This is a complete guide to delivery depots in 2024.
In it you’ll find out:
- How to automate depot management to gain efficiencies
- How to centralize delivery planning from multiple depots
- How to speed up overall order fulfillment from depots
- Lots more.
Let’s get started.
IN THIS GUIDE:
What Is a Delivery Depot?
Delivery depots are facilities where orders are temporarily stored before delivery. It is also the key stop on a delivery route, where drivers come to collect packages intended for delivery (outbound depots), or drop off products to be stored prior to sales and distribution (inbound depots).
Depots are different from warehouses, which house more inventory for longer periods. Still, both facilities serve a similar purpose in the final mile of delivery.
Depots activities typically involve storing products, processing orders, picking and packing items for delivery, collecting and loading parcels onto vehicles.
Why Are Delivery Depots Important?
We’re not going to throw a bunch of random facts at you. But we do want to highlight a few benefits of delivery depots’ role as a central storage location in the movement of goods.
Here are 12 advantages of using depots in delivery planning and management in 2024:
- Central Storage Location: With a delivery depot you can store products, processes and package orders, and load vehicles all in one place. Your drivers also need to make just one stop to collect all of the parcels for delivery.
- Streamlined Movement of Goods: Depots are typically closer to their final destinations. This cuts the time between pick-up and drop-off at the customer’s address, which can also minimize the impact of any unforeseen delays.
- Inventory Management & Control: Storing products in one place makes it easier to control stock levels and manage order cycles. This raises inventory accuracy, which makes it more efficient to source products for delivery and increase delivery speed.
- Order Fulfillment & On-Time Delivery: Cutting the time and distance between pick-up and drop-off makes it easier to fulfill orders. And because the depot is closer to its final destination, it’s easier to track, measure, and ensure on-time delivery.
- Improved Order Processing: Housing products and several processes under one roof makes it efficient to process orders. Your workers can receive delivery requests, process the order, pick and pack items, and load parcels onto vehicles as soon as drivers arrive.
- Price Stabilization: Having a physical location where you can store inventory helps you to maintain consistent stock. It also means that you can buy inventory in bulk. This can help you to cut a better deal with suppliers, while reducing your supply frequency.
- Cost Savings: Keeping supply prices low, consolidating several processes in one location, and increasing fulfillment speed raises efficiency. All of this can drive operational costs down, while improving output, performance, and your bottom line.
- Risk Management: Having the ability to store large volumes of inventory protects your business against price fluctuations. This lowers risk when resupplying and buying stock, especially when you do it bulk.
- Product Safety: A depot enables you to properly and safely store products. That lowers the chance of damages and loss of money on returns to suppliers. Depending on your industry, it also ensures safe storage of perishable goods, products, and materials.
- Quality Control of Products & Services: Leveraging a central inventory location ensures sufficient inventory levels to meet delivery demands. It also means consistent availability of products and their delivery to consumers.
- Flexibility & Scalability: With depots, deliveries stay flexible by allowing you to manage stock levels according to demand forecasts. This also enables you to grow at scale, with sufficient room to store products and expand operations according to your sales volume.
- Improved Customer Service & Satisfaction: Delivery depots fast track your delivery, ensuring customers receive exactly what they order, on time, and at a lower cost. They also help you to correct any mistakes that may happen with faster returns management.
Inbound vs. Outbound Delivery Depots
A depot can function as both an inbound and outbound delivery depot. But the main difference is that an inbound delivery depot receives goods from suppliers. On the other hand, outbound depots are staging points from where those goods are picked up by drivers and delivered to customers.
Put another way:
A depot has two main responsibilities in the final mile: to receive and store products from suppliers and to prepare and load orders onto vehicles so that they can be delivered to customers.
When you take a look at the benefits of delivery depots, they can be divided as inbound and outbound:
Inbound Delivery Depots
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Benefits of Inbound Delivery Depots
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Central Storage Location
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Inventory Management & Control
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Quality Control of Products & Services
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Price Stabilization
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✔
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Risk Management
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Product Safety
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✔
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Outbound Delivery Depots
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Benefits of Outbound Delivery Depots
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Streamlined Movement of Goods
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✔
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Order Fulfillment & On-Time Delivery
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Improved Order Processing
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Cost Savings
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✔
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Flexibility & Scalability
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✔
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Improved Customer Service & Satisfaction
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✔
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Types of Delivery Depots and Depot Facilities
Delivery depots vary based on their function, stage of the delivery process, location, and use. Here are various types of delivery depots you can encounter:
- Distribution Centers: These depots serve as hubs for receiving, storing, and distributing goods to various locations within a broader network and typically at a much larger scale.
- Final Delivery Depots: Also known as last-mile depots, these facilities are closer to recipients. Their role is focused on sorting, organizing, and dispatching packages for B2C, B2B and D2C fulfillment.
