E2open Acquires Global Multi-Carrier E-Commerce Shipping Software Platform, Logistyx Technologies. Read More

Micro-fulfillment Centers Only Half of the Equation

DC Velocity recently ran an article on the growing trend of micro-fulfillment (placing popular products in small fulfillment centers centrally located within population centers), noting the value of the approach as a response to e-commerce growth, warehousing shortages and carrier capacity constraints.

“If industrial real estate were widely available in key markets, perhaps that would put a damper on the popularity of micro-fulfillment. But warehouse vacancy remains at record lows, while industrial real estate demand remains at all-time highs. As a result, even conservative estimates place any sort of balance of supply and demand in warehousing about two years out. This factor should give micro-fulfillment plenty of time to normalize itself in fulfillment networks.

Research and Markets estimate that micro-fulfillment center installations will grow more than 20 times by 2030, with more than 80% of those installations deployed in North America. This data suggests that micro-fulfillment will become a staple of e-commerce fulfillment practices within the next few years.”

Among the benefits cited are faster shipping and lower transportation costs. But these are only true if retailers have the necessary tools to capitalize, including:

Webinar - Take Control of Your Parcel Shipping Network

The benefits of micro-fulfillment are negated if retailers’ carrier networks lack the capacity to handle the increased shipment volume or are locked into single carriers with increasing prices. If retailers lack the ability to quickly analyze fulfillment data from every angle, they’re leaving money on the table by not understanding how and where to optimize their processes, including carrier and service selection.

The critical nature of last-mile delivery for customer satisfaction heightens both the opportunity and risk for retailers employing micro-fulfillment. Contact us today to see how we can help you optimize your micro-fulfillment capabilities.

A Deeper Dive into Logistics Management’s Parcel Shipping Challenges

For its March 2022 issue, Logistics Management spoke with three sources for its “2022 Parcel Express Roundtable: Challenges Persist” article, covering many of the same topics Logistyx has highlighted recently, including carrier capacity crunches, carrier price increases, the growth in e-commerce sales, and the need for multi-carrier shipping. Overall, it’s an insightful article we recommend everyone read, but as is often the case with this type of format, the article didn’t offer much deep analysis of these issues. With that in mind, we thought we’d highlight some of the published comments and offer our expanded take.

Carrier capacity constraints

Rick Watson: Today, the parcel marketplace is looking very similar to where it was in 2021. There are still numerous strains concerning the carrying capacity of networks as volumes continue to climb.

Logistyx’s take: While parcel shipment volume has grown at an unprecedented rate, carriers also enacted caps on the number of shipments they would take, leaving shippers to scramble for alternatives. Those shippers who traditionally relied on one or two carriers had to manually navigate this process and often found smaller regional carriers implementing the same caps, because the trickle-down volume overwhelmed them and exacerbated the problem. Shippers with a multi-carrier shipping solution in place quickly identified, onboarded, and utilized a robust network of carriers large and small to meet their needs and gain a leg up on those reliant on manual processes.

Carrier rate increases

John Haber: All carriers have announced increased 2022 rates. Regional carriers such as OnTrac and LSO each announced an average annual rate hike of 5.9%, while USPS announced increases to its shipping service products such as Priority Mail Service (3.1%) and Priority Mail Express (3.1%). More price increases from the USPS are expected this year. Similar to OnTrac and LSO, Pitney Bowes announced a 5.9% increase for its e-commerce services.

The Parcel rates from FedEx and UPS are among the highest on record. Even though FedEx and UPS announced an average annual rate increase of 5.9% for their services in 2022, the actual rate increase for many shippers is actually higher, around 10% depending on contract.

Logistyx’s take: Rates are rising across the board at an unprecedented rate. With shipping capacity a hot commodity, it’s a carriers’ market. Shippers have little power to influence these increases since they can no longer leverage large shipment volumes to negotiate significantly better rates. The best way to combat these alarming trends is to employ a multi-carrier shipping strategy via parcel shipping software to manage carrier capacity. Moving to a multi-carrier shipping strategy enables shippers to rate shop and select the best carrier and service for each parcel from a network of strategically sourced carriers based on point of origin, point of destination, delivery timeframe, cost, capacity availability, and shipper-established business rules. Choosing the best rate and service for each parcel can help shippers offset these common surcharges and limit the impact of rising costs on the bottom line.

Webinar - Take Control of Your Parcel Shipping Network

E-commerce sales boom

John Haber: The outbreak of the pandemic brought forth a massive jump in U.S. e-commerce retail as stores temporarily closed and consumers remained hesitant to physically shop in stores once reopened. At its peak, e-commerce represented 16.1% of U.S retail sales in the second quarter of 2020, but it has since leveled off to around 13% as of the third quarter of 2021.

Logistyx’s take: This is clear confirmation of what we’ve come to expect: e-commerce is not only here to stay but is firmly established as a go-to option for consumers. For shippers, dealing with increasing order volumes and rising customer expectations can be a challenge, especially with ongoing supply chain issues, carrier capacity constraints, increasing shipping costs, weather delays, and labor issues complicating everything.

Many Logistyx clients, including Home Depot, Oxford (Owner of Tommy Bahama, Lilly Pulitzer, and Southern Tide), and Walgreens have capitalized on this trend to drive growth and success. As the top provider of fulfillment software for the third consecutive year in Digital Commerce 360’s Leading Vendors to the Top 1000 report, we’re uniquely positioned to both assist our customers with their e-commerce fulfillment while also examining important questions like whether the “Buy Now” button is actually doing more harm than good.

