Customer Service, Not Cost Savings, Is Top Priority of Logistics Executives

Aug. 1, 2003
Chicago, -- Despite all the attention lavished on cost cutting and ROI, a new survey indicates that logistics executives put customer service first. Thirty-three

Chicago, -- Despite all the attention lavished on cost cutting and ROI, a new survey indicates that logistics executives put customer service first.

Thirty-three percent of the logistics and shipping executives surveyed cited customer service as the most significant reason they have improved or plan to improve their company's parcel shipping system. Following close behind with 23 percent was cost control, according to an independent survey commissioned by ShipNow, Inc.

The survey was taken against a backdrop of optimism. Seventy-nine percent of the respondents felt that their company's sales would increase this year.

This positive frame of mind may explain why 84 percent plan to increase investment in logistics infrastructure.

Regarding priorities, 77 percent of those surveyed said parcel shipping has become a strategic function.

Those planning to upgrade their parcel shipping systems cited the need to handle higher volume as the prime factor, followed closely by the need to share information, improve customer service, and control costs. Other factors were dependability, the ability to handle international shipping, improving the returns process, and integrating manifesting with pick and pack.

Regarding recapture of investment, 33 percent required an ROI of less than 12 months, and 28 percent wanted to see a return within 9 months.

Not surprising, the survey confirmed that IT departments work closely with the operations department in the research and recommendation of parcel shipping systems.

ShipNow's CEO, Michael Kurgan, commenting on parcel shipping's impact on customer care, listed the ability to access shipping information, change shipping instructions, and choose the best way to ship as key customer service issues.

"It starts at order entry," he said, where addresses should be verified by a shipping-related database. He added that superior customer service is reinforced with the creation of business rules that assure convenient delivery.

"There are nuances to parcel shipping," he said. "One of them is rate shipping versus service shipping. Rate shipping is self-explanatory; get the cheapest rate. Service shipping on the other hand not only looks at the cost of shipping a parcel, but also sets parameters that can benefit the customer. For example, does the carrier use the class of service that gets the parcel to the customer at the right time of day?

"In a related example, one of our customers, a major catalog company, automatically upgrades parcels to next-day-air in cities where ground service is not flawless. And this is a company that designed sophisticated business rules to take full advantage of the cost savings associated with the various classes of ground shipping."

Kurgan also said "the assumption that a parcel is going to arrive on time is a customer service mistake. Major parcel carriers have a failure rate of 1 to 1.5 percent regarding on-time delivery. For a company that ships 2,000 parcels a day, this failure rate, means 10 to 30 customers could be disappointed every day.

"One solution is to build in a exception report into the shipping system, which will immediately alert a vendor or customer that the parcel is not going to make it on time. They can then proactively avert a potential problem." Kurgan said.

Additionally, he said, enterprise-class shipping systems can be the key to more user friendly returns/warranty procedures, especially when combined with the Internet.

ShipNow develops enterprise-class manifesting systems for high-volume parcel shippers. For more information visit