5 Important Reasons Lumber Dealers Should Consider Outsourcing Delivery

Written By Brad Rollo

The days of handling all your deliveries in-house may soon be coming to an end. From fleet maintenance to staffing, in-house delivery can be complicated, confusing, and overwhelming. Not to mention surprisingly expensive.

Growing expenses can be a concern for lumber dealers — especially when direct competitors are reducing costs and streamlining processes. One tactic some smart lumber dealers are using to manage costs and improve service levels is outsourcing some (or all) of their deliveries to a trusted partner.

gofor drivers

With so many expenses and hassles associated with operating an in-house delivery service, including employee training, payroll, vehicle upkeep, insurance, and registration, it’s time to take a careful look at the opportunities that a delivery partner can offer.

The Importance of Efficient Delivery for Lumber Dealers

While offering delivery was once a competitive advantage, it has become a standard ingredient for success. Simply offering delivery is no longer a differentiator; however, offering reliable, predictable, and fast delivery can be. Unfortunately, internally maintaining a high-quality delivery experience when juggling multiple unpredictable hot run deliveries can add to your overhead when profit margins are already slim.

The obvious solution is to outsource some (or all) of your deliveries. But many suppliers are understandably concerned about losing control of the process. After all, it took you a long time to build that service and earn your customers’ trust. Why risk it with an outsourced partner?

This risk has many dealers accepting rising delivery costs as just “the cost of doing business” — but it doesn’t have to be this way. When you choose the right delivery partner, it can actually help improve your overall relationship with your customers.

The fact is, when your customers run out of product, they often need it immediately. If you can’t deliver because your truck is already out on a run, your driver is sick, or your truck broke down, it damages your relationships and hurts your once reliable reputation.

The solution is a last mile delivery partner that is a true partner that can act as an extension to your brand — one that cares about your customers’ needs, has experience delivering to job sites, offers multiple delivery speeds (e.g., 3-hour express, same day and scheduled) and can deliver every time. That’s what your customers expect and deserve.

A last mile delivery partner can also reduce your operating costs while providing a high-quality delivery experience that meets or exceeds your own and gives you valuable insights into your business’s fulfillment requirements. 

5 Reasons Why More Lumber Dealers Are Using Outsourced Delivery Partners

1. Lower Costs

How much does it currently cost you to maintain your truck, keep it fueled up, registered, insured, and on standby for hot runs? How much does it cost for the drivers?

Let’s do some quick math. We’ll assume that, like most dealers, you always keep a cargo van or pickup truck on your lot to handle hot runs — and you do about three hot runs a week. And let’s assume it’s your oldest truck, so it’s already paid off. Your weekly costs probably look something like this:

Driver:

($13/hr [1] x 1.4 (benefits cost)) x 2 hours = $36.40 per delivery x 3 = $109.20/week

Insurance:

$50/week [2]

Gas:

($2.49/gallon [3] / 13 mpg for average cargo van [4])
x 23 average miles/delivery = $4.40 per delivery x 3 = $13.20/week

Maintenance:

$73/week [5]

Weekly cost:

$245

Cost per delivery:

$81

 

Note that this cost excludes the original cost of the vehicle, and it doesn’t consider the lost opportunity costs when your employee is out driving.

On the other hand, the average cost for a similar delivery using a delivery partner is $30 – $40. That’s a saving of 50% – 62%.

When you partner with a last mile delivery company, you only pay for the capacity you need, when you need it. The delivery partner is on standby, not your staff, which drives your costs down and makes you more profitable and reliable.

2. Instant Scalability

How many times have you thought “No matter how many trucks I have, there are days when I could use more”? Maybe your driver called in sick, and you have to scramble to find coverage. Or your biggest customer called with a last-minute request and your truck is in the shop.

These are the kinds of headaches that go away when you work with a last mile delivery partner. Instead of worrying about capacity, you can simply request the delivery through the partner’s website or app and get back to business.

With a stress-free ordering process, it’s as easy as 1 – 2 – 3. You simply use the third-party service’s mobile app or website, enter the delivery details, and choose the vehicle size you need. It’s that simple! All vehicles will be ready to go, even if it’s an urgent hot run.

3. Improved Technology

Another benefit of working with a trusted delivery partner is the technology they bring. This technology helps you offer better experiences for customers and can help streamline your internal fulfillment processes.

Take real-time tracking, for example. Your customers want to know when their orders will arrive — and pro customers expect accurate ETAs for deliveries. Offering this type of tracking can be difficult to do in house, but a good delivery partner will give you access to this technology.

Photo proof-of-delivery is another option some delivery partners offer. This gives you a photographic record of the delivery — from the initial load to the final delivery. So, if there is ever a dispute about the materials delivered or their condition, you have the photo record to help resolve it.

In many cases, you can easily automate your delivery processes by integrating this technology into your ecommerce, ERP or POS systems, enabling a more seamless customer experience.

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4. More Time to Focus on Core Business Needs

With your deliveries outsourced to a last mile delivery partner, you have time available to bring in more business. Instead of spending time setting up deliveries, you can now focus on core business needs.

This is particularly beneficial for small organizations, where managers do a lot of heavy lifting and wear several different hats daily. At larger companies, delivery specialists may still be needed, but they can work more efficiently, freeing up time to assist with other aspects of operations.

With a last mile delivery solution in place, you’ll have time to plan your expansion or open more locations. Back-burner projects, once a dream, can now begin. Branch managers can finally focus on sales and improving the bottom line as opposed to operational issues.

5. Simplified Management and Reporting

As a busy lumber dealer, the last thing you want is additional, time-consuming tasks dumped in your lap — such as trying to understand or predict your delivery costs.

A good delivery partner will have robust reporting tools you can use in real-time while you’re on the go. These tools help you accurately predict future spending, monitor service levels, drill down on individual delivery costs, and more — all within a single platform.

The Bottom Line

It’s a tough decision to outsource a service that is deeply integrated into your day-to-day operations. But when it comes down to it, you might not be able to rely on in-house delivery anymore if you want to compete in the modern market.

Choosing the right delivery partner can help you cut overhead costs without compromising on delivery quality. And it can give you access to features such as real-time tracking that your customers expect.

As a next step, learn what you should consider when choosing a last mile delivery partner.

 


 

Sources

[1] https://www.ziprecruiter.com/Salaries/Lumber-Yard-Worker-Salary

[2] https://howmuch.net/costs/commercial-auto-insurance 

[3] https://www.eia.gov/petroleum/gasdiesel/

[4] https://www.enterprisetrucks.com/truckrental/en_US/vehicles/truck-comparison-guide.html 

[5] https://rrunners.com/calculator/ 

Tags: construction, lbm

Brad Rollo

Construction work and high tech don’t generally go hand-in-hand, but it’s a winning combo that has optimally positioned Brad to lead GoFor. He launched GoFor in early 2016, and has built the company into the leading provider of tech-driven on-demand delivery services it is today. When he’s not talking delivery logistics and supply chain management, Brad likes to surf big waves, ski, and hike. He lives in Ottawa with his family.

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