Beat the Clock: How Businesses Can Improve On-Time Delivery
Photo by RDNE Stock Project
Delivering to customers on time is key for any business. It can improve customer satisfaction, and in turn increase customer lifetime value. It can also improve your reputation, leading to higher customer retention and recommendation rates. Put it all together, and your delivery business can take off like a rocket.
With customer expectations rising as many businesses now offer same-day or next-day delivery, your on-time delivery performance gets even more important. This is impossible at scale without high supply chain efficiency.
This article will explain on-time delivery (OTD), why it matters, and how to improve it. You’ll also learn about other key delivery metrics, and how to use data effectively to improve your delivery performance.
What is on time delivery?
An on-time delivery is simply a delivery that is made to the customer at the promised time. It’s a key metric in any delivery business, and shows how well your delivery or courier service is doing overall. Here's how to calculate your on-time delivery rate (OTD):
How do you define late deliveries? There’s no single agreed standard, so you will have to decide criteria based on how your delivery operations work and what you promise to your customers. If you promise delivery within a 15-minute window, then even one minute over may count as late. If the customer is waiting from 12:15 to 12:30 for a delivery promised within that time window, for example, then 12:31 will feel late to them. On the other hand, if your promise was simply “Tuesday”, then it’s not late until the driver’s shift is over.
The best approach is to figure out what delivery experience you want to offer to your customers, and work backwards from there. If you hit the right delivery date and time every time, customer complaints are less likely, and customers will appreciate your reliability.
What’s a good on-time delivery benchmark to aim for? Companies like Fedex and UPS aim for a minimum 95% on-time delivery rate. For high customer satisfaction, try to match or exceed this rate.
Why does on time delivery matter?
Customers want businesses to fulfill their promises, and delivering on time is a big part of it. The good news is that speed alone is not the only thing customers care about. Sure, if you’re delivering pizza to a hungry customer then they want it while it’s still hot — but other things matter too. According to Statista:
- 86% of US customers will accept slower delivery to improve sustainability.
- 47% are willing to wait 3-5 days for a delivery — and only 5% expect next-day delivery!
- 42% will change their shopping behavior if a product is delivered later than they were promised at the time of purchase.
On-time delivery also says a lot about how well your business operates. If you have a high OTD rate, it means your business is efficient and has a strong supply chain. But if your rate is low, that may indicate problems with your order processing, delivery management or fulfillment process.
Delivery bottlenecks are a common problem in businesses that are growing fast. For example, Routific customer Greenhouse Juice is a Canadian company selling fresh-pressed organic fruit juices. As demand for their product grew, Greenhouse found themselves having to scale rapidly from a couple of dozen deliveries a day to hundreds every week — and every order has to be delivered fresh, at the highest quality. Without route optimization and delivery management software, Greenhouse wouldn’t even be able to schedule their deliveries in time, never mind actually get them to the customer.
How can you improve your on time delivery rate?
You'll need to look at several parts of your business and order management to improve your on-time delivery. Here are some key things to work on:
Managing orders and inventory
Managing customer orders and inventory is important to keep your on time delivery rate high. You should always have the right products ready when they're needed. This means predicting how much of each product you'll need for each ship date, and using software like an ERP system to keep track of your inventory in real time. Avoid running out of stock or having too much. You’ll also need to manage your lead times.
Managing your warehouse
Your warehousing can affect your ability to deliver products on time. Some basic things to check:
- Make sure products are placed where they are quick and easy to find.
- Package products well to prevent damage and returns.
- Load deliveries efficiently and in the right order so the driver spends as little time as possible at each stop.
Accurate ETA predictions allow you to give your customers realistic delivery times. If your predictions are off, your on-time delivery rates will suffer. Delivery management software like Routific makes it easy to predict ETAs by factoring in historical traffic data, distance and other factors. If you’ve tried to do this by hand, you know how time-consuming it can be.
Route optimization means figuring out the most efficient route for a set of deliveries. This can save on fuel and maintenance and ensure deliveries arrive on time. Routific considers real-time conditions like traffic, road closures, and the priority of deliveries. This ensures that you always deliver on the promised delivery date.
What happens if I can’t deliver on time?
You can do everything right, and still not meet your on-time delivery metrics. Car crashes, natural disasters, a supplier unexpectedly out of stock, a driver off sick — sometimes bad luck happens and you won’t be able to deliver on time.
When this happens, communication is your best friend. Let your customers know as soon as possible that you’re having problems, and give them an updated ETA. Routific and other delivery management software includes customer notification options so you can easily alert everyone who is affected. Customers are more likely to be forgiving if you have a good track record of reliability, and keep them in the loop.
More key delivery metrics
To improve, you first need to figure out where you are. Knowing and tracking key performance indicators (KPIs) is important for improving on time delivery. These metrics can tell you how well your delivery service is doing. We’ve already covered the OTD rate, so here are some other important delivery metrics:
Deliveries per hour
This is an easy one to calculate, and an important contributor to the profitability of any delivery business. The more deliveries you can make per hour, or the higher your route density, the lower your cost per delivery. Your exact number will depend on your location — it’s much easier to have dense routes in the middle of a big city than in a semi-rural area. But in general, these are typical benchmarks:
- Anything less than three deliveries per hour is poor performance.
- Three to six deliveries per hour is a healthy average.
- If you can manage seven or more deliveries per hour, your performance is very good.
