Developing proprietary software may make sense, but it can limit options down the road
Building a last-mile delivery network requires plenty of focus on the types of vehicles, sourcing of drivers and customer tracking information. And rightly so, as these basics are critical to any sustainable and profitable network.
But a simple decision about software early in the process could be the ultimate determiner of success. And it is one that is usually overlooked: buy vs. build.
“Everybody feels they are unique, and every client does have something unique, but at the end, everyone is trying” to satisfy the end consumer, Mehul Kapadia, chief growth officer for Locus, told Modern Shipper at the recent Home Delivery World conference in Philadelphia.
Kapadia, who joined the company this summer, said businesses in the last-mile space are all faced with the same question: Do they buy off-the-shelf routing software, or do they design it themselves based on what they believe to be their unique needs?
Kapadia said each companies needs are unique, to a point. The company, which now has 150 global customers, is able to track all the data collected in its routing platform and use that “shared learning of the ecosystem” to inform product updates for all users.
This is where the buy-vs.-build discussion takes on the most importance. Kapadia said that shared learning is something that a delivery firm building its own technology misses out on. Sure, each company has unique needs, he added, but Locus is able to accommodate those while taking advantage of the larger ecosystem.
“More customers are buying online, so how do we improve the experience for you?” Kapadia asked.
Locus was initially founded as a women’s safety geo-tracking app provider. The product, RideSafe, was able to identify deviations from a pre-defined ride route, identifying potentially dangerous situations. But along the way, the technology was being adopted by food delivery companies to notify them when staff was going out of route. It was then that Locus’ founders, Nishith Rastogi and Geet Garg, now CEO and CTO, respectively, realized the logistics potential of the technology.
In 2016, Locus launched its first two dispatching products, DispatchIQ and Track IQ. Its investors include global powerhouse TigerGlobal as well as Qualcomm Ventures and Blume Ventures, among others.
Kapadia said companies can consider three factors when deciding between buying or building:
- The pace of innovation. Kapadia said there is some commonality between industry sectors, and that helps fuel innovation in Locus’ technology. Also, because Locus is focused on the tech, the company is able to move fast, deploy fast and stay current with needs.
- The pace of updates. This is an important point Kapadia noted, as companies that build their own software are often slower to update it. IT teams are often smaller with tasks spread across the entire organization, not just on updating a routing app, so change can be piecemeal and slower. Cloud-based platforms can be updated quicker.
- Cost. Kapadia said using a software provider helps spread out the overall development and updating costs of the technology across an entire ecosystem rather than just a single operating unit.
“The net sum of all of these is you can focus on your core business,” he said.
Kapadia added a couple of real-world examples that could impact companies that may have proprietary systems. One is a business that has a captive fleet of 35 vehicles but is now seeing a need to expand that fleet to meet business needs, at least on a temporary basis such as holiday shipping season. While outsourcing likely makes the most sense in this case, a proprietary software solution may not be able to handle that model, leaving the routing component to another company and losing control and possible touch points with the customer.
Another is the recent example of Meta adding e-commerce buying for WhatsApp users via JioMart in India. While the option to purchase items from inside WhatsApp is convenient for customers, Kapadia said a delivery provider’s technology may not integrate well with the purchase. This may require a redo of the workflow to ensure a smooth delivery experience.
“Everybody will have downloaded WhatsApp, but not everyone will have downloaded your app,” he said.
In this case, Kapadia said an outsourced technology provider has likely already made the necessary configuration adjustments so the customer experience remains seamless and the delivery is made on time.
In June, Locus launched its order-to-dispatch delivery management solution at the Gartner Supply Chain Symposium/XPO 2022 conference in Lake Buena Vista, Florida.
The platform utilizes optimization algorithms and workflow automation to learn from previous outcomes to improve dispatch planning, scheduling and routing. The data insights also increase visibility, capacity and carrier management under an integrated API-ready solution, the company said.
Rastogi told Modern Shipper that the solution, which is the first time Locus has moved beyond routing to managing other aspects of the last mile, has already been adopted by 71% of its customers.
Kapadia said Locus, which has seen good traction in Southeast Asia, is focusing on building out use cases for its technology as it looks to expand its presence in North America.