Measuring and improving your delivery performance is not an easy task. There are countless elements that impact the ability to deliver on time. Improving these processes starts by carefully analyzing your industry sector, the types of items you deliver, and your customer expectations. If you want to become an industry leader, you need a crystal clear view of all these elements so you can act on time.
In this article, we present the 7 best ways to measure and improve your Delivery Process. These 7 measures are derived after working with first-class companies in a wide variety of industries such as Uber, Siemens, ABB, BMW, Coca Cola, among many more, which they use to build trust in their customers by consistently meeting and exceeding their expectations.
The first step to become a delivery performance master is to know what your targets are and where to look for them. The main indicator for delivery performance is On Time Delivery.
You need to understand your customers so you can set clear measures, and more importantly, categories to qualify your results. With Celonis, it is possible to measure your On Time Delivery, using the calculation that adapts to your customer needs and your company strategy.
Uber, for example, sets clear targets from the beginning of the process by providing an Expected Pick Up Time and Expected Time of Arrival. In both cases, being early or late could affect your customer plans. The delivery window is quite narrow, as a couple of minutes is already considered to be out of the “On Time” window.
Let's imagine the arrival time of the Uber to the destination was late. To understand the problem, we can review the first part of the process - picking up the passenger. The problem could be in this portion of the process, as maybe the customer was not in the right place or maybe the driver took too long to react.
Perhaps your estimations were too optimistic? When the pick up time was on time, we can analyze the travelling part. A myriad of reasons are possible causes, for example unexpected traffic, navigation not able to suggest the best possible route or a wrong travelling time estimations. By splitting the whole ride in two parts, more specific metrics and issues can be allocated to the specific part of the trip.
Process Mining technology easily allows you to break your process into sub-processes. By doing it, you are better equipped to handle the complexity created by multiple departments, thousands of customers and millions of cases. You can easily spot in which part you are losing time, empowering you to identify root causes and work on solutions.
Right behind late deliveries, the most influential topic on customer satisfaction is the “Change of Delivery Dates”. When you change you reschedule all the time, customers will lose trust in you and your capabilities.
Imagine you are using Uber and you get constant changes in the pick up time to an earlier or a later date. If these changes happen constantly, you will lose trust in the service.
In general, change notes are bad news, so ask yourself these questions when improving your delivery performance processes.
Are you aware of the amount of changes on your deliveries?
Do you know your average amount of changes per delivery?
Are these changes postponing the delivery or bringing it forward?
Celonis is able to measure not only the amount of changes you communicate to your customers, but also identifies root causes that are causing these changes.
Your “Delivery Capability” is defined as the ability to meet customer expectations. You can analyze it by comparing your customers’ requested delivery dates against your capabilities. By doing this, you can review if you are able to meet the market expectations. The Delivery Performance Solution by Celonis provides this functionality, in addition to potential adjustments to be more precise.
For example, in the ridesharing industry, customer expectations are quite high. For Uber to meet these expectations, they need to offer a service within minutes—otherwise, it is easy for clients to find a taxi instead. This of course varies, as in some industries a delivery within a few weeks is acceptable, nevertheless, customer expectations are increasing as a consequence improvements in the delivery process from tier one corporations.
“Reaction Time” is related to your ability to estimate Delivery Dates precisely, so you can make the right commitments to your customers. There are many ways you can improve your reaction time to build trust with your customers.
For example, Uber achieves a fast Reaction Time by providing a massive float of partners. As a result, they have enough resources to react to customers demands. In their case, the Reaction Time is calculated by comparing the distance of clients and the available drivers. Uber has developed algorithms to match drivers to clients in an efficient way.
This leads to the question, how good is your Reaction Time?
How can you guarantee they are on point?
What factors are you taking into account for their calculations?
What variables can be improved for a faster reaction?
Celonis makes it easy to measure and improve your Reaction Time by looking at your “Lead Times”. The Lead Time can be defined as the time period needed to provide a certain material or service. They can be measured in different ways and most of the time the calculation is made automatically by your ERP system. To have a state of the art Delivery Performance, your Lead Times need to be on point as this is the first step to becoming more proactive and able to respond on short notice.
“Incoterms” were created to have an international understanding regarding responsibilities, costs, and risks of transporting and delivering goods. You should keep a close eye on your Incoterm changes, as they affect your Delivery Performance in multiple ways.
Imagine the following situation. You are with a group of six people at rush hour. You order an UberXL and you agree to pay three times more the normal tariff because Uber is heavily demanded at that time. A few minutes before your pick up time, there is a change in your agreed terms. Your selection got changed to a normal UberX, therefore your group does not fit anymore.
Also, you will have to pay five times more than a normal tariff instead of three. As a customer, you probably are not too happy. This example illustrates the same effect that changes in “Incoterms“ can produce to organizations with Intercontinental delivery operations.
Celonis is able to track Incoterm changes to help you avoid unnecessary risk, extra cost, manual effort and delays.
Delivery Predictions based on Machine Learning algorithms can put you ahead of the competition and improve your Delivery Performance at a great scale. Uber has created multiple algorithms to improve their delivery performance.
For instance, their routing algorithms help the drivers decide the most effective route to reach their destination, directly impacting their On Time Delivery. They are also able to dynamically detect changes on route caused by traffic, accidents or other factors. To have top class delivery performance, you need to take advantage of Machine Learning techniques.
At Celonis, we have created prediction models by looking at the deliveries history. Cases where On Time Delivery is at risk can be detected by using dates and categories such as “Confirmed Date”, “Due Date”, “Material Type”, “Production Plant”, “Country” and many more. Furthermore, you can predict future delays, using seasonality factors to make decisions on resources and have clearer forecasts.
In the Celonis App Store, we have created solutions to better measure and improve your delivery performance following the previous 7 insights. With this package, you will be able to measure your on time delivery, analyze each part of the process, avoid changes that cause delays, meet your customer expectations, improve your reaction time, reduce manual work related to Incoterms and take advantage of Machine Learning to predict future delays. Besides advance dashboards, the package includes skills and objectives to enable the Action Engine and the Transformation Center respectively.
If you would like to get the Delivery Performance Solution by Celonis you can contact us at firstname.lastname@example.org
By Hugo Santana
Hugo joined Celonis after completing his Masters in Data Science at the Technical University of Eindhoven. His passion is to realize business value from Process Mining Technology. Currently, he develops customer solutions in the Celonis App Store, specializing in Sales & Fulfillment processes.