2019

PROGRESS REPORT

CUSTOMER SERVICE

Shape Up or Ship Out

Package delivery is playing a bigger role than ever in customer satisfaction

The days of seven-day shipping are long over. Today, it’s all about next-day or even same-day delivery. We live in a time in which we can order something on Amazon.com at lunch and reasonably expect it to be waiting at our front door when we get home from work.

A 2018 survey conducted by Convey, a delivery experience management organization, found that an astonishing 98% of shoppers agree their loyalty to a brand is influenced by the organization’s shipping abilities. The survey also found that 84% would cut ties with a brand if they had just one bad delivery experience—a whopping 34% increase from 2017.1

Not only do customers want faster delivery, but they also want more flexible delivery. For example, in 2018, nine out of 10 people thought they should be able to correct a delivery address after placing an order, and 53.2% thought they should be able to redirect a package after it shipped.2

Meanwhile, when there’s a delivery delay, 52% of customers expect the organization to make up for it by refunding or discounting the price of shipping.3

Meeting demand

These factors have made the delivery world a lot more cutthroat in recent years. According to Convey’s chief marketing officer, Kirsten Newbold-Knipp, Amazon is to blame.

“Delivery expectations have clearly increased year-over-year as Amazon continues to raise the bar and customers take the bait,” said Newbold-Knipp. “Today, simply tracking a package isn’t enough. Retailers and brands that want to thrive need to invest in people, processes and tools that positively impact last-mile delivery and customer loyalty.” 4

With increased customer expectations and higher-than-ever competition among retailers, how do organizations meet customer demands? According to Andrew Chung, a journalist, the answer involves that last mile.

“Modern e-commerce retailers need a solution for delivery as fast as two hours,” Chung said. “Last-mile warehouses facilitate the movement of goods in the supply chain to the final destination. Being closer to the consumer decreases supply-chain costs while minimizing the time to complete delivery.”5

With 41% of the U.S. retail market share, Amazon has set a precedent for fast delivery.6 It’s no longer a luxury, but an expectation, which makes it increasingly difficult for smaller retailers to keep up.

“While consumer expectations around delivery are rapidly increasing, their delivery experiences are declining,” Chung said. “Fast delivery is important to 99% of U.S. consumers when making online purchases. At the same time, an increasing number of consumers feel frustrated with the lack of professionalism and accuracy when having items delivered. For retailers looking to exceed expectations, there is a large opportunity to capture customer loyalty when delivery is done right.”7

Despite these challenges, there are some things organizations can incorporate into their last-mile facilities that can help, such as locating logistics facilities near major roadways and cities, and ensuring the facilities can adequately house the organization’s products.8

UPS and FedEx

No matter how quickly a retailer packages and ships an order, part of the process still depends on the mail delivery service. Two of those services—UPS and FedEx—have recently imposed a 4.9% average rate hike for 2019. The carriers have imposed the same rate increase every year for the past 10 years. However, it’s targeted this year at residential customers, and the increases could significantly impact free shipping.9

Journalist Rich Duprey reported that what will impact free shipping the most is the rate hike UPS imposed on SurePost, which is used in collaboration with the U.S. Postal Service (USPS) for faster last-mile deliveries.

“For packages over one pound, rates are rising by 9%; for those under a pound, they’re going up 9.34%,” Duprey said. “Surcharges to certain rural or difficult-to-access locations will see rates rise by 32%. Rates for FedEx’s similar SmartPost arrangement are also going up. The USPS also raised its rates this past October, with its Parcel Select package rates rising between 9% and 12%.”10

That adds up quickly—in 2018, UPS alone averaged 31 million deliveries each day.11 Although the rate increases won’t be detrimental to organizations like Amazon—which charges an annual fee for free shipping—smaller organizations will feel the impact. According to Spend Management Experts, a transportation spend management consultant, Parcel Select, SmartPost and SurePost are the services retailers use most for free shipping.12

The future of delivery

So how can retailers afford to offer fast and free delivery? The answer is technology. Many organizations are experimenting with using autonomous vehicles and drones to deliver packages.

Last year, for example, Amazon was issued a patent for a delivery drone the organization hopes will improve delivery reliability and speed. The retailer’s goal is to be able to deliver packages in 30 minutes.13

Walmart has worked with several organizations, including Waymo and Ford, to pilot grocery delivery programs. In its current partnership with Udelv, the organizations have established online grocery delivery in about 100 metropolitan areas.

