What Exactly Is a Delivery Management System, and Should You Get One?

Whether you own a restaurant, grocery, retail store, ecommerce site, or delivery business, customers are increasingly expecting fast, local delivery. They also want to be able to schedule deliveries, get real time delivery status updates, and communicate directly with your drivers (and your business). As an independent business owner, it can feel impossible to keep up, especially when platforms like Doordash, Instacart and other major brands dominate the market. 

Let me introduce you to the delivery management system (DMS). This software system can give your small business or franchise the same tools the big platforms use, helping you control your delivery business and give customers what they need. Read on to learn what a DMS is and how it can help you grow your business by giving your customers what they crave. 

What is a delivery management system?

A delivery management system is a software tool that organizes and automates the entire delivery process from purchase to doorstep. These tools accept orders, organize your delivery queue, assign deliveries to drivers, plan routes, and confirm delivery. Many also process payments. 

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 Essentially, a DMS gives you Doordash-like powers by offering these key features: 

• Real-time driver tracking: Track drivers in real time on cloud-based maps. See the locations of your entire team in the field from your back office or smartphone. 
• Automated Driver assignment: Your delivery management system will assign deliveries to drivers. Some systems use historic performance data to automatically assign deliveries to the best-ftting driver. 
• Route optimization: DMS software automatically suggests the most efficient routes for your drivers based on the deliveries in your queue. Some even consider driver performance in their optimization settings. 
• Customer notifications: Save time fielding customer status requests; your DMS will send automated messages based on real-time tracking. 
• Proof of delivery management: Maintain a searchable log of all signatures, photos, or other proof-of-delivery material to produce upon customer request and prevent chargeback disputes. 
• Integration capabilities: Most DMS software communicates natively with popular business software platforms like ecommerce tools, point of sale (POS) systems, bookkeeping tools, and payment procession platforms. 
• Order aggregation: Accept— and organize— orders from your website, over the phone, in person, or via third-party platforms. Find all your orders in one central dashboard, even orders being delivered by third-party partners. 
• Customer feedback tracking: Many DMS tools prompt customers to provide direct feedback to your business about their experience. This can help you catch negative reviews before they appear online and increase the number of positive Google reviews.

Why should your business consider a delivery management system?

If you offer local delivery of your products, you should consider a delivery management system. Even if right now delivery is only a small part of your business, a DMS can help you grow this new service into a serious revenue stream. In addition to helping your business grow, a DMS has other benefits: 

• Increased efficiency gains: Businesses that use DMS software report faster and more accurate deliveries. 
• REduced costs: Optimized routes reduce wear and tear on vehicles and save on fuel costs. 
• Improved customer experience: Give your customers accurate estimated delivery times. And automatically send status updates, no additional staff necessary. 
• Scalability: With all of your data centrally located and many tasks automated, you can build your business, faster, easier, and with lower overhead as customer demand increases. 
• Data-driven insights: Built-in reporting and analysis illustrates where you can find additional efficiency, update your services, or add more drivers. You won’t need to rely on a gut instinct— real-time reports show ata-driven insights, reporting, and improved decision-making.

The best news is that DMS technology has never been more affordable. Delivery management systems like Shipday even let you get started for free, with additional subscription tiers that grow as your business grows. So you don’t need to pay for tools that aren’t relevant to your business, but once you need them, all you need to do it upgrade, all your data will stay with you, in the same central dashboard. 

How a delivery management system works

So, how does a delivery management system actually work? Let’s walk through a typical transaction with a pizzeria using a DMS to manage a team of staff drivers to self-manage their delivery. 

• Customer places delivery order: A customer places an order for delivery via phone or on the restaurant’s online ordering app. 
• Pizzeria receives order: The DMS routes the delivery request to the business via a built-in order portal or through an integration with the restaurant’s POS system. 
• DMS assigns driver to delivery: Your DMS software assigns the delivery to an available driver. Fully automated, or AI-driven systems may consider the drivers’ past performance to assign the most effective available driver. 
• DMS selects the most efficient route: The DMS quickly generates the most efficient route based on the delivery queue, current traffic conditions, and vehicle type. 
• Driver receives directions via driver app: The DMS sends the route and delivery instructions to the driver via a connected smartphone app. 
• Customer receives status notifications: Once the delivery leaves your business, the customer receives an automated SMS text letting them know their order is en route. 
• Driver logs delivery confirmation: When the pizza id delivered, the driver can snap a photo or collect a customer signature to confirm the order was delivered correctly. 
• Driver moves on to next delivery: Your driver moves on to the next order in their queue. 
• Customer is prompted for feedback: The DMS sends a follow up message to your customer requesting a simple star rating or detailed feedback on their experience. 
• Data is stored in DMS reports: After each delivery, all delivery details are retained in your DMS reports, helping you search for historic information or identify patterns in your delivert business. 

