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Fast and reliable delivery does command a premium!
I have often discussed with various supply chain professionals the need for crashing supply lead time and ensuring reliable deliveries. The first reaction is that the additional value created through fast and reliable deliveries is difficult to monetise. Is it true?
There are umpteen examples where the value has indeed been monetised. Of course, the reduction in lead time and improvement in reliability should be substantial.
Remember how Fedex created the niche market of guaranteed overnight deliveries? The niche is no longer a small segment, but a considerable part of the overall courier market. Even now, when Fedex guarantees delivery during the tight slot given by the big box retailers, it does charge a premium.
Quick Commerce companies like Zepto, delivering in 10 minutes, have opened another niche in the e-commerce marketplace. The potential looks huge. Managing reliable availability of the entire catalogue assortment will definitely result in a decisive competitive edge and higher profitability in future.
FMCG companies focusing on supply lead time reduction and reliable deliveries will accelerate their sales much faster than their competitors! The game is on…