Deciding where to place parcel lockers isn’t an easy task. It depends on many factors, including the number of lockers needed, the size and structure of compartments, location potential, and available infrastructure.
On the other hand, you have to track the network's performance continuously. This gives insight into what can be adjusted to lower the costs of filling the lockers, find ways to shorten dwell time, and increase the utilization rate.
Due to the complexity of these problems, the high costs, and the risks, most last-mile carriers and posts face the same question. Should we build our own tool or search for an existing solution to help us make more confident decisions?
In this blog, we’ll break down the pros and cons of each choice and help you navigate the build vs. buy dilemma.
What to consider before building in-house
Last-mile professionals already have industry knowledge and understand the complexity of out-of-home delivery. It makes sense to leverage that experience to create a tailored solution that meets your company's specific needs, which some off-the-shelf software may not address.
However, this decision comes with its own set of challenges. Here are a few things you should consider:
- Development capabilities - For a delivery company, developing software is not the core competency. While many companies have large teams of engineers, they may not employ the same strategies, processes, and agile approaches a software development company does. To ensure you’re building the right tool, you must validate the idea’s usability and feasibility, test and plan features, and complete many activities before the first version is made. All of that has to be done quickly, and if the engineering team isn’t wired this way, it might take 6 months until the first line of code is written.
- Time to value - Building software from scratch doesn’t happen overnight. It takes significant time, which might delay the development of your parcel locker network. The more you spend building, the greater the chance for competitors to secure the most desirable locations.
- Depth of the solution - When creating a tool in-house, people focus on their perception of the problem and previous experiences in solving similar issues. However, the industry has a vast landscape of best practices and innovative ideas you might not be tapping into. Talking to multiple last-mile professionals, exploring other solutions, and then integrating best practices is necessary for creating an optimal solution. This might be difficult to achieve for one delivery company, as everyone is working on maintaining and improving the core business.
Building software isn’t a one-time thing. Once you create the first version of the tool, it needs to be updated and maintained to stay relevant and of value. The total cost of ownership will only grow compared to buying an off-the-shelf solution.
Another issue we’ve often seen is overlooking data health and volume. Companies with bad data health or large data volumes might benefit more from buying a finished product that provides automated data audits and governance abilities instead of tackling these issues themselves.
Why some choose to build anyway, and possible issues
Based on conversations with people from the industry, internally built software is often preferred due to the company's size or because existing tools seem to work.
Large and global parcel delivery companies usually don’t fear the costs of building in-house tools. But, due to their size, they have different teams assigned to various tasks such as location scouting, organizing loading processes, and monitoring network performance. Each team usually wants a tool made specifically for their use case. Without anything connecting these interdependent processes, it can lead to fragmented information and siloed teams.
Some choose to build on top of TMS and other data sources to create a quick solution for parcel locker networks. Usually, these solutions are dashboards created to monitor the network's performance by combining the data they’ve had in their systems. But while dashboards solve the problem of data visibility, turning it into actionable insights can be tough.
What to consider before buying
Prebuilt features, not having to worry about maintenance and upgrades, and a lower total cost of ownership are the main reasons for choosing an off-the-shelf solution.
On the other hand, introducing a new tool might feel risky due to uncertainties surrounding the integration time and time to value, or ROI. This concern becomes particularly pronounced when decisions must be made near peak seasons or critical operational periods.
The right tool has to fit your organization's requirements and goals. To ensure this is the case and make a more comfortable decision, consider the following factors:
- Level of industry-specific customization - Look for software specifically designed for the complexities and nuances of last-mile logistics. Generic tools often lack the industry-specific functionality required for real-time monitoring and predictive analytics in the context of last-mile out-of-home delivery. Consequently, they may not provide the insight necessary for growing and optimizing a parcel locker network.
- Data updating - You need up-to-date data to understand how your network is performing and what to improve. Choosing a tool that can continuously pull data from your systems and third-party sources is important so you won’t have to upload large datasets manually.
- Scalability - A tool that works well with the current data volume and network size may not be suitable for the future. It is crucial to ensure that the tool you choose can scale as your network grows.
- Learning curve - Most of the available tools were not built for people in logistics. They can be complex, require extensive training and coding knowledge, such as writing SQL queries. All of this delays gaining insights and actual value from the tool.
After weighing the pros and cons of both options, if you've decided that purchasing a tool is the more efficient and cost-effective choice, you might start thinking about available options.
Mily Tech: OOH Delivery Analytics software that checks all the boxes
At Mily Tech, we believe in managing the delivery network as a single cohesive system.
Our platform is a powerful mix of location intelligence and business analytics tailored for the last mile. Integrating the Mily Tech platform can help you:
- Drive efficiency in operations by speeding up time to revenue;
- Avoid resource misallocation;
- Focus on what is important for your business while we do all the heavy lifting.
Start seeing value from day one with a tool that is built to scale with your business, intuitive, and easy to use without any manual work or coding knowledge required.