Couriers like UPS or FedEX, who handle massive volumes, can achieve up to 12 deliveries per hour, but this is very rare for a small or medium business.
The best way to increase your deliveries per hour is to use route optimization software.
Average dwell time
How long your drivers spend at each stop to complete the delivery can have a dramatic impact on your deliveries per hour. Here’s how to calculate your average dwell time, or stop duration per delivery:
There are several ways to reduce your average dwell time:
- High-quality address information: Accurate geocoding (the process of converting an address to an exact latitude and longitude) can prevent a lot of wasted time looking for the right address.
- Driver familiarity: The more familiar a driver is with an area, the more they will know about the best places to park, how to access apartment buildings, and so on. Assigning your drivers to regular territories can increase your delivery efficiency.
- Delivery notes: Include information like apartment buzzer codes and customer delivery instructions in notes to your drivers to help them turn deliveries around fast.
💡 Pro tip: Routific’s delivery management software allows you to assign driver territories and include notes that drivers can easily access on our mobile app.
Delivery Cycle Time
This is the time from the moment someone places an order to the moment it’s delivered, and is a good measure of how efficient your order fulfillment process is overall. It includes the time it takes to prepare the order, pack it up, and send it off. Here's how you calculate it:
A low delivery cycle time helps you keep packing costs low and allows you to respond quickly to new queries.
Using data to solve delivery problems
Data is not only for large enterprises! Even if your delivery business is small or medium-sized, data can still help you solve problems and improve your deliveries. Here's how to do it:
Identify and measure problems
First, think about the problems in your business. Are deliveries often late? Do some routes take longer than they should? If you don’t already have this information at your fingertips, start tracking it. A simple spreadsheet is enough to get started. Think about what questions you want to answer, and collect data that will help you.
Look at your data
Once you've identified problems and collected some information, take a close look at your data. Are your deliveries late because of traffic, inefficient routes, or delays in getting orders ready? Use graphs and charts to help you see trends and patterns in your data. Benchmark against your own past performance or data from other companies.
Make a plan
Based on what you've learned from the data, plan to fix the problems you've found. This could be as easy as changing delivery routes to avoid areas with lots of traffic or planning more deliveries outside of rush hour. Delivery management and route planning software like Routific makes this easy. You may also have to make bigger changes to things like your production process and warehouse management.
Put your plan into action and keep an eye on it
Start using your plan, and watch the results closely. Keep track of the same key delivery numbers you found earlier, and see if your changes are helping. Remember, things might not improve immediately, so be patient and keep watching your data over time.
Learn and change
Lastly, be ready to change your plan based on the results. Don't hesitate to make changes if something isn't working as you thought it would. The goal of using data to solve problems is to keep improving, so it's okay if your plan needs to change over time. We know more today than we did yesterday, and will know even more tomorrow!
Remember, you don't need a fancy system to make decisions based on data. Even with simple tools and some hard work, you can use data to find problems and solve them. In the end, this will make your deliveries better.
Delivering on time is really important for any business that delivers goods. It affects how happy customers are, what people think of your brand, and how much money the business makes. To make your deliveries more timely, you need to understand and keep track of key delivery measurements, use data to solve problems, and add the right tools and technology at the right time.
Remember, improving on-time deliveries is ongoing, and continuous improvement is hard work. You must commit to checking how you're doing, finding problems, and using effective solutions. If you work hard using the tools described above, you can improve your delivery metrics further than you think.
Frequently Asked Questions
How important is delivering on time?
On-time delivery is a critical measure of the health of any delivery business. It directly affects how happy customers are, how people view your brand, and how much profit the business makes. Delivering on time a lot means you're reliable and efficient, while often being late could mean there are problems you need to fix.
Who is in charge of delivering on time?
Many roles in a delivery business are responsible for timely delivery. Drivers and couriers deliver the goods. Warehouse managers, inventory controllers, dispatchers, and customer service representatives are also really important. Everyone needs to work together to make sure deliveries are on time.
How does delivering on time make customers happy?
Uncertainty and lack of control makes people feel stressed. Making a clear promise about when a customer can expect their delivery, and sticking to that promise, provides certainty, predictability and a feeling of security. Customers love it when their deliveries are reliable and prompt! If a business always delivers on time, it builds trust and loyalty. But if deliveries are often late, customers might be unhappy and stop using your business.
What can cause deliveries to be late?
There are many reasons why deliveries might be late. These can include slow order processing and issues with inventory management. It could also be warehouse problems, poor route planning, traffic jams, vehicles breaking down or even bad weather.
What percentage of deliveries should be on time?
What counts as a good on-time delivery rate can change depending on the industry and the specific business. But as a general rule, an OTD rate of 95% or above is often seen as excellent.
How can technology help improve on-time delivery?
Technology can improve delivery accuracy by enabling efficient route planning with predictive traffic, accurate ETAs, driver territories and real-time tracking.
What can I do if my on-time delivery rate is low?
If your business struggles with late deliveries, take a look at every step of your delivery operations. Slow order processing, poor warehouse and packing management, inefficient route planning and inaccurate ETA predictions are all common reasons why businesses have low on-time delivery rates. Once you know what's causing the problem, identify new processes or tools you can use to fix it.
What is a delivery route planner and how can it help my business?
A delivery route planner is a software that helps plan the most efficient routes, taking into account traffic, the number of stops, and the time each delivery should be made. Using a route planner like Routific can save time for both dispatchers and drivers, provide more accurate ETAs and reduce time per delivery.