Schlagwort-Archive: Infrastructure

The looming end of independent logistics partners

Corona has made the public aware of the economy’s dependence on uninterrupted supply chains. In the current state of globalization, deliverables are coming from where they are cheapest. Manufacturing and distribution require complex supply routes – for raw materials, components, end products, and even services. As with all networks, the “last mile” is the hardest part, often outsourced to external logistics partners, such as DHL, Hermes, UPS, DPD, GLS, FedEx/TNT, and, if necessary, small biz. B2C, in particular, depends on the delivery networks, literally every household.

In 2020, each home in Germany received an average of 63 shipments. It means more than one delivery per week. Every shipment must be taken manually by a logistics partner on the “last meters” and carried more or less far. The delivery companies work with their hubs from where they drive with their vehicles within the day to the addressees. Increasingly, drivers are skipping time-consuming stations. Can it go on like this?

  • Too many
    The distribution of shipments among several logistics partners is inconvenient for the shippers and the recipients. Each company has its approach to steer drivers, vehicles, procedures, and delivery points in the best possible way. As a result, many vehicles deliver to one customer per day. Each driver has its way of leaving packages and documenting acceptance – drivers are not afraid to sign on behalf of the customer or fill their systems with false status messages. Digitization indeed creates timely transparency. Still, misuse by drivers destroys this advantage (example message: Unfortunately, acceptance of your parcel has been refused. Therefore, your package will be returned to the sender.).
  • Automated non-contact
    The quickest way to resolve a problem is for the addressees to contact the deliverer quickly. The assumption that recipients could contact the deliverer with just one click is one of the urban legends of the Internet age. Although providers offer online forms and a well-hidden telephone number to enable contact. All the customer gets is a well-worded standard message sent immediately to confirm receipt. However, it is automated feedback without any human participation. The spam folder in which the requests disappear cannot be traced. A phone call does not help either. Modern telephone systems provide lengthy verbal menus that need to be answered, only to end up waiting on hold until an employee picks and immediately hangs up. The whole thing now starts all over again. Remarkable is in this context DPD, who announces the upcoming waiting times every few minutes – 5 minutes in the beginning, then 14 minutes, then 1 minute, then 11 minutes, and so on. The end of the story is that the installed touchpoints are no longer contact points, but walls keep the customer away.
  • Inappropriate infrastructure
    Undoubtedly, it is an advantage for the consumer society that people can order goods conveniently, from their sofa, and receive them in principle at the front door. ONE logistics partner would be much more sustainable – fewer appointments, less congestion, fewer differences, and more reliable delivery. As long as the recipients live in the countryside and have sufficient parking spaces in front of the house, stopping should not be critical – as long as it is delivered at all to the last, uneconomic corner. The risks and walking distances increase dramatically in inner cities since drivers are now consistently penalized for stopping in bike lanes or second row parking. It is even worse in traffic-congested centers. Since drivers have to distribute a lot of parcels in a very short time to get to their hourly wage, it can quickly happen that drivers simply do not deliver to complicated addresses because their standard run is jeopardized. Drivers’ inhibitions are already so low that in complex cases, they decide not to deliver – “I don’t have time to deliver there.”
  • Precarious employment
    Delivery companies have few alternatives to spare money – first with salaries and then with vehicles. Permanent employees with a reasonable minimum wage are the most expensive way to provide a delivery network. Salaries range from up to 22% more than average, to even 10% less than the average (which explains why some parcels do not arrive reliably). The most favorable alternative for the parcel, express, and courier services is self-employed small biz owners. Here, the delivery companies benefit from the self-exploitation of the individual entrepreneurs. As a result, the black sheep drivers destroy the reputation of the delivery company at the touchpoint to the customer. With the current remuneration, it is understandable that the drivers take advantage of existing gaps. The dispatched companies support these relationships by placing orders with the cheapest suppliers.

Bottom line: The brave new world of online commerce thrives on the glamour of websites. Easy navigation and ALWAYS the best prices encourage customers to buy. However, the backbone of it all is not the online presentation but the reliable supply chain. With multiple disparate service providers, sealing-off through automated touchpoints, difficult delivery infrastructure, and precarious workforce, this biz model is at risk. The pendulum of online commerce eventually reaches its maximum amplitude. When the pendulum swings back, the local shops will win back customers for lucrative goods. In the meantime, the big companies will follow Amazon’s lead and establish their internal delivery management, making drivers a committed part of the biz. Companies like DPD will disappear in the medium term. The black sheep make the most significant contribution to the impending end of independent logistics partners of drivers who optimize themselves and do not act in the interests of their company.

