Companies managing their supply chain operations face the challenges of growing complexities of the global economy, the continuous rise in e-commerce and increasing customer expectations. To help confront these challenges and keep pace with customers’ needs, companies increasingly understand the importance of digitally transforming their supply chain to increase flexibility, visibility and reduce costs. According to the 2019 MHI Annual Industry Report, 80 percent of survey respondents believe digital supply chains will be the predominant model within just five years.
So what exactly is digital transformation of the supply chain? When it comes to the supply chain in particular, companies have invested more heavily in website and marketing technologies, leaving supply chains under- invested and developed. This is an untenable state of existence given increasing sales and rising customer expectations, which stress brittle, over-extended supply chain networks, processes and systems. These challenges are even more apparent come peak season, or in the face of disrupting events like weather or the current COVID-19 outbreak, which cause companies to react by adding more inventory sources, more options for inbound and outbound fulfillment supply, and technologies capable of instant reaction/change to mitigate disruption as best possible.
For example, in the world of parcel shipping, as more online sellers offer perks like free shipping and next- or even same-day delivery, customers’ expectations keep climbing higher. When faced with disruptions, shippers have a need to add new carriers instantly in order to extend last-mile fulfillment from a “nice to have” to a potentially existential necessity.
Digital transformation of supply chains requires a wide range of tools for automation and AI, including such innovations as self-driving trucks, drones, 3D printing, inventory management systems, warehouse robotics and more. Note that, although recurrent seasonal peaks can be dealt with via AI, rare and unusual disrupting events like COVID-19 still require human intervention. AI requires datasets to provide “past experience” and deals better with recurrent challenges like season peak or weather events.
COVID-19 aside, as cloud computing and other advancements make new tools and technologies more accessible, even the smallest organizations can opt in to a digital transformation, which leaves larger organizations no choice if they want to stay competitive. To effectively adapt to the digital transformation of the supply chain and better understand opportunities to optimize processes to deliver more value, companies need to consider their ideal business outcomes to determine the best path forward.
Automation and the power of moving shipping to the cloud
For companies looking to enhance the way they execute supply chain outcomes, automating processes for sourcing and delivering goods through the cloud can offer a clearer view into the supply chain and give organizations improved access to data to drive better business decisions.
Moving to a cloud-based infrastructure helps shippers ensure all their information is updated automatically, happening behind the scenes in real time, while also providing flexibility to do things more quickly, including onboarding more carrier services. Increasing their carrier network enables shippers to decrease costs while often improving or expanding customer service. Shippers can make more nimble business decisions with access to a wider cloud-based carrier network and the capability to harness real-time shipping data and run analytics to help evaluate carrier performance, uncover savings opportunities and inform carrier contract negotiations.
Digital access to carriers and supply chain data can also help shippers become digitally mature, improve productivity, maintain or improve customer service, prevent losses and decrease transportation spend. Omnichannel retailers in particular can benefit from a digital supply chain. Digitally-mature shippers have technology running their inventory management, order management and shipping all in one integrated system, allowing them to easily capture data from different systems to optimize the customer experience and minimize the cost of increasingly complex supply chain processes. Cloud-based shipping software enables companies to leverage a single system to manage multiple carrier contracts, comply with label and documentation requirements for each, and see the long-term impact of various carrier service rates – streamlining order fulfillment ops and setting each parcel up for cost-effective, accurate and on-time delivery before it leaves the warehouse.
Data security in the cloud
While it has its advantages, with digital transformation comes new – and continually increasing – security concerns, particularly with regard to privacy, access and data location. Parcel shipping ecosystems contain all sorts of personal information, including names, addresses and phone numbers. However, a dependable cloud-based shipping system can potentially provide more robust data security than a company could by itself – particularly if there’s a lack of deep IT resources, staff, controls or expertise in-house.
Data privacy and security guidelines, standards and laws vary across regions (such as GDPR, CCPA, PIPEDA, etc.), so it’s important that a cloud-based shipping solution is backed by a global strategy with rapid implementation and rollout of adjustments to ensure compliance with data security and privacy requirements, with the ability for companies to monitor and address security and privacy legislation both on the home front and across borders.
End-to-end visibility into last-mile delivery
Digital supply chains can help companies provide full visibility into customer deliveries and increase transparency by leveraging real-time performance data and connecting the end-to-end transportation cycle. Utilizing a cloud-based shipping solution allows organizations to easily integrate with all the relevant carriers and partners. From there, they can select the best, most efficient carrier service for last-mile delivery based on actual carrier performance to identify the optimal route with the lowest cost implications and/or fastest delivery times.
For some shippers, most of the job may seem complete when the parcel leaves the warehouse; for customers, this marks the beginning. The ability to keep customers updated on all shipments in real-time is essential. Cloud-based shipping solutions offer control tower visibility and dashboard reporting which facilitate proactive delivery event management and carrier performance monitoring to allow customer service to intervene if needed to keep deliveries on track, increasing transparency and customer satisfaction.
Charting the digital transformation journey
There’s no one-size-fits-all cloud-based shipping solution, and many shippers start with hybrid solutions once they realize the benefits to be gained by just partially embracing the cloud. Each company has a unique strategy, infrastructure and budget; finding the best solution usually comes down to clarifying an organization’s particular business needs. Companies don’t have to have all the answers or transform their digital supply chain all at once. Many shades of grey exist between completely on-premise and completely cloud-based solutions. Each delivery model has its advantages and disadvantages, and the ideal delivery model for each shipper’s digital transformation journey depends on a variety of factors.
A hybrid delivery model combines both SaaS and hosted solutions. From the user’s perspective, there’s only one shipping system in place, but a peek “behind the curtain” will reveal both cloud-based and on-premise servers at work.
A hybrid shipping solution is ideal for organizations that want control over where their data is stored but realize the benefits of global accessibility. For example, they might store sensitive customer data on their private cloud and use a public cloud to manage the rest of their shipping operations.
Today, most organizations prefer a SaaS-based shipping solution over their hosted or hybrid counterparts. In fact, according to Gartner, global SaaS revenues could hit $113.1 billion by 2021, a 30% increase from 2019. Since SaaS TMS solutions are cloud based, they’re more time-efficient when it comes to sharing and managing shipping data on an ongoing basis, meaning that organizations receive a double benefit: time savings upfront and over the long-term. Compared with manual processes or traditional on-premise solutions, cloud-based solutions also make it easier to access, aggregate and analyze data.
Riding the wave of digital transformation in the supply chain is not optional. Growing customer expectations and rising competition in the marketplace make digitalization a mandatory progression for shippers looking to succeed. Each business has unique needs and supply chain priorities that will determine which digital solutions are the best fit. Ultimately, embracing the cloud makes supply chain innovation more sustainable, helping organizations improve their parcel shipping operations and generate a quick ROI.