Advertisement

Blog

Same-Day Delivery: Logistics’ New Battleground?

The only time I would ever think about same-day delivery is around the holidays, but I find the idea compelling. Is this salvation for the supply chain?

Same-day delivery is available in specific US cities. Couriers employed by the delivery company pick up inventory from a local warehouse or retail store, and deliver it to customers. The advantage of this model over Kozmo, which shut its doors in 2001, is that the delivery company doesn’t own inventory. It’s how Amazon.com used to be before it started building warehouses. The delivery companies profit from the delivery fee, which ranges from $2 to $10. Some merchants require minimum orders; others don’t.

In the electronics supply chain, many businesses are hubbed together in certain regions (Silicon Valley) and industrial parks (Research Triangle). The most obvious application for same-day delivery would be a manufacturing line that’s idling for lack of a few parts. Same-day delivery could save this company millions of dollars worth of downtime.

The same would be true for engineering. Most designers can get component shipments overnight, but what if you forgot one part, or something is defective? Instead of shelving that design for awhile, you could have your part in an hour.

Purchasing managers could also benefit from same-day shipment. Let’s face it: BOMs are big and confusing. Buyers could save themselves a lot of grief if an incorrect part or omission reaches the factory at the same time as a scheduled delivery.

There is, of course, a problem. Same-day only works if the inventory you want is within a day’s drive of a warehouse, retail store, or component factory. Most manufacturing –- whether it’s components or finished goods -– is scattered around the world. The part you need probably isn’t being manufactured next door.

Distribution warehousing could solve part of the problem: Most distributors have huge regional facilities in all parts of the world. Geographically, same-day shipment is possible in Europe. In China, that could be a problem.

Most of the businesses providing same-day delivery are small, local, startup companies that focus on a city or region. Couriers use their own cars or bikes, and are reimbursed for mileage. It seems to me, however, that this trend won’t go unnoticed by the big carriers for long. In fact, UPS, FedEx and DHL are well-equipped operationally for same-day services — they already own fleets of trucks and planes. UPS even partners with tech companies on the warehousing component parts.

Better yet, maybe the flailing US Postal Service can leapfrog the carriers and provide same-day service in the US. It might be the Post Office’s last hope.

The sticking point, as always, will be cost. I can’t see this system working in the electronics industry without minimum orders. Paying $2 for same-day delivery of a $2 component isn’t cost-effective. There’s also the possibility that same-day services might receive inventory that’s been consigned for another customer. Inventory tracking is already a nightmare, but any company — say, a distributor — that cracks the price/inventory/tracking code could have a big opportunity in same-day.

What do you think?

8 comments on “Same-Day Delivery: Logistics’ New Battleground?

  1. kjosefschmidt
    December 4, 2012

     

    With today's increasingly faster pace of business, combined with compressed development times for new products, it is certainly possible to carve out a business niche for same day delivery for those customers willing to pay top dollar for that that service. Geography plays a role, too, inside the US it is much easier to offer same day delivery when moving west towards time zones that are further behind. One other untapped opportunity is same-day delivery from Asia. Direct flights that leave Asian hubs arrive in the US at the same time or even a few hours earlier than when they left, so same-day delivery for trans-Pacific flights are a possibility.

  2. _hm
    December 4, 2012

    This is also a wonderful news for freelance design consultant. Many a times you get sudden idea or your test needs one or more special parts. You may not like to wait for whole day. Generally one drive to local electroincs parts store. But if you get delivery at your office / home in few hours, that is wonderful news. This is a nich market and has very good potential.

  3. Barbara Jorgensen
    December 5, 2012

    I sort of dismissed this idea at first, but then began to think about it. It has the potential to become one of those thigns that we can't do without once we've tried it. Who would have thought FedEx would have become so crucial to our day-to-day?

  4. prabhakar_deosthali
    December 6, 2012

    In my opinion same day delivery is not a good idea for routine manufacturing processes where everything is well planned ahead of the actual requirements on the shop floor. The cost overheads associated with the same day delivery models can escalate the product cost unnecessarily.

    Same day delivery is good for the designers who normally run a race against time to bring new innovations in the market ahead of their competition.

    Same day delivery is also good for consumer goods delivery to the final customers – a value addition to the company's image and possibly also an additional orders just because of this feature.

  5. Daniel
    December 6, 2012

    Barbara, I think this is already a proven model by most of the online shopping websites. They used to have warehouse at multiple locations and online order will be processed from nearby warehouse to the place intent to delivery. Since they have multiple items from multiple vendors, maintaining warehouse at different locations may not be a big issue. But when it comes for components or devices, customer may place the order once in a while, so warehouse at different locations may not be profitable.

  6. t.alex
    December 6, 2012

    This is in fact a good concept which can be a niche business to target at customers who really need something urgently. I believe one of the top challenge is how to manage inventory effectively. Specifically if there is a good way to predict the parts that customers may need urgently most, we can focus more on those rather than keeping stock of every possible things. Other challenges include keeping the transportation cost down and the carbon footprint low.

  7. Barbara Jorgensen
    December 6, 2012

    My concern is overall the industry will be less diligent about forecasting. I know that when I have safety nets — overnight shipping, faxing or emialing a document   — I wait until the last minute. Obviously, this is more expensive.

  8. Ariella
    December 15, 2012

    @Barbara Of course, it's not cost-effective, but it may still be worth it for people who don't plan ahead to be able to avoid what amounts to a rush charge. 

Leave a Reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.