The past two years have highlighted the criticality of resilient supply chains and transportation management systems, and in more recent months we have seen the enduring consequences of multiple macroeconomic disruptive forces.
The transportation eco-system is evolving at an unprecedented pace right now. This week, we released our annual AlixPartners Disruption Index, which polled over 3,000 business executives globally. Our study revealed that CEOs in particular had acknowledged this acceleration, with 57% feeling that their companies are not adapting fast enough to the change they’re seeing in their businesses, and 46% also highlighting poor execution of the technology and tools they have invested in as being their biggest challenge for 2022.
With that context in mind, it was fascinating to chair a panel discussion at last week’s Manifest 2022 event in Las Vegas, discussing supply chain digitization and the application of transportation systems.
While it is undisputed that end-to-end supply chain visibility is vital, translating an obvious solution to practical and pragmatic implementation is a much tougher task. Here are the five key takeaways I took from the session, as analyzed how technology and a rethink of organizational design are both vital components in developing more robust transportation networks and enhancing the delivery experience.
1. Real-time supply chain visibility can be a catalyst for external value creation and internal operations.
A true end-to-end view of a supply chain, enabled by greater connectedness, can realize huge benefits for organizations. This connectedness can act as a catalyst to breaking down silos within a business, providing a clear line of sight to the first mile, middle mile, and last mile, allowing companies to tailor transportation execution and planning to mitigate risk and deliver the desired customer experience. It must be integrated enterprise-wide, across sourcing, manufacturing, distribution and transportation – by association S&OP / IBP is a foundational component in aligning an organization and driving end-to-end transparency. The highest levels of visibility will help mitigate risk both up and downstream in the value chain.
2. Visibility is great – but it must also be clear how to act on what you see.
Companies often struggle to make the most of the insights they gather. Timeliness and accuracy are imperative, as you must be able to predict with probability and the credibility of historical information to provide accurate delivery slots to consumers at the time of the order. Speed to this accurate decision making can be a key differentiator – this information shouldn’t take 18 clicks to bottom out.
As a result, business processes and functional groups should be oriented to drive action through visibility and connectedness, extending to working collaboratively with partners to improve clarity. Third parties can connect you to a network of final mile delivery carriers that are fully integrated with their platforms and, as we continue the movement to the cloud, it will become easier to connect to different systems to enable this.
Digital supply chain control tower platforms can also dramatically boost visibility. A dashboard of worldwide data can quickly propose scenarios and decision points should shipments experience delays that enable timely action. Their ability to aggregate information in real-time from disparate elements – including multiple systems, silos, functions and customers – can create a distinct competitive advantage when it comes to the customer experience.
3. The growth in e-commerce is bringing new challenges and requires revised strategies
: A number of transportation strategies are emerging to support the rise in e-commerce and omnichannel fulfillment. Micro-fulfillment to meet rising direct-to-consumer next-day and same-day delivery demand is forcing shippers to modify or expand their footprints, though this can sometimes lag behind the strategic and commercial roadmaps for developing a direct-to-consumer channel.
The need for a seamless connection between order management, fulfillment and transportation execution is proving imperative to differentiate on speed and customer experience. This can be particularly challenging for clients that have historically sold exclusively through channels partners or have no omni-channel foundation to build from.
It is also clear that relying solely on UPS and FedEx is no longer enough. Our recent work in supporting clients in their digital carve-outs has required carrier network expansion in order to add partners that offer specific service offerings meeting nuanced business needs, and regional coverage that can supplement these major players. As a result, investing in and operating private fleets is an option to be considered that can offer more flexibility and control. The business cases are becoming more attractive given the recent developments in the transportation market, although developing the operating capability and required digital enablement can be both complex and capital intensive. Building the strongest tech platform possible and an ecosystem of partners is vital in opening more doors to enable such self-sufficient opportunities.
4. Consumer expectations are sky-high, and action is needed to shift gears and meet them
: The pandemic has driven millions more consumers to a digital-first purchasing environment, and their experiences of excellence – and sub-par service – means that customer experience is the new battlefield. The vast majority of customers will pay more for a better experience and the organizations acting on this are the winners right now.
Fast, free shipping to meet immediate demand requires creativity in getting inventory closer to the customer, shipping from store, and leveraging micro-fulfillment centers, among others. Direct-to-consumer has increasingly become a space where a growing portion of the differentiator for shippers is supply chain speed and a smooth customer experience.
Businesses also need to connect that fact that the driver experience will define the customer experience. Standardization brings consistency, which is greatly valued, while driver training must also be a robust yet rapid and seamless process – impatience is high in a talent pool where availability is stretched.
To aid retention, consider how you can improve the efficiency and consistency of the driver experience, irrespective of local geography or product type. Look at the data surrounding driver pain-points and take action to solve them or at least highlight them in advance – access and parking, for example, are high-ranking issues. Paying acute attention to what drivers care about most will translate to high-performance on what matters most to consumers.
5. The future will be driven by the customer experience
: The long-term direction of transportation will be dictated not by what you deliver, but how you deliver and the associated experience you provide. In many ways, every company needs to become a transportation and logistics company in order to meet the required service levels that allow you to win in the direct-to-consumer space. Agility remains critical, and digitization is now a “must-have” rather than “nice-to-have”.