is a good option if these are things you need.
However, users report it can be expensive and difficult to use, with inaccuracies in geocoding and optimized routes needing manual adjustments.
OptimoRoute provides advanced routing functionality, including depot reloading, but lacks barcode scanning and order taking. It is generally user-friendly, but some advanced features may be challenging to understand. Route optimization is fast, although manual edits can be difficult.
Route4Me is a well-developed route planning tool with a well-developed marketplace of add-on features. This means it’s easy to add custom features like support for curbside pickup, avoiding left or right turns, or e-commerce integrations.
On the other hand, Route4Me’s route optimization algorithm is not the best, with routes up to 30% longer than competitors. Users also report it can be difficult to use, and that it’s fairly common for vehicles to be sent to the wrong addresses.
Again, for more details take a look at our review of the best courier software.