Deliver On-Time Regardless of Demand Without Destroying Profit Margins

It sounds redundant to say, but a significant portion of your success as a manufacturer or distributor depends on your ability to consistently deliver on-time.

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Those who can do so will win new customers and grow existing business with ease, and those who can't will lose customers left and right and struggle to maintain market share.

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If you're still in business after the tough economic conditions over the past few years, you’re probably meeting delivery deadlines most of the time, but to be an industry-leader and maintain an edge over your competitors you need to deliver on-time every time, not most of the time.

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In this article, we’ll explain how leveraging the Veryable marketplace to build a flexible extension of your full-time workforce will help you deliver on-time regardless of demand without destroying your profit margins.

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Why Is It So Hard to Consistently Deliver On-Time?

What makes it so challenging for manufacturers and distributors to consistently deliver on-time is that demand isn’t the same everyday and shifts unpredictably. There's also things that come up out of nowhere - last minute orders, no-shows/callouts, etc.

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When relying on the old-fashioned staff to averages with only FTEs approach, there’s no way to address these situations without using overtime everytime demand is higher than average. Not only is this cost-ineffective, but when employees have to work faster, mistakes are more likely to occur which can be even costlier than a late delivery. Additionally, this also leads to long term issues with retention and morale. Sure, your employees might like working overtime occasionally, but it was never really designed to be an added benefit. If you rely on OT too much, your FTEs will start looking elsewhere for a similar position with a more predictable schedule.

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Your other option would be to stay overstaffed year round, but this too would destroy your profit margins and offset any revenue increase achieved from improved service levels. That’s why you aren’t already doing this.

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Allow us to illustrate - below is a usage graph from one of our beverage distribution partners. The orange line represents average demand, and the blue line represents actual demand.

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With the staff to averages approach,

-Everytime the blue line is above the orange, this distributor would have been putting deadlines at risk and forced to rely on overtime to keep up.

-Everytime the blue line is below the orange line, they would have been paying workers to stand around  

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As this example demonstrates, staffing to averages leads to average performance and excess costs. As you can also see in the graph, even staying slightly overstaffed year round wouldn’t have provided this distributor with sufficient capacity to meet targets during peak periods.

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Thankfully, Veryable unlocks a new option.

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Matching Headcount to Demand on a Daily Basis

Our on-demand marketplace for manufacturing and warehousing labor connects businesses with thousands of skilled and vetted workers at the click of a button, enabling businesses to create a flexible extension of their full-time workforce called a labor pool.

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By building a labor pool, businesses gain the ability to scale labor up and down in tandem with demand.

This means when demand is higher than you planned for, you can rapidly increase your headcount and address the extra workload without putting on-time delivery targets at risk or having to ask FTEs to work overtime.

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Here’s what this looks like:

Instead of the traditional staff to averages approach (left side of graphic), just keep your headcount at your minimum average volume (purple dotted line).

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When demand comes in above that minimum threshold (closer to pink dotted line), that’s when you flex up your capacity with your on-demand labor pool.  

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When your volume is lower, (closer to the purple dotted line), reduce usage accordingly.

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By taking this approach, not only will you be able to deliver on-time regardless of demand, but you’ll be able to do so at a lower, more constant cost per unit.

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Revenue Growth

With an improved on-time delivery rate, your sales team will be able to stop replacing disappointed customers and instead focus on growing existing business.

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Additionally, you’ll no longer have to turn down orders due to capacity constraints during peak periods - this gives you a massive competitive advantage.

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Here’s an example:

This distributor was in the middle of its peak season when they acquired a competitor. Because they had a labor pool, they were able to scale up instantly and take on the extra volume without putting deadlines at risk. Then when a winter storm came out of nowhere and shut things down, they were able to scale down drastically for a week and avoid thousands in labor costs. Afterwards, they were able to scale up even further to clear out the backlog without falling behind in other areas. This allowed them to go after new business and grow revenue while their competitors were still trying to catch up.

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Reducing Costs

With the ability to rapidly scale up as needed to meet demand, you’ll be able to maintain a leaner headcount and avoid constantly being over or understaffed. This will drastically improve your margins and overall bottom line.

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But that’s not all. Improving on-time deliveries means your sales team will be able to avoid the costly nature of having to constantly replace customers. You’ll also be able to eliminate other more minor expenses related to expediting orders and making up for lost time.

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Stories From The Real World

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Manufacturer Uses Veryable to Achieve Better Delivery Performance

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Background

AircraftCo (name redacted) is a manufacturer that produces aluminum storage containers for aircraft OEMs. AircraftCo produces replacement parts on the same production lines as new orders, and any significant demand spikes result in late deliveries, excess inventory, longer lead times, and upset customers.

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The poor service and longer lead times resulted in missed revenue as customers switched to other suppliers that can ship quicker.

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Approach

By building an on-demand labor pool and bringing in 5-10 operators as needed to assist skilled FTEs and provide loading/unloading support when demand spikes, AircraftCo is able to comfortably hit on-time delivery targets regardless of weekly volume.

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Results (after 3 months)

• Weekly on-time delivery performance increased from 73% to 98%
• Expected annual revenue increase of 33%
• Fewer administrative burdens related to order expediting and customer relationship management

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RTIC Outdoors

RTIC’s in-house “Custom Shop” services B2B orders placed in bulk, and with an on-demand labor pool at the ready, they're able to ensure orders are sent out on-time regardless of daily order volume. Click here to read the full case study.

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Conclusion

Every manufacturer and distributor wants to be an industry leader, and to reach this status, world class on-time delivery performance is required.

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By building an on-demand labor pool, you can bring in extra workers when you need to increase output and then scale back down instantly afterwards. Then, whenever you encounter another surge of demand, you can quickly increase output again by bringing back workers from your labor pool. This makes you faster, more efficient, and gives you an edge over your competitors in numerous ways.

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To learn more on this topic, check out these resources:

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Improve Service Levels by Using On-Demand Labor

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How to Reduce Cycle Times to Improve Service Levels

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Take Full Advantage of E-Commerce Peak Season With Veryable

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The Amazon Effect on Manufacturing and How to Adapt

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How To Avoid A Customer Experience That Sucks: Working In Logistics

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Info For Your Role

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Getting Started

The first step in getting started is to create your free business profile - this only takes a few minutes. Our team of experts will reach out shortly after to answer any questions you have and ensure your team is set up for success.

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If you need any help, please contact us.