- Cross-Docking Facilities: These depots enable the transfer of goods from inbound to outbound delivery vehicles with minimal to no storage time. This expedites the flow of goods through the supply chain. It is often used for the delivery of perishable items.
- Consolidation Centers: These facilities consolidate smaller shipments from multiple sources into larger, more cost-effective shipments for transportation. This reduces transportation costs by minimizing the number of individual deliveries.
- Return Processing Centers: Some depots specialize in reverse logistics and returns management. Businesses use them to process returned items from customers, inspect them for damage or defects, and restock them for resale, disposal or return to supplier.
- Local Delivery Depot: These depots are assigned to specific delivery zones. They help companies to manage deliveries within those locations, providing faster and more efficient services to nearby customers or businesses.
- Collection Depot: Collection depots serve as central hubs for gathering packages. Customers can conveniently drop off their shipments for processing and delivery, but also collect parcels delivered to the depot.
- 3PL Depot: Third-party logistics (3PL) depots are operated by logistics service providers, offering warehousing, fulfillment, and distribution services on behalf of multiple clients.
- Fulfillment Center: These centers manage inventory storage, order processing, and shipping logistics to ensure timely delivery of products to customers. The key difference between them and other delivery depots is that their specific to retail and e-commerce
- Courier Depot: Courier depots serve as bases for last mile carriers. Companies use these facilities to handle, sort, organize, and dispatch parcels for delivery by their courier fleet to various destinations.
READ: 4 best route optimization software solutions for third-party logistics (3PLs) providers.
On the other hand:
Retail prices, operating costs, and higher demands for delivery force businesses to rethink the use of their facilities. This has led a lot of companies to transform or repurpose physical assets into depots.
In doing so, companies are able to increase the number of depot locations with no additional cost. So, in 2024, the following facilities can also be used as delivery depots:
- Retail Store
- Warehouse
- Storage Facility
- Delivery Hub
- Distribution Center
- Production Facility
- Manufacturing Plant
How to Plan Deliveries from Depots?
You can use two ways to plan routes to and from a depot:
- Single depot route planning
- Multi-depot route planning
Single Depot Route Planning
Single depot route planning is the practice of planning inbound and outbound delivery routes to and from one depot location independently from other delivery operations. In other words: it’s a decentralized way of route planning.
Planning routes this way means that you have to assign resources specifically to that depot. This includes: a storage facility (depot), delivery fleet (drivers and vehicles), pick and pack workers, route planner and dispatcher.
The goal is to treat each depot as its own separate delivery team that works independently from the rest of your delivery network.
As such, this type of route planning benefits small businesses or businesses that operate in multiple disconnected delivery zones, for example franchise operations.
Advantages of Single Depot Planning
- Autonomy: Each depot has access to its own resources. This way it's responsible for managing them to plan, schedule, and execute all orders in their delivery area.
- Granular Control and Visibility: The organization delegates control over to a depot manager. It’s their responsibility to manage resources and processes in order to maintain delivery performance according to the organization’s standards.
- Smaller Teams: Planning routes from a single depot is easier as there are fewer moving parts to manage. And because there are fewer team members, it also means that lines of communication are closer, while instructions are easier to implement.
- Decision Making: Because depots are closer to the delivery’s final destination, it gives dispatchers and route planners greater visibility over last-mile operations. In case of unexpected events, stakeholders can evaluate situations sooner and react faster.
- Order Accuracy: The smaller order volumes means there are fewer routes to manage. This reduces the chances for human error, which makes it easier to complete each route. And in case an error does occur, it’s easier to fix it to maintain order accuracy.
- Delivery Performance: Fewer errors and faster delivery speed translate into higher delivery performance. It also makes it easier to continuously optimize performance, and allows the organization to pit depots against each other to increase output.
- Customization and Personalization: A single depot that’s responsible for a single delivery area allows for greater customization and personalization of routes to meet specific customer needs and preferences. This can lead to higher levels of customer satisfaction and loyalty, as deliveries are tailored to their unique requirements.
Disadvantages of Single Depot Planning
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Lack of Coordination: Single depot route planning can lead to inefficiencies in the context of the entire delivery. Without centralized oversight, there is a risk of you choosing inefficient routes that result in greater distances, fuel consumption, and operational costs.
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Difficulty in Standardization: With decentralized routing, it’s difficult to maintain consistency and a standard in the routing process. This can lead to variable service quality and customer experience, as routes depend on the individual preferences or expertise of drivers, route planners, or depot managers.
- Dependency on Individual Entities: Single depot route planning relies heavily on the capabilities and reliability of individual drivers, dispatchers, or route planners. If one of those team members is unavailable, there may be limited or no backup options. That can lead to disruptions in service for the whole delivery and increase the chance of customer dissatisfaction.