“We want to make sure we stay on the cutting edge of grocery delivery by exploring what’s new and next,” said Tom Ward, senior vice president of Walmart’s digital operations in the United States.14

These technologies are relatively new and still in the experimental phase, but they offer a promising future for the fast, free delivery we’ve all come to expect.

—compiled by Lindsay Dal Porto, assistant editor

References

  1. “Convey Survey: Last Mile Delivery—What Shoppers Want and How to #SaveRetail,” BusinessWire, Nov. 7, 2018, https://tinyurl.com/ydgyjs9b.
  2. Krista Garcia, “Online Shoppers Want More Control Over Deliveries,” eMarketer, Nov. 7, 2018 https://tinyurl.com/yapaf54s.
  3. “Convey Survey: Last Mile Delivery—What Shoppers Want and How to #SaveRetail,” see reference 1.
  4. Ibid.
  5. Andres Chung, “The Importance of Last-Mile Facilities in the Supply Chain,” SupplyChainBrain, Dec. 19, 2018, https://tinyurl.com/ybq9k2k9.
  6. Ibid.
  7. Ibid.
  8. Ibid.
  9. Rich Dubrey, “Will UPS and FedEx Rate Hikes Doom Free Shipping?” Fool, Jan. 1, 2019, https://tinyurl.com/yde3ys24.
  10. Ibid.
  11. FreightWaves “Parcel Carriers Shine During Peak Delivery Period, Firm’s Data Shows,” Benzinga, Jan. 7, 2019, https://tinyurl.com/ybexlfnd.
  12. Dubrey, “Will UPS and FedEx Rate Hikes Doom Free Shipping?” see reference 9.
  13. Hamza Shaban, “Amazon Is Issued Patent for Delivery Drones That Can React to Screaming Voices, Flailing Arms,” Switch, March 22, 2018, https://tinyurl.com/y7hh2vl2.
  14. Lauren Thomas, “Walmart Taps Udlev for Latest Driverless Car Tests to Deliver Groceries,” CNBC, Jan. 8, 2019, https://tinyurl.com/y6w5sgfr.

New @ ASQ

What's on our minds

Alan Daniels has been named the new Technical Advisory Group (TAG) 176 Quality Management and Quality Assurance chair. In addition, Susan Briggs will continue to serve as chair of TAG 207 Environmental Management for the 2019-2021 term. TAGs 176 and 207 are responsible for the U.S. voice in the revision of standards such as ISO 9001 and ISO 14001. If you are interested in joining a TAG, please e-mail standards@asq.org.


HEALTHCARE

Unnecessary Medical Services Cost $200 Billion In United States Each Year

Overuse of low-value, unnecessary services costs the U.S. healthcare system more than $200 billion each year, according to an estimate included in research by the Joint Commission.

The estimate is part of a new study that was released last month detailing a commission initiative to reduce unnecessary care and raise awareness among clinicians and the public about issues surrounding healthcare overuse.

The campaign, called “Choosing Wisely,” aims to identify and measure low-value care for patients not only to save money, but also to avoid potential harm to patients and inconvenience of unnecessary care.

For more from the study, released last month, visit https://tinyurl.com/joint-comm-choose-wise.


ASQ

ASQ Sells Shares In ANAB to ANSI

ASQ sold its share of ownership in the ANSI-ASQ National Accreditation Board LLC (ANAB) to American National Standards Institute (ANSI) in late 2018.

ANAB had been owned equally by ANSI and ASQ since 2005. The purchase results in ANAB becoming a wholly owned subsidiary of ANSI, registered as a separate legal entity, and renamed the ANSI National Accreditation Board (ANAB).

While ANSI and ANAB will continue business as usual in the near term, ANSI intends to move its accreditation of conformity assessment bodies into ANAB under the auspices of ANSI ownership, creating a single entity to lead accreditation services.

For more information about ANSI and the ANSI National Accreditation Board, visit www.ansi.org/accreditation/anab.


Quality-Related News From Around the World

Powered by LexisNexis

Top 10 Most Reliable Automakers

This year’s Consumer Reports Car Reliability Survey collected data from over 500,000 members to determine what problems vehicle owners can expect. Problems range from troublesome engines to infuriating infotainment systems, transmission issues and other troubles. Read more about the top 10 automakers here: https://tinyurl.com/top-ten-automakers.

GM to Cut Thousands of Jobs, Close Plants In U.S. and Canada

General Motors (GM) is poised to end production at five plants in the United States and Canada, kill off several passenger cars and slash 15% of its salaried workforce in a sweeping cost-cutting plan designed to boost profits and adjust to changing tastes in vehicles. For more information about the changes, visit https://tinyurl.com/GM-cuts-jobs.