Public Relations follows the finalized product

In the Anglo-American world, venturesome investors endow start-ups. These founders develop their preparatory building blocks as good as it gets: the biz idea, model, and plan. The earlier investors get involved, the greater their RoI. For receiving funding, the start-ups must convince the financiers of their offer – without practical proof. The founders anticipate the expected biz development for early support, even though they do not have a finished product yet.

The possible funders should be convinced as early as possible to improve the preparation of the company. However, a vague idea is not enough, as many imponderables lead to exaggerated promises and expectations. Offerors need a conservative estimate of what, how much, in which ways, and to whom they can sell. Marketing is done for stakeholders (funders, partners, suppliers, professionals, and the public) once the following basics are described.

  • Solvent customers
    There is no deal without customers who are willing and able to pay. On the one hand, depending on the price range of the offer, those, who cannot afford it, are excluded. Start-ups cannot pay for an elaborate consultancy without respective funding. On the other hand, those, who do not get enough exclusivity, are also excluded even with a high price. In the case of luxury goods, the additional benefit of the extraordinary is more critical to specific clientele than the practical usability that is presumed anyway.
    Ensure that you achieve the required turnover with your clientele.
  • Shippable deliverables
    The deliverables, such as goods and services or a mix of both, should be prepared with the customers in mind. This starts with the design of the offering (including usage, manufacturability, quality criteria), goes through the various manuals, and ends with packaging (including sales, outer, and transportation packaging).
    Ensure that your offerings are thoughtful enough to deliver what you promise to customers.
  • Resilient workflows
    The more extensive your offering, the more diverse the required workflows are. It doesn’t matter whether and who performs them – internally or externally. In any case, you need the necessary processes (i.e., development, manufacturing, sales, after-sales, and supporting ones, such as purchasing, logistics, HR, IT). Goods are more dependent on smooth procedures than attendances since they depend on the commitment of the employees. With training and a supporting back office, you standardize your offering and solve most aspects on the fly.
    Ensure that your procedures are described in a printable way so that everyone is working on the same basis.
  • Capable employees
    The “simple” jobs are disappearing or will be taken over by “intelligent” machines. This means that the modern times of Charlie Chaplin are over. In the future, people will represent your company at the junctures to internals (between different departments) and externals (to customers, partners, and suppliers). In doing so, you will make the decisions that were reserved for the obsolete, higher levels. This requires sufficient knowledge and capabilities and, above all, soft skills.
    Ensure that your employees AND YOU are trained so that they can master the internal and external interfaces.
  • An intact infrastructure
    The required infrastructure does not start at the borders of your site. The external network connections (i.e., traffic routes, energy supplies, and telecom networks) must match and already be considered when choosing a location. Today, a product developer cannot work with 3D programs if there is no available broadband connection. Within your company, you need appropriate routes, such as inbound/outbound logistics, and storage space. Not to mention the digitization of the tasks. Your entire IT is affected (including internal networks, cross-functional systems, barrier-free access, also for external partners, and your web presence). This is true for a corporation and the small bakery with its cash register, ordering system, etc.
    Ensure that you have tested the relevant building blocks before the launch, that everything is ready for action, and the employees know their roles.
  • An operant public image
    Only now is the right moment to supply the advertising machine with content. Offers are priced based on described customer groups. The flows are harmonized. Employees can represent the company to the outside world. Your infrastructure works. Now, you can make achievable promises.
    Ensure that you have a simple, unified public image, without over- or understatements.
  • Resilient perseverance
    The most important comes at the end. The new biz is not yet at flight altitude when it starts. Revenues are not yet as high as targeted. The employees have not yet been trained. Many things are not working as desired. At this moment, everyone must work hard to improve the flaws. This requires an appropriate team spirit, servant leadership, and a strong commitment from everyone.
    Ensure that the employees’ commitment is maintained despite the difficulties during the ramp-up, and that errors are readjusted promptly.

Bottom line: The view of the market crier shows us a person who has already left all the preparatory measures behind him. The products are ready for sale, and he knows what to do. His cash register consists of a purse full of change. The mobile sales table can be set up anywhere – as long as he has registered as a flying salesman. All the components are in place when his stand opens. Hopefully, bystanders will be able to pay his prices. From now on, he can entice his customers with his external presentation because public relations follows the finalized product.