In Focus: 5 Factors To Consider On The “Build Vs Buy” Decision on Last-Mile Software Solution

Consumer expectations around last-mile fulfillment are their peak. A consumer survey showed that 55% of consumers will switch their retail brands if they find their delivery times are too slow. It also showed that 80% of consumers are willing to pay higher prices for same-day deliveries.

Technology solutions for last-mile fulfillment have emerged as the quickest, most practical way to meet these steep consumer demands. However, should a business invest their capital in building and maintaining their solution from scratch, or simply purchase an off-the-shelf solution? 

Walter Heil, Senior Vice President, Developed Markets, Locus, shared his insights on our latest episode of In Focus, a series of webinars where logistics and supply chain experts from Locus and brands around the world share expert opinions and actionable insights on how to make the last mile your differentiator among brands. Below are key takeaways from the session “Buy vs Build? How To Get The Best of Both Worlds from Your Last Mile”.

To access the complete set of insights, view the webinar here:

Holistically consider the costs

When considering the costs associated with building your own solution, Walter said, “As much as 20% of the costs are around building and rollout. Costs accelerate when you are building and maintaining your own text stack during the support phase after the launch. You’re going to have to perform upgrades consistently to address and accommodate the growing demands of the customers and your business, or even carry out platform migrations to accommodate increases in scale and increase capacity. It goes on and on. So, contrary to what people think, ongoing costs really are the majority of overall costs.

Unforeseen issues, hurdles, delays, and external factors dig deep into the IT budget and delay the golden market timeline that has other implications. Some surveys and studies suggest 52% of the IT projects do overtime budgets. 56% of these IT projects simply fall short of the original vision or the expected return on investment.

Match the pace of innovation with evolving trends

“SaaS providers in the market are experienced in helping their customers deliver millions of orders or supporting millions of deliveries on an annual basis, and maybe even on a monthly basis. With continuous iterations of enhancements, these platforms offer features that solve a wide range of problems.

And that lets our other customers take advantage of those unique configurations and capabilities throughout the SaaS service. Such platforms are built to keep compatibility in mind, we have to be compatible with whatever’s going on in the market, we have to stay compatible in order to remain competitive, and deliver value to our customers. Not only are we good at building and scaling technology and delivering it to the market, but we’re good at building a vision and delivering on that vision for our customers.

Leveraging existing experience and expertise

“In a buy strategy with a company like Locus, you can leverage that expertise rather than having to build it within your organization. How does that bring value to you? We spread that maintenance cost across hundreds of customers. This way, you’re not left on your own with the burden or liability of all of the maintenance costs yourself when you build as compared to when you buy.

If you build in-house, you have to be sensitive to the reality that you can accumulate a lot of tech debt. And that tech debt can build year over year, as you continue to have to invest to scale your technology to meet the growing demands of your business and the market.

Considering the right opportunity cost and ensuring competitive Resilience

“Only 34% of organizations seek first mover advantage in the face of time-sensitive market disruptions. Why? Many times it’s because many organizations simply don’t have the infrastructure and technology to be able to be a first mover. They have to wait and watch what happens, and react later. And sometimes that’s a little bit too late. When you purchase SaaS software, you’re taking the opportunity costs out of the equation, and you benefit from the platform’s already live functionality. And it happens in a much faster timeframe. So it gives you an opportunity to be a first mover, which is super important.

Hitting the ground running with right time to value

“You have to balance or prioritize the time to value and cost of ownership. SaaS platforms provide the fastest window to connecting your goals with your actions, because we are a market-ready, industrial-grade solution in the cloud. On the customer’s end, a solution like Locus can help you get to market much faster, and your ROI can be recognized much quicker. When you think about a build strategy, it typically takes about six to 12 months to build the first version of a well-functioning sort of user-friendly platform. Any delay in the decision can add a cost overrun of about 27%. With a solution like Locus, we can typically be up and running in a matter of a couple of months or quicker in some cases.

Making the right decision with facts at hand

“Building your own solution presents a valid case, if the requirements are unique to your organization. You have to offset that against the advantages of a SaaS platform that is configurable, nimble, and can be deployed quickly, and where you can take advantage of the best practices of companies in your industry and even companies that are not necessarily in your industry. But their capabilities and functions might lend value to your organization, experience, and expertise.”

Walt then covered how along these lines, Locus’ Dispatch Management Platform is a real-world ready end-to-end last-mile fulfillment solution that has been delivering excellence across the world over diverse industries including e-commerce, CPG, manufacturing service organizations, home service providers. He also spoke of the benefits of its modularity, its compatibility with existing TMS, OMS solutions, and how it has enabled 650+ million deliveries across 200+ clients in 30+ countries globally.

To know how you can deploy Locus’ solutions to achieve last-mile excellence in relatively quick time frames