Understanding Shipping Exceptions: Causes, Management Strategies, and Opportunities

Costs Associated With Shipping Exceptions

Dealing with an exception requires resources, and those resources are not free. The most apparent resource required is the money needed to solve the problem. If the delay is caused by equipment failure, for example, there will be a repair cost.

There are also costs associated with responding to your customer's expectations. For example, your immediate response, which might include a discounted price, is incredibly important. However, ignoring the long-term cost of a disappointed customer can be devastating. Many customers will be sure to talk about a negative experience to others, and their voices can be loud and difficult to counter.

The costs incurred from shipping exceptions also include internal costs. Employee stress levels may be higher if exceptions occur frequently. If the same type of exception happens repeatedly without being addressed, it can affect employee productivity and job satisfaction. Ultimately, if shipping exceptions cause too much stress among your employees, they will quit, and your turnover rate will rise, leading to higher training costs.

Managing Shipping Exceptions

No delivery system is perfect, so some shipping exceptions will always exist. However, a system to manage these situations is critical to any supply chain. Because there are so many different types of exceptions, there is no one-size-fits-all strategy for managing them.

Communicating transparently and proactively to all internal and external stakeholders can help moderate the negative effects. Understanding what type of response is needed will support the communication strategy and help control costs. Making tracking numbers available to customers, for example, shows transparency and allows them to see updates, such as when their order is out for delivery.

Communication Is Key

No matter the cause of an exception or how severe its effects are, your communication strategy can directly affect the impact of a shipping exception. Your communications should be clear and concise. 

Explain the situation, describe your solution, and make sure the customer can reach out if needed. If a customer does reach out, respond quickly, empathetically, and professionally. If customers feel like you are listening and actively trying to solve the problem, they are much more likely to be patient and understanding.

It is also important to be proactive. Giving customers as much notice as possible when a delay occurs will demonstrate transparency, honesty, and integrity. Some carriers, such as FedEx, have their own tracking codes , and understanding those can help you deliver information to the customer.

Use an Appropriate Response

Not all shipping exceptions are created equal. For example, responding to an unexpected weather event like a winter storm may be best handled through emails, text messages, and social media posts that direct customers to where they can find tracking numbers and other information.

Conversely, a natural disaster that causes significant delays or cancellations will require a more resource-intensive response. Understanding the appropriate response level is a critical component of cost management. 

You may not always have control over the response. For example, if something happens to a FedEx delivery, you may only be able to communicate their response to your customers. However, that information is still important because you can provide better customer service by giving the customer information instead of forcing them to contact the carrier for updates.

Reducing Shipping Exceptions

While managing exceptions is crucial, eliminating or reducing exceptions is even better. Here are some strategies that can help reduce and possibly eliminate some exceptions:

Listen to People Who Are Close to the Problem

If you ask them, your employees, vendors, and customers will likely be able to provide a lot of information on the causes of shipping exceptions. When they tell you about the problems, be sure to listen. It is easy to filter out negative comments or brush aside information that contradicts your thoughts, but these people are usually the ones closest to a problem. They will be able to provide valuable information.

Invest in Improvements

Investing with the intent to improve logistics infrastructure can take many forms. For example, if too many customers are entering incorrect addresses, using an updated application that verifies addresses may be worth considering. In a warehouse, some procedures could be improved, which would require scheduling time to train employees. Providing real-time traffic updates for last-mile deliveries sent through carriers such as FedEx can help ensure more deliveries are made on time.

Have a Plan

When exceptions occur, having a plan in place that covers most circumstances will make managing the exception much easier. In many cases, parts of the plan can be automated. For example, if a carrier informs you of a delivery delay, that information can be sent out automatically to everyone who needs to know.

Learning From Exceptions

When shipping exceptions occur, the immediate need is to resolve the issue. After that is done, it is a good idea to see if the exception presents an opportunity for improvement. The ways to improve depend greatly on when the exception occurs in the logistics chain. For example, if the issue is with international shipping, there may be no practical remedies or improvements beyond exploring other carriers. If exceptions occur in a facility you operate, however, you will have more control over what can be changed.

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