RIP DIFOT (Part 2)

04 Dec RIP DIFOT (Part 2)

If you are anything like me, then you have become accustomed to online shopping. It is an amazing and simple process. But often it can become a very frustrating experience caused by delays, failed deliveries, and waiting at home all day for a delivery that will only take 2 minutes, only to find a “LEFT CARD” in the letterbox.

DIFOT (Deliver In Full On Time) is used today to measure how well a transport company is performing, and in today’s market, a DAY delivery target is all that is available. Even when opting for a premium delivery service, such as next day, the only additional service you are getting is a shorter lead time. In my previous blog, DIFOT or not?, we looked at DIFOT being the gold standard performance indicator used by transport companies, and generally tied to contractual commitments. But DIFOT is no longer the KPI to bring the transport industry forward. Quite frankly it’s time to lay DIFOT to rest. So what other options are available?

If you take a quick look at Uber, you will realise that they do not measure service delivery in anyway. Rather, they focus on customer satisfaction. And, when service levels drops, they actually charge more, via surge pricing.  One of the things Uber does really well, that enables this kind of behaviour, is keeping customers informed in real time, allowing customers to accept surge pricing or, wait until the surge has passed.

So how would this translate into eCommerce deliveries?  When things get really busy, it is quite possible you will get the dreaded “LEFT CARD”, instructing you to pick up your parcel from the nearest facility now after 3pm! And that is after you stayed at home all day to make sure you were able to sign for your new iPhone XS.

While failed deliveries are frustrating for the receiver, they are extremely costly to the shipper and the transport company. It is in everyone’s interest to reduce failed deliveries. Authority to Leave (ATL) works sometimes, as does Alternative Delivery Point (ADP). But when it really matters, for example high value or urgent items, these outcomes are not acceptable.

How can we change the game? How can eCommerce companies start to improve their customer experience? How can transport providers unlock new revenue streams? How can we get more accurate delivery windows?

@ FourPL we think that a new measure is required for the Transport Industry. The measure must drive increased transparency, more greatly reflect reality, and ensure that the both the receiver and the drivers are better informed. The delivery of timely and accurate information must become as valuable in the Supply Chain, as the physical delivery of goods.

Introducing PiD, Predictable, Informed, Dynamic transport KPI. It is a multi dimensional KPI that looks not just at the delivery of items, but also the sharing of information, and measuring how well a transport provider is able to respond to changes in the delivery.

So how does it work?

Predictable:

This is basically today’s DIFOT. It is a measure of how often a transport provider is able to delivery on time and in full, based on the agreed service levels. Carriers are then measured on how what % of deliveries, were made within a given threshold. More often than not, this is measured in days. However, in the eCommerce world, HOUR commitments will be needed. This will become more difficult if we do not start to measure DIFOT in conjunction with “Informed”.

 Informed:

This is measuring how well the customer/receiver was communicated with, particularly when things are not going as planned. The transportation provider proactively informs participants on the status of a delivery, in near-real time, and alert of any delays; providing updated ETA’s (Estimated Time of Arrival) when unexpected events occur. This is providing receivers and customers relevant information at the right time. From, “we are running 30 minutes late”, or, “we are a little ahead of schedule today”, through to, “Due to a vehicle breakdown, we will not be able to make your delivery today”.

By measuring Predictability, and Informed together, transport operations can begin to offer tighter delivery windows. In doing so, the Predictable (DIFOT) can drop, however, well informed participants will apply a wider Delivery target.

Dynamic:

This is a measure of how well a transport provider is able to respond to changes in the delivery request. The customer, or in many cases the receiver, can update the delivery options up until the point of delivery. The receiver and the driver performing a delivery can interact seamlessly, to ensure deliveries are made successfully on the first attempt as efficiently as possible. The measure of delivery performance here will be against a new dynamic delivery date set by the receiver. A good score here demonstrates a transport operations ability to respond to changing demands, and still deliver on first attempt.

Do you see this new way of measuring transport as providing your customers value? As a service provider, what challenges do you see in moving to a such KPI’s? Join the discussion below.

Next week take a deep dive into this new KPI and discuss how it can begin delivering better transport outcomes for operations, customers and receivers.

If you missed our first post, Part 1 we looked at DIFOT and whether it is still a gold standard performance indicator given changing market dynamics? We asked some thought provoking questions.

FourPL Contact for more information: contactus@fourpl.com.au

About the Author:About the Author: James Foran is FourPL’s “Transportation Guru” and is well known as a thought leader in the Industry. James’s expertise is helping business stakeholders understand technology capabilities and how to get the most out of their current technology, or, help develop a strategy to introduce new technology into their business.