- Complexity in Integration: This type of depot-level route planning is a challenge to how you integrate routing data across multiple systems. To ensure data exchange between all depot sites will require additional resources, which can be time-consuming and costly.
- Difficulty in Scaling: Scaling a decentralized route planning model to meet growth or changes in demand is complex and resource-intensive. That’s because with each new depot you have to add additional drivers or supporting staff, while maintaining efficiency and consistency across the rest of the delivery network. This requires even more effort, time, and resources to carefully plan and coordinate each step in the expansion of your delivery.
Multi-Depot Route Planning
Multi-depot route planning is the practice of planning inbound and outbound delivery routes for your entire delivery network at the same time. In other words: it’s a centralized way of route planning.
Planning routes this way means that you assign routes to drivers, regardless of their pick-up stops or depot locations.
The goal is to plan the most efficient routes using all available resources at your disposal. In that way, you manage the entire delivery network and the whole delivery cycle from start to finish from one location, regardless of the number of depots that you have.
As such, this type of route planning is best suited for medium to large and enterprise-level businesses.
Advantages of Multi-Depot Planning
- Efficiency: By incorporating route planning tasks into a single centralized system, you can optimize routes more effectively. In that way, you use all available resources to minimize time, effort, and costs that go into the planning and execution of each route.
- Reduced Costs: Centralized route planning lowers operational costs by maximizing the way you use your resources. It can reduce planning time, route distances, fuel consumption, while improving load capacity utilization, route and workflow efficiency.
- Improved Customer Service: With streamlined routes, organizations can provide more accurate estimated times of arrival (ETAs). It also allows dispatchers to respond quickly to customer requests for changes and dynamically adjust plans to ensure satisfaction.
- Data-Driven Decision Making: A centralized system can collect vast amounts of data. This enables you to analyze key performance metrics, identify trends and opportunities, and make decisions to continuously optimize routes and delivery cycles based on data.
- Simplified Management: Centralized route planning simplifies how you manage tasks by providing a single point of control. From here, you can plan, oversee, and coordinate all delivery activities, reducing managerial burdens and increasing operational efficiency.
- Total Control: Your route managers have unparalleled visibility and accountability over the entire delivery process and all of your resources. For example, this allows them to monitor vehicle movement, delivery performance, and dynamically adjust routes.
- Collaboration: Multi-depot route planning encourages teamwork and knowledge sharing among different teams by synchronizing efforts across different depots, harnessing collective expertise and resources.
- Scalability: Multi-depot route planning can easily scale to meet changes in demand or operational expansion. This ensures that delivery processes remain efficient and effective as the business grows.
- Adaptability: With centralized systems, organizations can quickly adapt to unexpected events or disruptions, such as traffic congestion or inclement weather, by adjusting routes in real-time to minimize delays and maintain delivery schedules.
- Integration: Having a centralized system to manage multi-depot route planning allows you to integrate routing software with business systems. Software solutions like ERP, inventory management or customer relationship management (CRM) software, can help you to seamlessly exchange data and automate overall delivery and workflow efficiency.
Disadvantages of Multi-Depot Planning
- Dependency on Central System: If you rely on centralized route planning and the system experiences technical issues, your operation is vulnerable to failed delivery attempts, missed deliveries, and lower customer satisfaction.
- Initial Complexity and Investment: Adopting a centralized route planning system is a complex endeavor. It also requires a significant upfront investment in technology, setup, and training. But in the long-term, route planning software ROI via operational efficiency is considerable.
- Lack of Local Context: Multi-depot route planning may overlook local knowledge or that can affect routing decisions, especially when it comes to customer preferences.
- Privacy and Security Concerns: Centralized route planning requires access to large amounts of data, including customer information, vehicle locations, and delivery schedules. Ensuring the privacy and security of this data is crucial, as any breach can have serious consequences for the organization and its customers.
- Resistance to Change: Using software and centralized route planning may face resistance from employees who are accustomed to existing processes (e.g. route optimization with Excel). Overcoming this resistance and ensuring buy-in from all route planners and teams can be seen as a challenge to its adoption.
How to Automate Depot Management and Delivery Planning?
Managing a delivery is a long-term endeavor and never a once-off thing.
To be successful, you’ll need to plan almost all aspects of your delivery daily.
Given how variable each delivery can be, you’d be foolish not to introduce some automation into the way you plan and manage them.
By using software to carry out routine tasks, you save yourself (and your company) tons of time, money, and resources.
Why should you spend hours checking your inventory to ensure you have enough stock for incoming orders? Or plan routes manually for each driver when there is a tool that can do the job for you?
Delivery automation is the process of leveraging tools to assist you with your daily delivery tasks by automatically handling them for you. All you have to do is implement them as part of your regular process, and plan, manage, execute, and review your delivery according to the insight that these tools provide.
