In the face of increased consumer demands and more complex supply chain systems, shippers must rise to new challenges related to visibility, carrier integration, benchmarking and more.
When it comes to servicing customers – and consumers – supply chain management is all about visibility. These days, it is unlikely that businesses house all data regarding shipments within their own organization. It is generally spread out across numerous partners, including other manufacturers, local transport partners, freight forwarders, shipping lines, port services, air freight carriers, and more. To get the big picture and better visibility, organizations need to collaborate more with shippers and other trading partners.
Visibility can come at a price. There is the cost which results from having blind spots in your supply chain and there are the unseen process improvements which can improve workflows and increase awareness which are lost when an organization does not have a visibility solution. Visibility is without a doubt a major challenge faced by everyone in the industry. The key to solving the problem is gaining access to all that underlying data which is spread out across all those numerous partners, manufacturers, local transport partners, freight forwarders, shipping lines, port services, and air freight carriers. To gain true visibility, shippers must look for ways to reduce the complexity in their supply chains, for example, through supply chain convergence. And they must find ways to join or aggregate their data for reporting and analytical purposes. An obvious byproduct of supply chain convergence is data aggregation and visibility.
With more regulated and high-value items, such as electronics and pharmaceuticals, being shipped around the world, shippers are being held more accountable than ever. They need a visibility solution which enables them to track the exact location of each item – often down to a specific time of day – and need to get the goods to the destination within the agreed upon delivery dates, all while providing real-time alerts to the shipper. This makes visibility into the entire shipment process critical and challenging to say the least.
One key area where lack of visibility becomes a problem for a retailer is drop shipping. That's because the drop shipping process can leave them out of the loop if they don't have an integrated approach to data exchange. Having the ability to look across your supply chain to check availability, view quantity on hand and submit an order is essential in today's connected world. Integration supports the collaboration model needed between manufactures and their suppliers to make drop shipping possible. Drop shipping allows retailers to exponentially expand the number of product lines they offer and gives access to a network of inventory to meet customer demand while eliminating the overhead of storing and managing physical goods. In a drop shipping model, suppliers carry and deliver the inventory to the end customer.
Drop shipping has grown in popularity with the rise of omni-channel retail and the increasing expectations of customers who now have the power to acquire what they want, when they want it, from anywhere with the click of a mouse.
But the drop shipping business model brings its own risks and challenges: retailers may not have full visibility into everything that's happening from the order to fulfillment. Since retailers have little insight into goods that are not housed in their own distribution centers, they need the shipping process to be more transparent. Suppliers must be responsible for tracking and alerting the retailer of any issues along the way. Here, integration between retailers, suppliers and customers, as well as advanced technology to easily automate and manage the entire process is of the utmost importance.
Carrier Options & Speed of Delivery
Another major challenge for shippers today lies in the new complexity and array of shipping options. Shippers need to determine the best mode for shipping inventory, which may now come from a store directly to the consumer, direct from the manufacturer or from a fulfillment center to the purchaser.
Today's consumers are very different from even three years ago. They aren't afraid to buy things online and their expectations for next day or second day delivery are ever increasing. With the explosive growth of online retail through the use of mobile and other devices and increasing consumer demand for any product, anywhere any time, some customers have even come to expect their purchases to be delivered as quickly the same day or next day.
This can be especially challenging given changing societal habits such as urbanization, where carriers must deal with increased ground traffic, delivery annoyances such as apartment building access and more. Shippers and carriers must adapt their channels, store formats, and types/sizes of vehicles used in the logistics process to match the needs of more efficient shipments. To meet these expectations shippers have to have a diverse shipper's network comprised of international, national, local, and regional carriers.
Unfortunately, shippers and retailers tend to have an over reliance on a single carrier and as a result can't react as quickly or simply can't meet the expectations set by their customers. In a single carrier environment, you severely limit your ability to find the best shipping option; having access to more than one carrier makes the per-shipment cost more competitive and drives down costs over time, enabling organizations to compare not only costs but on-time delivery data. A true multi-carrier environment allows you to gain agility, react more quickly to changes in the market and meet or exceed your customers' expectations for delivery.
Finally, benchmarking inventory, shipments and all the involved processes is critical to improving shipping operations. This is often a challenge for organizations with numerous partners or shippers that lack the technological ability to benchmark activities and performance. However it is a critical place to invest as you can't manage what you can't measure.
Benchmarking and the establishment of Key Performance Indicators (KPIs) can provide insight into shipping patterns and open up opportunities for process improvement and unlock untold value. To stay competitive, you have to find ways to formulate metrics that help you compare your rates to other companies in the same market. This requires data to create a complete profile of destinations, weights and costs that you most often use. That's especially helpful when you negotiate your carrier contracts to ensure you are getting what you paid for and at the most competitive rate for your volume and industry.
Gaining insights into fulfillment processes, spending and performance can help shippers gain a competitive edge, and this is why visibility, carrier integration and benchmarking are key to achieving successful shipping operations in the year ahead.