Retailers and distributors are turning to drop shipping (sending goods directly from the supplier to the customer) to increase the number of products they offer, minimize the inventory they carry, and reduce order cycle times. Drop shipping is an attractive proposition, but it also puts the customer service proposition into the supplier's hands. Without visibility into the entire customer order-to-delivery cycle, retailers and distributors run the risk of brand damage.
1. Choose milestones that can be used as control points.
Recommended milestones for drop shipping include:
- Customer order date and promised delivery time frame
- Order acknowledgement
- Order confirmation
- Manufacture/critical material status
- Advance Shipment Notice (ASN)
- Out for delivery
- Proof of Delivery (POD)
2. Implement actionable and periodic performance reporting to control the drop-shipping process.
Actionable reporting focuses on exceptions and critical statuses and should be exception-based to allow resources to focus on the items that need attention.
Performance reporting takes a longer term view (week/month/year-to-date) to track the supplier's performance consistency and whether it is trending better or worse and should be used as part of the supplier improvement program.
3. Set supplier status updates to the "clock speed" of the order life cycle.
It's important to understand that faster- and slower-moving goods can have different clock speeds. For example, if the goods are fast moving and the order-to-delivery cycle is three days, then, status updates need to come in hours and throughout the day, not in a batch update at the end of the day.
4. Insist on comprehensive proof of delivery that includes electronic signatures and pictures.
This will help to minimize customer claims and verify that suppliers are getting the job done correctly and in a consistent manner.
5. Ensure that the supplier has a quality delivery program.
Delivery performance and supporting technology vary widely. Many manufacturers focus on low cost as opposed to delivery service quality. Make sure to evaluate the manufacturer's or its Logistics Service Provider’s (LSP's) driver retention, training, and technology capabilities to make sure they can consistently deliver, and electronically document, at the level commensurate with the customer service strategy.
6. Immediately share information with suppliers, customer service organization and, ultimately, with customers.
For complex goods and especially those with longer lead times, the "where's my stuff" question comes up frequently. There is no reason not to automate this process and turn it into a value-added service for customers, as opposed to a potential frustration. This can also improve the productivity of the call center and sales organizations.
7. Use technology to automate and disseminate.
Two of the biggest challenges are collecting data and data quality. Logistics networks arewell-suited for automating this work because drop shipping is a multi-party process and networks operate in real time. Implement a supply chain visibility solution that can model the milestones and has the flexibility to change as more is learned about the drop-ship supply chain. Visibility solutions effectively link the statuses of the lifecycle of an order and provide the basis for reporting. Because establishing real-time visibility into drop ship activities requires data sharing across the parties, choose cloud-based solutions.
Drop shipping provides a compelling way to expand a retailer's, or distributor's, market reach. However, without effective visibility tools in place to capture statuses and provide actionable insight in real time, retailers and distributors are "flying blind" with respect to their supplier's delivery performance impact on the most valuable thing they own - their brand.