And when it comes to delivery depots, there are two key areas you need to automate: inventory and route planning.
For Inventory Management
To successfully automate depot management, the first thing you need to do is to automate how you use, monitor, track, and maintain your inventory.
Here's how three key tools can automate depot management in terms of inventory:
#1 Inventory Management Software (IMS)
Inventory management software is a specialized tool for managing and optimizing inventory-related processes.
These tools offer advanced tools for tracking, monitoring, and controlling stock levels.
Using barcode scanning, RFID technology, or other tracking methods, these platforms automate how you manage inventory, from receipt to distribution. This ensures accurate inventory counts and minimizes shortages.
Automated alerts and notifications notify depot managers of low stock levels, overstock situations, or impending expiration dates.
IMS also facilitates demand forecasting and inventory optimization, optimizing inventory turnover and reducing supply frequency and the costs of goods.
Most popular inventory management solutions include:
#2 Enterprise Resource Planning (ERP) Software
ERP software is the central nervous system of depot management automation. The software integrates various functions such as inventory control, procurement, and logistics.
By consolidating data from different areas of the supply chain into a unified platform, ERP systems provide real-time insights into inventory levels, demand forecasts, and inbound and outbound depot delivery activities.
This automation streamlines inventory tracking, replenishment, and order processing, enabling depot managers to make informed decisions and maintain optimal stock levels.
Additionally, ERP software automates administrative tasks, such as generating purchase orders or tracking shipments.
Most popular enterprise resource planning solutions include:
#3 Customer Relationship Management (CRM) Software:
CRM software plays a crucial role in automating customer interactions and improving customer satisfaction in depot management.
By centralizing customer data, including contact information, order history, and preferences, CRM systems allow you to personalize communication with customers.
Automated workflows and communication tools also streamline order processing, invoicing, and customer support. This improves their efficiency and responsiveness when interacting with customers.
Most popular customer relationship management solutions include:
For Route Planning
The second part of automating delivery and depot management is to automate how you plan, optimize and dispatch routes to drivers.
For this you'll need to take advantage of route planning software. And seeing how we are in the business of route optimization, let us show you exactly how you can do it using eLogii:
How eLogii's Powerful Route Optimization Software Helps You to Plan Deliveries from Depots
eLogii is used throughout the route planning game.
That includes planning and optimizing routes at a depot level. But more importantly, generating optimized routes for thousands of deliveries to and from multiple delivery depots on one centralized platform.
Once you’ve imported depot locations to eLogii (or used the routing API to integrate it with your other systems), eLogii can be used to automate a variety of tasks, from how you import orders and deliveries, through route planning and optimization, to how you collect proof of deliveries.
Specifically:
eLogii stands out as a premier solution for route planning to and from multiple depots. Our solution offers a range of benefits tailored to meet the complex demands of modern delivery planning:
- Centralized Route Planning and Optimization: With eLogii, route planning is centralized on a single, user-friendly platform. This approach ensures consistency and efficiency across all depots, streamlining operations and maximizing resource utilization.
- Unlimited Depots: Unlike other solutions, eLogii doesn't impose limits on the number of depots that can be set up into the system. This scalability enables businesses to expand operations without constraints, allowing for growth and changing demands seamlessly.
- Connecting Depots to Zones and Drivers: eLogii simplifies the process of connecting depots to specific zones and drivers. This helps you to manage, coordinate, and execute tasks seamlessly across all three levels, even when they overlap.
- Total Visibility Over Last Mile Operations: With eLogii, businesses gain complete visibility over all last-mile operations, from depot to doorstep. Real-time tracking capabilities enable you to monitor driver and vehicle movements, track delivery completion, and dynamically respond to any changes. And with different access levels for users, you can assign managers to do all of this both at a depot level or globally for the entire delivery network.
- Easy Integration with Other Systems: eLogii seamlessly integrates with existing systems and software, such as ERP, CRM, and inventory management platforms. This ensures smooth data exchange and workflow integration, eliminating the need for manual operations and enhancing overall route planning and delivery efficiency.
- Different Ways to Optimize Route Efficiency: eLogii offers multiple optimization strategies to suit diverse business needs and objectives. Whether prioritizing speed, cost-efficiency, customer preferences, load capacity, or resource utilization, you can customize the routing algorithm to achieve optimal results based on what matters to your organization.
- Real-Time Data Tracking and Analytics: eLogii provides real-time data tracking and analytics tools, enabling you to make data-driven decisions. By analyzing historical and real-time metrics such as delivery times, vehicle utilization, and route efficiency, you can identify areas for optimization and drive continuous improvement of your delivery.
Or simply put:
eLogii's tailored features offer unparalleled flexibility, scalability, and efficiency to optimize their last-mile operations and deliver exceptional customer experiences.
FAQ about Delivery Depots