The Perils of Perishable Shipping
What did I do to deserve this...?
Shipping perishables seems so simple at first.
I want to lower my shipping rates. So, I make sure I ship everything ground. And I consolidate all that volume with one delivery carrier, so that I get the best discount.
Consolidating volume lowers my rates. So far, so good.
Okay, but now for the perishable part.
Late deliveries are spoiled deliveries. Spoiled deliveries get refunded. And reshipped.
But remember, I consolidated all my volume with one delivery carrier. So I am relying on that carrier to deliver on time.
On any given day, a carrier can be expected to deliver between 85-95% of packages on time.
Which means that, on any given day, I am refunding and reshipping between 5-15% of my sales.
Oh, but it turns out that customers don’t like receiving spoiled product. So even after I refund and reship, I’m probably never seeing that customer again.
So, I’d better find a way to reduce spoilage.
If I put more ice packs in the box, I can keep the box colder for longer. That’s great. Except that now I’m paying for more ice packs. And I’m paying a higher shipping rate, because I’ve made the box heavier.
Maybe I can add another warehouse. Shorter distances. Better on-time delivery. Great.
That does mean I’ll need to ship inventory to one more warehouse every month. Will I have enough volume to pay for another truck every month? I can probably figure that out.
Except, the new warehouse says I’m required to integrate with some system they use, which is different from the systems I use.
So my data from this new warehouse isn’t going to talk to the rest of my data.
And it will take me weeks to integrate with that new system.
Instead of going through that, for my furthest out customers, maybe I can run a refrigerated truck, skip some carrier sort centers, and cut the delivery distance on those shipments.
Running a truck costs a few thousand dollars a week. So I’ll need to make sure I can fill at least one full truck per week. Can I do that? Probably? Maybe?
You know what, I should just ship more air. I’m sure no one will notice when my shipping costs quadruple.
Alright, let’s do the math…
If I lower my costs, my spoilage goes up.
If I lower my spoilage, my costs go up.
Are you telling me it’s impossible to lower costs and spoilage at the same time??
To be continued…