Customer Service Vs Cost – Who Wins and Who Loses?

8th February 2016

Logistics BusinessCustomer Service Vs Cost – Who Wins and Who Loses?

An extract from the blog of Logistics Business IT Awards judge, Emile Naus:

“Yesterday’s Channel 4 documentary ‘Dispatches: Where’s My Missing Mail’ took the spotlight to the home delivery industry. Using undercover film in one of the Yodel depots, plus interviews with drivers and warehouse operators, it made for uncomfortable viewing for anyone in the industry.

Throwing parcels on conveyors, into cages and vehicles, it all pointed to a total lack of care, an absence of management and a disregard for their direct (the retailer ) and their ultimate customer (the consumer).

But the program also touched on a fundamental issue. We live in a world where we expect ‘free’ delivery, and fast. It reminded me of an old engineering sign:

  • “Fast” ~ “Reliable” ~ “Cheap” 


Pick any two


Retailers have been educating customers to expect fast (next day is becoming the norm) and cheap (free is the expectation) deliveries. Based on this logic, it simply won’t be reliable.

The home delivery industry is under significant cost pressure from its customers – retailers. Cost for a standard delivery is between £2 and £3 per delivery. For that, we expect the parcel to be picked up from a retailer’s distribution centre, transported to a hub, sorted, transported to a branch, put on a delivery vehicle and delivered to the consumer’s door; and often more than that.

Volumes fluctuate massively, with Black Friday the obvious example, but promotions are a standard way to drive sales without regard for the operational effects. The carriers are simply expected to be able to flex their capacity.

As a consequence, Home Delivery businesses have been ruthless about cutting costs. The program highlights staff being taken on for short term contracts. It does not give any opportunity to develop the team and create a sense of pride in what they are doing – they are simply turning up for work for a few weeks and then moving on. This lack of consistency then drives through to the management levels. The example highlighted also use of self-employed delivery drivers. Paying a small fee (£0.60 per delivery was the amount mentioned) has removed the risk to the business, but it is substantially lower than the standard industry pay. It makes it impossible to invest in vehicles, education and systems.

There is no excuse for the events that Dispatches highlighted. But it is time to deal with the root cause: if we don’t pay for service, we should not be surprised we don’t get it.”