Amazon Customer Data Was Leaked Ahead of Black Friday

Amazon experienced an embarrassing data lapse as it headed into one of its busiest periods on Black Friday. The e-commerce giant emailed customers on Nov. 21 to tell them their names and email addresses had been leaked on its website, due to a “technical error.” Read the full story here: https://tinyurl.com/Amazon-data-leak.

To get a roundup of the week’s most noteworthy stories delivered to your inbox every Friday, subscribe to the QNT Weekly e-newsletter at asq.org/newsletters.


Getting to Know…

Jami Kovach

Current position: Associate professor at the University of Houston (UH).

Education: Doctorate in industrial engineering from Clemson University in South Carolina.

What was your introduction to quality? A quality class I took in college, which led to a summer internship and then to my first job in industry.

Is there a teacher who influenced you more than others? My dissertation advisor, Rae Cho, because he taught me how to publish my research.

What’s the best career advice you’ve ever received? Work hard, play hard.

Previous note-worthy jobs? Working as a product and process improvement engineer for several years in the U.S. textile industry before getting my Ph.D.

Are you active in ASQ? I’m currently serving as editor of Lean & Six Sigma Review, chair of the technical program committee for ASQ’s World Conference on Quality and Improvement (WCQI) and UH’s student branch councilor for ASQ’s Greater Houston Section.

What noteworthy activities or achievements outside of ASQ do you participate in? I’m an Academician in the International Academy for Quality. I received the 2017 Outstanding Educator Award from the Southwest Decision Sciences Institute. And I was part of the team that was awarded second place in the Project Management Institute’s 2016 Teaching Case Competition.

Have you had anything published? I’ve published more than 50 articles in a wide range of peer-reviewed journals that describe my research studying the application of process improvement and process design/redesign methods through case studies conducted in industries including animal care, banking, construction, healthcare, juvenile justice, logistics and transportation, manufacturing and oil and gas.

Recent awards or honors? I recently became an ASQ fellow.

Personal: Married.

What are your favorite ways to relax? Binge watching shows on Netflix.

What books are you currently reading? I’m currently reading Michelle Obama’s Becoming. One of my favorite authors is Malcolm Gladwell.

What was the last movie you saw? “Feminists: What Were They Thinking?” It’s a documentary looking back at feminism and how the times are different, but not necessarily better.

Quality quote: “Providing value requires cultivating a relentless pursuit of excellence.”


HEALTHCARE

Group Lists 118 Top U.S. Hospitals

The Leapfrog Group, a national nonprofit healthcare advocacy group, recently released its annual list of top U.S. hospitals based on safety and quality measurements.

In 2018, a total of 118 hospitals were recognized because of performance in different areas of hospital care, including preventing infections, reducing C-sections, using technology to ensure safer care, and instituting leadership policies and practices.

“Leapfrog is proud to recognize the recipients of our most elite award for safety and quality,” said Leah Binder, president and CEO of the Leapfrog Group. “We’re encouraged by the hard work of top hospitals, as well as all of the hospitals that compete for this award. Their transparency and determination delivers the best possible care in their communities.”

The states of Florida, California, New Jersey and Texas were each home to 12 or more hospitals that received the Leapfrog distinction.

For a complete list, visit https://tinyurl.com/leapfrog-top-hosp.


News Briefs

The American Society for Nondestructive Testing will hold its annual research symposium April 1-4 in Garden Grove, CA. The four-day event addresses key research, development and innovation of advancing nondestructive evaluation (NDE) technologies, and bridges gaps in NDE research, engineering and technology transfer. Find more details at www.asnt.org.

The 24th annual American Productivity and Quality Center Knowledge Management Conference will be held April 29 to May 3 in Houston. Visit www.apqc.org/apqcs-2019-knowledge-management-conference for details on speakers and the more than 20 practitioner-led sessions.

The National Association for Healthcare Quality has set Oct. 20-26 as Healthcare Quality Week to mark the contributions professionals have made to improve healthcare quality. Visit https://nahq.org/about/healthcare-quality-week in the coming months for updates and details on the weeklong celebration.

The International Accreditation Forum (IAF) just finished celebrating its 25th anniversary last year. IAF is the world association of conformity assessment accreditation bodies and other bodies interested in conformity assessment in the fields of management systems, products, services, personnel and other similar programs of conformity assessment. It was founded in January 1993 by representatives of accreditors of quality system certification bodies from Australia, New Zealand, Canada, Japan, Mexico, the Netherlands, the United Kingdom and the United States. ANAB (then known as RAB) was among the founders of IAF.


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