Shared user platform the way to go?
12 February 2018
Shared logistics can help retailers scale deliveries while managing costs, argues Paul Tyson, commercial director at ArrowXL.
Due to challenging market conditions, it is expected that retailers will face continuing pressure on margins throughout the year, while having to meet the rising expectations of the increasingly demanding consumer. As a result, there will be a requirement to cut costs even further while maintaining and improving the overall customer experience.
Fortunately there are a number of various outsourcing opportunities available for retailers to take advantage of in a bid to reduce their overheads while gaining access to extensive resources, specialist knowledge and innovative software – one of which being the adoption of a shared user delivery platform.
Historically, retailers operated their own expensive transport and logistics networks - for both one-person (parcels) and two-person deliveries (furniture and appliances) - because they didn't want to lose control of their delivery function. By keeping this in-house, retailers were guaranteed increased visibility and transparency over operational performance and levels of service. For those organisations with extensive capital, it was thought to be the safer choice.
However, the development of new technology has now made it easier to integrate and communicate with suppliers, as well as to monitor and analyse performance. As a result, we are now seeing more retailers contemplating a switch to a shared user platform, where deliveries are managed and fulfilled by a logistics partner. This approach, which sees the supplier carry numerous products from different retailers within the same trailer to maximise efficiency, offers a wide range of benefits including substantial cost savings. It is particularly attractive to those retailers selling larger items that require a specialist two-person delivery solution, which is more expensive to operate than a standard courier network delivering smaller, lightweight parcels.
By switching to a shared user platform, such as that offered at ArrowXL for two-person deliveries, retailers will be able to scale up and down operations upon demand. A historic problem for those retailers operating their own logistics networks has been ensuring they have the necessary capacity to handle extra volumes associated with peak trading periods, whilst maintaining a profitable fleet during other times of the year. Typically, retailers would require high levels of capital outlay to ensure their fleets could cope with growing volumes being driven by peaks such as Black Friday, only to see significant parts of this expensive network lay dormant during quieter periods.
During busy periods forecasting calls between our operational teams and our clients will take place several times a day, where we agree the number of trailers required for the anticipated volumes. Due to constant investment in own our fleet and infrastructure we can also typically provide around 10% flexibility in these volumes, which provides added peace of mind for our clients at busy times of year.
This approach will also help those retailers whose peak seasons constantly vary. For instance, the key trading period for companies selling barbecues and garden furniture will fall during the Easter weekend, which changes each year while being subject to the weather. As long as regular forecasting and effective communication remains in place, retailers utilising a shared user network will benefit from a more efficient operation.
Another key consideration for retailers is the savings they will make on their workforce.
Arrow has also invested in the AskAxl application. It provides customers with visual tracking of the delivery vehicle while dynamically reducing the ETA window from two hours to just 30 minutes. To create a dedicated solution of this kind in-house would take significant time and resources.
Finally, a shared user platform is a solution for companies that are growing at a quick rate, but remain unsure as to when they will reach the milestone when investing in their own fleet becomes a viable option.
Utilising a shared user platform allows a retailer to mitigate risk when planning for the future, which will only help to navigate the challenging economic landscape.