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DMS vs. traditional dispatch

You might think, businesses like pizzerias and courier services have been delivering for decades without a DMS, why would they need one now? As soon as some form of DMS system was available, businesses that could afford to use them, did. The major difference now is that cloud computing and automation have made these DMS systems much more affordable and user-friendly for even the smallest businesses. 

Manual dispatch systems that rely on paper tickets and paper maps might seem fine for the smallest delivery businesses. And technically? They do work. But they require a lot of administrative attention and when errors happen, it is nearly impossible to diagnose exactly where the miscommunication happened. Paper tickets get lost. Directions are misunderstood. Customers and business owners can’t track in real time. So if something unexpected occurs in the course of a delivery— a traffic accident, a lost driver, an unclear delivery address— it can take hours to get your operation back on track. 

Delivery management software is also more quickly scalable than traditional dispatch management methods. As your business grows, you can simply upgrade your subscription level to increase the number of tools available. With your data already centralized in a DMS, you won’t need to overhaul your whole system or spend time training new employees to dispatch using outdated tech. The DMS automates many tasks— like route planning— and is so user-friendly that most anyone who has used a smartphone can figure out the DMS dashboard.

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Costs and ROI of implementing a delivery management system

Implementing a delivery management system is not without costs, but most businesses find they quickly earn a return on their investment. Most restaurant and courier businesses recoup their initial investment in three to six months; higher volume businesses may have an even shorter timeline. 

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Most DMS providers use one of three common pricing models: monthly subscriptions, per-order fees, or a hybrid approach. Monthly subscription models typically range from $50 to $300 per month, depending on the features and number of monthly deliveries. Some DMS platforms— like Shipday— offer a free baseline subscription for the smallest businesses to get started. 

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Per-order fee structures usually charge $0.25 to $1.50 per delivery, which can benefit lower-volume operations. Hybrid models combine a lower monthly base fee along with per-order charges, offering flexibility as your delivery volume grows.

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To calculate your potential ROI, consider these factors:

• Employee bandwidth: What tasks take up most of your employees’ time? Can the automated tools in a DMS reduce the amount of time your team needs to plan routes, assign deliveries, or communicate order status to customers? Most businesses switching to a DMS see a 5% to 50% reduction in labor costs due to more streamlined operations. To get a conservative estimate of your ROI, calculate how much you would save if you could reduce your labor costs by 5% to 15% per month. 
• Error reduction: Deliveries are prone to errors, from missing items to delivering to the wrong address or delivering at the wrong time. Using a DMS can pay for itself quickly in error reductions alone. Average the amount you spent on correcting errors monthly over the past six months. How much would you save if a DMS could eliminate those errors? 

• Potential business growth: Many businesses experience a surge in delivery orders after adopting a DMS.  One courier service— New Jersey-based A-Team Delivery— reported growing their delivery volume by 200% after adding Shipday to their operation. Another way to estimate your ROI is to consider how much your profits could increase if you could grow sales by 20% to 50%. 

Here's a simple ROI calculation example: A restaurant processing 500 deliveries monthly, with an average order of $30, might spend $149 on a DMS subscription. If that system reduces delivery errors by just 10 incidents per month ($300), the savings on remakes alone would more than cover the subscription cost. Factor in labor efficiencies and increased order volume, and the ROI becomes even more compelling, as this DMS user from KFC Barbados describes:

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“Shipday has been a game-changer for us. It cut costs by 50%, daily across six locations, and made our entire delivery process faster and more reliable.”

— Stuart Davis, KFC

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How to choose the right delivery management system for Your Business

Selecting the right delivery management system requires evaluating your current and future business needs. You’ll also need to consider your budget and whether you need a DMS that readily communicates with any existing software you already need. 

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If you have systems you already love, seamless integration with your existing tech should be your first priority. Your DMS should connect smoothly with your POS or payment systems and online ordering platforms. Without proper integration, you risk creating more administrative work rather than reducing it. Ask potential providers for examples of successful integrations with systems like yours.

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Consider the user interface and learning curve. Your staff will need to adopt this system quickly with minimal disruption to operations. Request demos and free trials to evaluate how intuitive each system feels. The best direct delivery management solutions should be easy enough that new delivery drivers can understand it after minimal training.

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Customer support quality varies dramatically between providers. Since delivery issues often happen during your busiest times, you need responsive support that's available when you need it. Check reviews specifically about support responsiveness and ask about guaranteed response times.

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Finally, assess customization capabilities. Your delivery needs are unique, and your DMS should adapt to your processes rather than forcing you to change your operations to fit the software.

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High quality providers like Shipday offer customizable delivery zones and driver management, integrate with multiple POS and payment systems, and are easy to learn. Shipday also boasts excellent user ratings across multiple review sites

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So, should you invest in a DMS?

If you offer delivery as a part of your business operation, you should consider a DMS. Customer demand for fast, accurate delivery is likely to only grow. To stay ahead of the curve and meet that demand, your business should update systems now. Delivery management technology has never been more affordable. If you are concerned about your ROI, get started for free with Shipday, and see how a user-friendly DMS can upgrade your operation. 

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Get started with Shipday for free today.