The logistics services industry has taken on a new set of businesses with functions that were largely invisible just a few years ago. Once again, we’re seeing individual entrepreneurs jumping in to fill the last-mile “niche” market that will exceed $45 billion this year according to Statista.com.
When working with graduate and undergraduate students in supply chain management and operations classes, I’m often asked to list the elements that make for a successful small service business. Yes, there needs to be a good idea and an accessible market—such as last-mile delivery.
Inexperienced, aspiring business owners are often looking for a checklist of actions that can aid in getting funds and reduce the risk of failure. Experienced, successful business owners talk about the seven “must have” operational functions.
First, you must have a plan or strategy that keeps you focused on the value-add that you provide. Don’t get distracted into too many operations done in a mediocre way. Just be the best at what you do.
Second, you have to know what your customer expects. If you’re delivering for a shipper or logistics provider, what are their standards and what does the end customer expect? You want to “wow” both parties.
Third, you must measure performance. There are the external metrics like customer satisfaction and on-time service; however, many small businesses fail to do internal metrics like fuel consumption, miles and time per drop off, as well as vehicle service needs and employee productivity. If you don’t measure these, you may suddenly realize that you don’t make any money.
Fourth, know your technology. Understand applications and processes that support your service performance and keep hardware and software—including vehicles—up to date and at peak performance.
Fifth, plan for “wow,” but be ready for “whoops.” Have a process laid out for resolving complaints and correcting errors and omissions. In last-mile, this means authorizing drivers to fix errors where possible and to proactively deal with pending problems.
Sixth, have funds available to get started. This means have enough to get to initial service completion and the creation of cash flow to continue funding the business. It will always be more expensive and take more time to get going than you planned.
Seventh, treat employees, contractors and customers like best friends that are voluntarily working with you. They deserve respect and a positive experience. And, of course, always remember to smile.
While we all know that business operations involve daily firefighting and interacting with outside entities, logistics-based operations require working with people that don’t work directly for us. They are carriers, shippers and customers with whom we do transactions—and positive transactions lead to more business.
We trust people all around the world to do their job correctly so that Chinese-made golf clubs get to us unbroken and on time. The last-mile delivery operator is as important as any link in the chain.
The barriers to entry are generally low, as we’re now seeing deliveries in private cars and leased vans. Sure, it can seem that starting a delivery service is easy, but forgetting any of the seven operational must-do list items will result in constraints on the success of the logistics entrepreneur.
About the Author
Peter Moore is Adjunct Professor of Supply Chain at Georgia College EMBA Program, Program Faculty at the Center for Executive Education at the University of Tennessee, and Adjunct Professor at the University of South Carolina Beaufort. Peter writes from his home in Hilton Head Island, S.C., and can be reached at [email protected]