The timely delivery of orders is as crucial as their shipping them in the case of e-commerce businesses. Nevertheless, despite the smooth operation of logistics processes, shipments may come across some issues such as an error in the address of the recipient, the inability to deliver the package successfully, damaged packages and delays in shipping.
In such cases, shipments can be delayed, incur additional expenses, lead to customer complaints and finally, fail to be delivered.
Such a situation demonstrates the necessity of shipping exception management. It will help e-commerce companies detect issues with shipping, identify their reasons, take actions and prevent such cases in the future.
Shipping Exception Management: Definition and Explanation
Shipping exception management is the process of detecting, investigating, solving and tracking problems that prevent a shipment from moving forward through the delivery process as planned.
Shipment exceptions can appear on various stages of the logistics process starting from pickup and transit and continuing through to the delivery attempt itself. Ineffective exception management means businesses may have to wait until customers notify you about shipping problems.
What Is a Shipping Exception?
A shipping exception refers to an event that interferes with the usual movement or delivery of a particular shipment.
For instance, a package can be temporarily held at a sorting centre because of an incorrect address or can be delayed due to bad weather or even be returned to the seller if there are many unsuccessful delivery attempts.
Not all exceptions lead to a lost or undeliverable package. There are numerous exceptions that can be successfully resolved if the business detects them on time and takes the right measures.
What Does Shipping Exception Management Consist Of?
Shipping exception management consists of the following steps:
- Monitoring for any abnormalities in shipments
- Detecting an exception via tracking updates
- Identifying the cause of the problem
- Communicating with customers or couriers if necessary
- Taking proper actions
- Monitoring the movement of the package until the problem is solved
- Examining repeated exceptions to prevent them in the future
An efficient process requires tracking packages, communicating with the involved parties, automating processes and conducting data analysis.
Types of Shipping Exceptions
Shipping exceptions can happen for a variety of reasons. Some exceptions are created by customers themselves, some by – couriers, weather conditions and transportation.
Package Held in Transit
The package could remain in the same place for too long without any new tracking updates.
Reasons include:
- Transportation delays
- Sorting problems
- Operational backlogs
- Weather interruptions
- Routing errors
- Problems with tracking systems
Companies are supposed to keep track of such packages and get in touch with the respective courier companies once they remain in the same status for too long.
Incorrect or Insufficient Address
An incorrect, insufficient or unserviceable address can prevent the courier company from delivering the package.
There could be issues like missing apartment numbers, wrong PIN numbers, incomplete street names or missing contact details.
Checking the addresses prior to sending packages could help to avoid these exceptions.
Delivery Failure
Delivery could fail due to the unavailability of the customer, an inaccessible destination and the failure to contact the customer.
Depending on the circumstances, businesses can try to make another delivery attempt or contact the customer to schedule a new delivery date.
Return to Sender
Shipment could be sent back to the business owner because of the inability to deliver it.
Reasons could include:
- Several failed delivery attempts
- Incorrect address
- Customer refusal
- Unserviceable destination
- Unavailability of the customer
- Expired holding period
Delivered but Not Received
There are times when tracking shows a delivery confirmation but the customer says that the package has not been received.
Companies might be required to conduct an inquiry into the package delivery and verify the tracking results by consulting the courier partner.
Damaged or Lost Shipment
Sometimes packages could be damaged or even lost during the delivery process.
In such cases, damaged packages would typically be replaced, returned or refunded depending on the circumstances, whereas lost packages would generally be investigated and a claim may be raised with the courier service provider.
Why Shipping Exceptions Are a Problem for E-commerce Companies
Shipping exceptions are important issues for e-commerce businesses not only because of their impact on the delivery process but also because of how they affect customer experience, business operation and expenses.
The following points illustrate some potential shipping exceptions consequences for e-commerce companies:
- Increase in customer support calls
- Increased shipping and return costs
- Late deliveries
- Increase in RTOs
- Extra work for operations team
- Negative customer experience
- Decrease in customer trust
- Loss of repeat business
Customers increasingly expect transparent delivery tracking and timely updates. When businesses fail to communicate about a delivery problem, even a minor exception can become a larger customer service issue.
What is the Exception Management Process for Shipping?
A structured process enables businesses to deal with shipping exceptions systematically.
Step 1: Identifying Shipping Exceptions
Firstly, there is a need to identify exceptions that have occurred to the shipping process.
Shipment exceptions can be identified through courier tracking data, shipment dashboard, automated notifications, and delivery status update.
Step 2: Identifying the Problem in Question
Once the exceptions are identified, it is important for the business to identify the underlying problem.
There may be several reasons why the delivery of a shipment might be delayed.
Examples of the reasons are as follows:
- Incorrect delivery address
- Disruption in transport
- Bad weather conditions
- Courier operations issues
Step 3: Identifying the Solution to the Shipping Exception
Once the problem is identified, the next step is to identify the solution to the problem.
The solutions to the problem will depend upon the nature of the problem and can be as follows:
- Updating the delivery address
- Requesting new delivery attempts
- Contacting customers
- Coordinating with couriers
- Re-delivery
- Refunding
- Filing a courier claim
Step 4: Taking Corrective Action
Once the correct solution is selected, the company must take swift action.
For instance, if the customer provides the right address, the operations manager can work with the courier and try to see whether the package can be diverted to the right address.
Step 5: Monitoring Until Resolved
Exception management does not stop after taking corrective action.
The organization should continue tracking the shipment until the issue is resolved. In this way, the problem will not become a recurring exception.
