Improving the efficiency of third party logistics business with cloud telephony

Avinash Shankernarayana September 26, 2016
Improving the efficiency of third party logistics business with cloud telephony

By switching to cloud telephony third party logistics providers can phenomenally boost efficiency while driving down costs.

By switching to cloud telephony third party logistics providers can phenomenally boost efficiency while driving down costs.

Third party logistics industry is growing at a rapid pace in India. According to a report, third party logistics (or 3PL as it's called) industry is expected to touch 48,000 crores by 2019. 

For the players in the logistics industry, time equals money. The 3PL business is a highly competitive one due to low margins and high competition in the market. Improving operational efficiency is one of the key ways to gain competitive advantage.

The story thus far

Many old school logistics companies keep track of their order deliveries the traditional way with a pen and paper (sign off after every delivery). At the end of the day, the delivery agents update the order status summary, which is then collated and passed on to the customer.

Some logistics companies are moving away from the "sign off" system and have a custom app devised for their business. This app runs on a handheld or a mobile phone that is carried by their delivery personnel. When the delivery happens, the delivery personnel update the order status on the app. This data is then collated by the team monitoring the deliveries at the office. While this sounds like a good system on paper, here are some reasons why it is unable to solve all of the issues they face.

Dispute resolution is still a problem: if a customer complains that the delivery agent never showed up, the companies have no way of tracking the issue. Even in complaints of wrong deliveries, it takes the companies 24-48 hours to figure out what went wrong and further time after that to initiate corrective measures. Immediate information retrieval is not possible. Also, updating order status at the end of the shift does not help the companies plan their inventory, which increases inefficiencies in the entire supply chain.

Patchy data connection: For the custom mobile apps to work, the agents need to have a working data connection. Even in Tier 1 cities, the data connection is patchy and not dependable. In Tier 2 and 3 cities, the possibility of a working data connection is slimmer. Lack of data coverage means that the agents will not be able to use the mobile apps to retrieve customer information or confirm deliveries.

Cracks in the manual data updating: There are two issues with getting agents to update the status of the orders manually - no incentives for trudging through the updation, and there is no way to trace any complaints that are registered while the staff are still on the delivery route.

In our conversation with some of the biggest players in this vertical, the points listed below come up as.

Some of the key challenges, players in this vertical face on a daily basis with their operations are lack of clarity on the order delivery status; dispute between the customer and delivery personnel due to lack of communication; high cost of reimbursement; Increase in returns for COD orders.

Cloud telephony to the rescue

With cloud telephony, real-time order tracking can be done without depending on mobile data which can be patchy. This assists significantly in inventory management across the supply chain as well as dispute resolution.

The agent dials into a specially assigned number with an IVR that will assist them in updating the order status. This data can then be synced with the logistics company’s CRM. This way, the order status is updated in real-time using just a simple phone call.

When this solution was implemented, logistics companies reported an 18 percent improvement in on-time delivery, which is a significant improvement.

Also, when order status updation happens in real-time, inventory visibility improves for the customer by 5 percent.

When you use cloud telephony for the communication between your personnel and the customer, all the conversations are recorded. You can lay down processes to ensure that failed deliveries or returns do not happen due to lack of communication.

Customer care complaints and calls related to delivery failures and staff behavior have seen to be reduced by at least 15 percent.

Since all the calls are routed via cloud telephony, the need to reimburse agents for all their calls doesn’t arise. Since all the calls are routed using 2-3 numbers (virtual numbers), calls only to those numbers can be reimbursed.

According to logistics companies, the cost saving due to better visibility of personal calls is ~35 percent. Also, the time to calculate this information and thereby release payments has reduced by 60 percent.

One of the biggest sources of losses for delivery companies is COD orders. The reason for this being twofold - customers refusing to pay for the order and customers not being available to pay for the order. While we can't do much about the former, we can control the latter to a large extent. Due to this reason, delivery companies have a standard operating procedure. The delivery person has to verify that the customer is going to be available during the time of delivery. While this is supposed to be the standard practice, logistics companies had no way to verify its implementation. With cloud telephony, it is easy to track the proof of the calls made to the customer.

This simple fix results in reducing failed COD orders by 30 percent according to some of the leading logistics companies.

For an industry that is so labor intensive, spending time and effort improving operational efficiency makes complete sense. Technology assists 3PL companies in devising standard operating procedures that save them both time and money. And cloud telephony is tailor-made to solve the challenges faced by their ops teams.

The author is Director, Enterprise Sales, Exotel

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