Before we dive into the specifics, though, let’s back up a second. The delivery phase of supply chain management is only one piece of your overall supply chain. Although there are a number of models floating around, we like the simplicity of the Supply Chain Council’s supply chain operations reference model (SCOR), which has also become an industry standard. It divides supply chain management into the following parts:
Now that you have some context on the role of the delivery phase, let’s focus in on that fourth aspect of supply chain management. We’ll start by examining exactly what the delivery phase involves.
What Happens in the “Deliver” Phase of Your Supply Chain?
After you’ve planned out all the moving parts of your supply chain, sourced the materials and components you’ll need, and assembled a finished product, you’ll need to move that product into the hands of your customers. Depending on your business model, those customers may be the end consumers of your product or they may be a retailer or reseller who will then offer your goods to their customers. The delivery phase encompasses the journey your items take from your warehouse all the way through the receipt of payment for those items.
During the delivery phase, you’ll encounter a number of different aspects that you’ll need to consider carefully, including:
- Distribution & Transportation: Ideally, in the planning phase, you already decided how to distribute your product—direct to consumer, through retailers, etc. In the delivery phase, you’ll need to monitor whether the plan you created on paper is proving effective in the real world.
- Routing Efficiencies: Additionally, as your product makes its way through those chosen channels, you’ll want to ask how you can optimize its movement. Can you create efficiencies within routing in order to keep costs down?
- Customer Expectations: You’ll also need to consider whether your distribution plan is meeting customer expectations. For example, are customers clamoring for BOPIS options that you don’t yet offer? Or are they shopping around for free shipping? Whether you’re selling directly to consumers or through other channels, you’ll need to keep a pulse on whether your customers are happy with the way they’re receiving your goods.
- Customer Satisfaction: Alternatively, maybe you have the right options in place, but you’re simply not executing consistently. Given all the disruptions of 2020’s COVID-19 pandemic, managing customer expectations in volatile logistics markets has become a hot-button issue within the delivery phase.
- Last Mile Delivery: Along these same lines, you’ll also need to keep a sharp eye on what can often be the most expensive leg of your product’s journey. How can you balance costs with speed to stay on budget and keep your customers happy?
- Product Life Cycles: All of your products will go through their own individual life cycles. You’ll need to manage the full roster through their individual journeys to make sure you have enough stock to meet demand for growth products while minimizing dead stock for products in decline.
- Data Transparency: During the delivery phase, you’ll be working with a number of partners, which may include retailers, distribution centers, carriers, and consumers. How will you get visibility into where your products are at any given time? How will you share this visibility among your partners to encourage collaboration? And, finally, how will you provide this all-important visibility to your customers, who are increasingly demanding it?
- Transportation Management Systems: Once you have access to all the data you need, how will you easily and affectively aggregate it? Will you use it within your inventory management system or will you invest in a more robust Transportation Management System?
- Emerging Technology: Lastly, how can you embrace the newest advances to create efficiencies? Should you incorporate IoT and blockchain technology to assist with traceability and ensure the integrity of your product from the time it leaves your warehouse until it arrives in the hands of your customer?
These considerations are just the start. Your organization will have its own unique matters and logistics to ponder, so consider these a jumping-off point. As you get deeper into the delivery phase of your supply chain, you’ll uncover your own set of challenges, consumer expectations, and standards that you’ll want to meet.
Additionally, if you’re operating in the Hawaiian Islands, as many of our customers do, you’ll encounter your own set of issues unique to running a business in the middle of the Pacific Ocean.
Why the Delivery Phase Is So Vital for Hawaii-Based Businesses
Hawaii-based businesses have their own distinct considerations when it comes to the delivery phase of their supply chains, namely:
1. How Many Islands Will You Serve? If you’re based on Oahu, will you be selling only to Oahu residents? Or will you be selling to customers throughout the state—or even ones on the mainland? Obviously, intra-island logistics are simpler. When you move goods off-island, you’re adding in more lead time, more modes of transportation, and more partners. However, doing so can significantly expand your customer base, especially if you’re on a neighbor island like the Big Island, Maui, or Kauai.
You’ll need to consider your model carefully to make the right decision for your business. (And, when it comes to receiving goods and supplies in Hawaii, you might want to consider direct service to each Hawaiian Island, rather than the hub-and-spoke model with Oahu at the hub.)
2. How Will You Manage Delivery Times and Expectations? As you well know, moving items between Hawaii and the mainland—and even around the islands—can take time, sometimes more than you’d like. When it comes to moving freight, you’re always balancing time and speed. You can move goods faster with modes like air freight, but they’ll cost significantly more than ocean freight. In addition to managing your freight mix and your budget, you’ll also need to meet (and manage) expectations for customers, some of whom might understand extended lead times and some of whom might not.
3. Maintaining Transparency Across Modes – Once you decide on the right mix of freight modes, you’ll need to figure out how to capture and manage the delivery data from your partners so that 1) you have transparency into the movement of your goods and, ideally, 2) your customers do, too.
In the Hawaiian Islands, this can be particularly difficult. Even logistics giant XPO, who manages delivery for the fitness company Peloton in Hawaii, struggles to offer meaningful delivery data to Peloton’s customers and delivery partners in the islands. Often, consumers receive confusing “delivery confirmation” communications that simply mean their bike has arrived at their island’s port. However, the final, white-glove delivery service may actually be more than a week away.
If you can establish full data transparency internally and externally for your customers, you’ll continue to rise to the top of their list of preferred providers.
4. Responding to Changing Demand – Finally, you’ll also need to strategize carefully around responding to fluctuations in customer demand. Because of Hawaii’s isolated position in the Pacific, it can take longer to mobilize additional stock to meet a surge in demand. On the opposite side, you don’t want to get stuck with dead stock that’s taking up expensive on-island storage space. Working with a freight forwarder can help you access multiple modes of transportation and multiple carriers in order to keep up with consumer demand.
Plan for Delivery Success
The delivery phase of your supply chain is where all of your organization’s hard work bears fruit. That product that you’ve concepted so carefully finally lands in the hands of the customers you’re hoping to wow. By taking the time to get everything right within this phase, you’ll pave the way for the highest levels of customer satisfaction. Additionally, you’ll set the stage for repeat business that keeps your company flourishing long into the future.