Delivery failures jam up supply chains

Undeliverable as Addressed (UAA) are a supply chain professional's worst nightmare. It diminishes service levels and negatively impacts profit margins. In Asia, where the increased domestic spending of China has lead to a subsequent increase in distribution across the region, the importance of finding a way to combat UAA items is paramount in ensuring efficiency across the region. First-time delivery failures caused by UAA items are extremely costly because most errors are detected downstream in the distribution process - often when they've already left on a plane, ship or truck - where they become much more expensive to rectify.

In recent years, technology has played a key role in revolutionising the efficiency of postal and parcel deliveries across Asia. Adoption of automated identification and data capture technologies is now widespread among mail and express operators, as well as the logistics providers behind the scenes. The question now becomes whether technology can do anything more to improve the operational efficiency, quality of service and profitability of delivery services to continue to provide meaningful productivity gains to the region.

Many courier and delivery companies across Asia have systems that use address verification, but these only work if the address is entered and verified prior to the pickup. However, UAA items regularly rise from mistakes in the processing before it gets onto the plane or ship, or in surprise pickups in road transport. This type of mistake occurs frequently and as a result parcels find their way into the back of the transport without the address being validated in advance. Unfortunately, allowing items past the point of collection that have not been validated causes many of the UAA issues that operators face. Subsequently, resolving the problem becomes more difficult, time-consuming and costly to correct. The situation gets worse the further items get prior to validation, whether that is to the distribution hub, when an attempted delivery fails, or after one or more return visits back to base.

Industry research suggests a large national European parcel operator can easily face a cost of as much as €100 million per year (US$126 million) for delivery re-attempts, of which around 10% may be attributable to misroutes. Delivery and supply chain organisations across the world are looking for cost-efficient, accurate ways to combat this problem and with China's increased domestic spend on shipping goods, the Asian supply chain sector needs to quickly find and implement strategies to help to ensure that bottom line results are not drastically affected.

For supply chain professionals, estimating the total cost to an organisation of dealing with UAAs is difficult to do precisely. Manually readdressing items takes time and uses up valuable resource. Not all address errors are picked up on the first visit to the distribution hub. When they are not, these items can become very costly and labour intensive to resolve. In determining the financial impact of UAAs, it's important to include the cost of all the additional logistics in shipping or rerouting items to and fro. If items are actually delivered to the wrong address and the recipient does not contact the vendor, then the cost of errors can be extremely high, especially for high value goods.

Also consider the cost of missing service level agreements with the customer. Quality of service costs more than money, as poor service erodes customer satisfaction. That makes it difficult to put an exact value on, but if service level agreements are not adhered to, customers move their business elsewhere. Shippers often hold carriers and postal operators entirely responsible for the handling UAA errors, regardless of their origin. As consumers and businesses source more and more products via the internet, mail and express operators are increasingly held to account in maintaining service level agreements and making sure they do is essential in a competitive environment. Failing to identify and eliminate issues that can hamper the first time deliverability of any item shipped will result in disappointed customers and additional service costs, not to mention lost future revenue opportunities resulting from a dissatisfied customer experience.

What cargo professionals are increasingly turning to is a comprehensive bar code and RFID solution which allows for accurate identification and efficient rectification of mistakes along the line. While manual data entry can be time consuming and error prone, especially when it is done under the pressure of a fast -paced field process like cargo packing and mail distribution. Automated data entry is the preferred method of data introduction into any workflow process, both because it engenders error-free entry and also due to the time efficiencies it offers over manual entry.

Another potential solution would be to use a mobile version of the proven address and verification used in distribution  operations to eliminate errors and drastically reduces transaction times. Unlike manual key entry and paper-based processes (which have severe limitations including a low accuracy percentage), a mobile verification solution could automate the extraction, verification and cleansing of postal addresses at the collection point, eliminating the issues before they enter the network.

The uses of mobile technology aren't limited simply to address verification either, major mail services around the world including both Canada and England use Intermec products for a variety of purposes from signature collection to delivery confirmations.

Major mail services can deliver tens of millions of items a day to nearly as many addresses.

With the advent of new mobile computing technologies like Intermec's CS40 - the first rugged mobile computer with the size and styling of a smart phone - mail services around the world will be offered greater enhancements to existing paper based systems. Mobile computing solutions like Intermec's CS40, can enhance accuracy of delivery and offer tangible worker efficiency gains through automating common worker operations like collecting signatures for tracked products, including ‘Special Delivery' and ‘Recorded Signed For' services. Under the automated systems, the signature is collected on the handheld device which is then sent via GPRS wireless technology to enable sending customers to confirm delivery, and view the signature, within 15 minutes.

For most supply chain, mail and express operators, the time saving of automated data entry alone offers substantial operational cost savings. It may only be a question of reducing  a two minute paper-based process down to a fraction of the time on an automated process, but eliminating seconds on every pick-up, every day, for every worker can easily add up to a significant saving in operational time and cost. Add to this, the ability to eliminate undeliverable address errors at the point of collection and the payback will multiply further. Supply chain organisations and mail operators who are forward looking in terms of their uses of technology will reap significant competitive benefits over their rivals and provide the best opportunities for a successful future.

Penny Chai, Intermec Asia-Pacific's channel & marketing director

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