Steps for Reducing Shipping Exceptions
Even though some issues might occur unexpectedly, organizations can undertake several steps in order to minimize the occurrence of such exceptions.
Verify Client Addresses
Wrong addresses often lead to delivery problems.
In order to avoid this, businesses can use address verification tools during checkout to detect wrong or missing information.
Select Reliable Courier Service Partners
Choosing reliable courier service partners can be helpful for improving consistency in deliveries.
The following criteria should be used to select such partners:
- Delivery success rate
- Serviceability
- Return to origin (RTO) rate
- Delivery time
- Exception rate
- Customer support
- Shipment visibility
Using multiple courier service partners can be useful in selecting the best carriers.
Provide Tracking Information
The customers should be able to track the progress of their orders.
Package tracking and shipment notifications give visibility and reduce uncertainties during transit of the order.
Proactive Notification Setup
The business shouldn’t expect the customer to figure out the problem themselves.
Proactive notifications may help the customer to know about:
- Delay
- Delivery failure
- Address issues
- Rescheduling of deliveries
- Returns of shipments
Proactive notifications make the process of managing exceptions more transparent.
Setup SOPs
Standard Operating Procedures make it easy for the team to manage exceptions.
Here is an example of what an SOP can cover:
- When to escalate the exception
- Who manages the exception
- How to notify customers
- What actions need to be taken for different types of exceptions
- Courier partners to contact for some exceptions
- Resolution tracking procedures
Monitoring the Performance of Shipments
Businesses need to monitor their shipment information for the identification of repeated exceptions.
If there is any location, carrier, product type or shipping mode which creates regular exceptions, business can determine the reason behind this and make changes in its operations accordingly.
How Automation Can Help in the Management of Shipping Exceptions
Manually managing exceptions becomes hard when the number of orders increases. Automation helps businesses in monitoring their shipments and taking care of exceptions.
This system would allow:
- Monitoring shipment information
- Identification of abnormalities in shipment tracking
- Issuing alerts
- Classification of exceptions
- Notifying customers
- Assigning exceptions to the concerned department
- Monitoring exception resolution process
- Creating performance reports
Rather than monitoring all shipments manually, operations teams will be able to concentrate on exceptions only.
AI in Shipping Exception Management
AI can extend the capabilities of automation, analysing large amount of data concerning shipments and detecting patterns which cannot be easily noticed by humans.
For instance, using AI-based software, you can identify the following factors:
- Possibility of shipment delays
- Areas where delivery fails repeatedly
- Reasons behind shipment failures
- Performance of couriers
- Possible risk of RTO
- Recurrent customer or address issues
Additionally, it will allow you to prioritize exceptions depending on their severity, so you can deal with urgent ones first.
Nevertheless, AI will work effectively only when combined with reliable shipment data, proper business rules and human supervision.
Best Practices of Shipping Exceptions Management
Effective shipping exception management involves two things: prompt resolution and future prevention.
The following steps should be taken to achieve this goal:
- Continuous monitoring of shipments
- Development of clear exception handling procedures
- Quick response to exceptions
- Keeping customers informed
- Accurate shipment tracking data
- Regular communication with courier partners
- Using automation
- Exception analysis
- Courier performance evaluation
- Regular review of SOPs
The task should not be limited to solving problems but should also involve identifying patterns and reducing the number of exceptions.
How to Monitor the Shipping Exception Management Performance
Monitoring the appropriate metrics enables companies to see how successfully they are dealing with shipping exceptions.
Exception Rate
The exception rate metric shows what percentage of shipments have an exception.
Formula:
Exception Rate = (Shipments with Exceptions ÷ Total Shipments) × 100
Lower exception rates imply that less shipments have exceptions.
Average Resolution Time
It is the average time needed to resolve a shipping exception.
Shorter resolution times will help to avoid additional delays.
First-Response Time
First-response time is the metric showing how quickly the company responds to exceptions.
Faster first-response time is especially valuable for time-sensitive shipments.
Repeat Exception Rate
The repeat exception rate is the metric showing how often exceptions recur either for the same shipment or across shipments.
A high repeat exception rate indicates that underlying issues may not have been fully resolved by the company despite being reported.
Customer Contact Rate
It is the metric showing how many times a customer needs to contact the company about delivery exceptions.
Resolution Success Rate
The resolution success rate represents the percentage of exceptions that are resolved without escalation or delivery failure.
It helps companies to understand how well their exception handling process performs.
Conclusion
Exception in shipping is inevitable for every e-commerce business. However, the effect of the exceptions on the delivery process can be minimized by adopting a systematic strategy.
Shipment exception management helps businesses identify problems in the delivery process at an early stage, manage them effectively, and identify recurring issues that might be occurring.
A combination of accurate shipment tracking, effective customer communication, trustworthy courier partners, SOPs and automation will enable e-commerce businesses to manage their delivery process better.
FAQs
Shipping exception management represents the procedure of identification, investigation, resolution and monitoring of those unexpected events which lead to the disruption of regular delivery of shipments.
There are many types of shipping exceptions; however, the most common ones include stuck package, incorrect address, failed delivery attempt, package returned to the sender, delivered package that was not received by the customer, damaged/lost package and incomplete tracking information.
The delay of delivery means that delivery is delayed; however, exception in shipping refers to much broader term and includes all unexpected situations which result in the disturbance of regular shipping process.
Businesses should discover what the exception is, determine its root causes, choose a solution for dealing with it, take necessary actions to solve the problem, reach out to customers or couriers if necessary and keep monitoring the shipments until all is well.
