Delivery Orchestration: Should businesses maintain their own fleet or outsource it?

Last Mile Delivery — it's vitally important for your business to get this right.

Businesses are in a dilemma as to whether to maintain their own delivery fleet or to outsource it? Or could both be done at once?

Let's dive deeper into this conundrum and gain a deeper understanding of how businesses can address it.

Understanding delivery orchestration

?Essentially, orchestration means arranging something carefully in order to achieve a specific goal. Considering this, delivery orchestration means a way to manage deliveries so that you benefit the most from them.?

For example, Dominos & Mcdonald's have both ways of delivering - in-house & outsourced. The arrangement of deliveries is done through third-party logistics services and in-house deliveries.?

Outsourcing and managing in-house deliveries helps a business provide a better customer experience.

When you start with outsourcing your delivery procedures, it becomes much easier to orchestrate them to run automatically.?

The primary purpose of this orchestration is to eliminate inefficiencies in order to gain benefits such as lower costs, faster time to market, and increased visibility.

Let’s understand both aspects in depth.

What exactly is in-house delivery?

It boils down to owning and managing your last-mile delivery technique. Many businesses opt to employ in-house delivery systems, which include having their own delivery crew and fleet of trucks to convey items from a shop or warehouse to customers. This option gives you the ultimate control over the delivery procedure.(can use examples of in-house too).?

Here are some examples of businesses using this:

• Baker Miller & True Grain
• Mutual Trading Company

Businesses frequently use this delivery model when they are unable to collaborate with a dependable service provider or when there is skepticism about the available third-party providers. The in-house last-mile delivery system, like the 3PL alternative, offers advantages and disadvantages.

The Pros and Cons of In-House Delivery

Pros:

• Businesses have greater influence over client engagement and experience.
• Customers can only contact one provider—the seller—which improves customer service and engagement.
• Communication issues are reduced since only the client and the vendor interact.

Cons:

• Purchasing or leasing delivery fleets is expensive.
• Tracking in-house delivery logistics is difficult and time-consuming.
• If drivers fail to deliver acceptable service, the seller's brand suffers.

What is third-party delivery?

Third-party delivery refers to the process of outsourcing delivery logistics to another organization. Sellers who pay couriers like DHL to deliver their items or restaurants that use third-party delivery services like Foodpanda are excellent examples of organizations who use third-party delivery services.

Businesses benefit from having third-party firms manage delivery since someone else is in charge of a variety of logistical chores.?

Here are some examples of businesses using this:

• Restaurants & cafes

The following are the benefits and drawbacks of third-party delivery.

Pros:

• Businesses may concentrate more on their product offers.
• Marketing and advertising expenditures are reduced since many third-party delivery businesses also advertised their partners' product and service offers.
• A less committed staff is necessary.

Cons:

• Businesses lose control over the whole client experience since they must rely on the services offered by their delivery partners.
• Miscommunication and logistical issues may become more prevalent.
• Profitability has declined over time since outsourced services are more expensive than doing them in-house.
• Commissions are charged by third-party services which further reduces the margins. According to TechCrunch, top third-party delivery companies charge between 17% and 40.5% of the total order cost.

Examples for delivery orchestration

Several businesses, especially restaurants, use delivery orchestration by having their own delivery fleets as well as having a presence on third-party delivery services such as DoorDash, GrubHub, etc. The delivery orchestration is used by companies like McDonald's and Dominos in order to manage their bulk orders efficiently and effectively.

How delivery orchestration has helped businesses

When a company has a large volume of orders, delivery orchestration works best. Using their own delivery service alone, an enterprise will find it difficult to deliver a large volume of bulk orders.?

Delivery orchestration has hence helped in -

Reducing costs - Having a hybrid approach and using 3PL as an alternative method of fulfillment can help reduce costs by reducing fuel consumption, vehicle expenses, and salary costs.

Increasing efficiency - Businesses can increase fulfillment efficiency by catering to all types of customers and locations with third-party delivery services.

Rate of fulfillment - Since businesses are using a hybrid approach of having both in-house & 3PL, it allows them to cater to a larger number of orders and tap new geographies.

Conclusion

Although these factors are important, your business's specific needs will ultimately determine the decision between an in-house delivery and delivery orchestration with a third-party delivery provider.?

Third-party solutions frequently favor restaurants that can make up for poor margins with extremely high volumes. Smaller and high-end businesses may benefit more from an internal delivery system. Third-party services may be more beneficial to high-volume fast delivery service businesses.

As businesses rely heavily on third-party aggregators for orders these days, it makes sense to have a third-party delivery service to fulfill orders for them. Yet again, that cannot be the only option since the business won't have access to customer data, resulting in a poor customer experience.

To conclude, bootstrapped businesses might not opt for in-house delivery as the risk associated is quite high. On the other hand, mid-size, funded, to enterprise-level businesses can opt for a hybrid approach.