The need for multi-carrier shipping to overcome parcel shipping challenges

Josh Taylor: … single sourcing with FedEx or UPS is becoming a thing of the past. Carrier diversification is necessary now to ensure companies always have a way to reach their clients.

John Haber: Shippers learned they need to diversify their last-mile carriers – beyond UPS, FedEx and perhaps the USPS. This way, shippers can fill their capacity requirements, gain the types of last-mile services they need, like same-day and two-day, and mitigate shipping costs.

Logistyx’s take: We couldn’t agree more. Multi-carrier parcel shipping technology can simplify many critical tasks for shippers:

  1. Adding Carriers: Given the modern-day complexity of high volume, global parcel shipping, relying on a single carrier is risky. Parcel shipping software helps ship high volumes of parcels while decreasing transportation costs by making it easier to quickly onboard new carrier services, including regional and last-mile providers.
  2. Automating Rating, Rate Shopping, and Carrier Compliance: Parcel shipping systems eliminate the need to navigate multiple carrier systems to determine the ideal carrier service for each parcel based on point of origin, point of destination, delivery timeframe, cost, and any applicable business rules. The system automatically obtains the rates for each shipment from each carrier, selects the optimal service, and automatically produces the carrier label and necessary documentation.
  3. Consolidating Parcel Shipments: Often, the same customer/recipient places multiple orders in your order management system within minutes of each other. Without adequate planning to take advantage of packing those orders into one container, shippers pay for multiple, individual parcel movements instead of one LTL movement. A parcel shipping solution can perform these
  4. Integrating Enterprise Supply Chain Systems and Carriers in the Cloud: Sophisticated parcel shipping software will be hosted – not managed – in the cloud to easily integrate with specific order fulfillment workflows, whether they include IMS, WMS, TMS, or eCommerce Systems – or any combination thereof.
  5. Managing Carrier Capacity: When parcel shipping software is integrated with a sophisticated WMS, it can measure shipment volumes against carrier capacity thresholds and automatically manage carrier capacity and optimize shipping strategies – essentially maximizing capacity utilization to minimize transportation spend.
  6. Ensuring On-Time Delivery Consistency: The right parcel shipping solution will have a Control Tower that provides customers with visibility into their parcel’s delivery journey, including the last mile. Thanks to alerts about parcel delivery issues or “exception events,” customer service teams can proactively troubleshoot and communicate delivery updates to the customer in real time.
  7. Shipping Across Borders: Due to regulations, tariffs, and documentation, cross-border commerce used to be one of the most intimidating aspects of parcel shipping. Parcel shipping technology, with an integrated process for cross-border shipping, automatically identifies and provides the appropriate documentation for any shipment.
  8. Making Sense of Parcel Shipping Data to Boost the Bottom Line: Once the parcel shipping software collects all the shipping origins, carrier data, shipping transactions, and business rules in ONE database, enterprise shipping information can be more readily accessible for Business Intelligence reporting to improve decision-making across the organization, fine tune fulfillment practices and unlock other insights.
  9. Auditing Carrier Invoices: Carriers aren’t always perfect, and neither are the numbers on their invoices. While shippers have grown to expect the inaccurate application of carrier surcharges and other fees, they’re almost impossible to catch through manual invoice auditing. Automatically uncover these discrepancies with carrier invoice audit and analytics tools to tackle parcel shipping challenges.

Contact Logistyx today to see how we can help you navigate 2022’s parcel shipping challenges.

 

The “Buy Now” Button: Good for Sales; Bad for Parcel Shipping and Logistics?

The simple, ubiquitous “Buy Now” button on retail websites around the globe has made a significant impact on e-commerce sales by simplifying the purchase process for online shoppers with an existing account. One click, and the sale is complete. That’s great for the sales team but puts considerable strain on fulfillment operations. According to DC Velocity:

“For users who are already logged into a site, that simple button allows them to set the entire fulfillment chain in motion with just the tap of a finger. While that might sound great to sales executives, it can be a headache for logistics professionals, since the button encourages shoppers to order a single item at a time, instead of bundling multiple products into a larger order that can be transported more efficiently.

‘The buy-now button has led fulfillment centers that process e-commerce orders to throw more orders into smaller boxes and get them out the door as quickly as possible to meet their shipping and delivery promises,’ Huckeba says. “Carriers want to work with shippers who can be as efficient as possible—the more packages they can get on a truck, the more revenue they’ll make—but it’s not efficient to fill a truck by weight with large numbers of small order parcels.’”

The suggested solutions? Order consolidation, flexible packaging, no packaging, and dedicated delivery days. But don’t stop at fulfillment, also consider returns processes.

Adding to this list, Logistyx recommends carrier capacity management via multi-carrier parcel shipping software to lessen the impact of the “Buy Now” button on a shipper’s bottom line. As capacity crunches continue and annual rate increases rise, the need for these strategies and technologies only grow.

Of course, the most impactful solution might be reconsidering whether a “Buy Now” button is truly the best way for shoppers to complete their purchases. After all, a single click to purchase only encourages the behaviors exacerbating the issues in the first place.

Contact us today to learn how advanced multi-carrier parcel shipping can help you optimize your fulfillment operations.

Logistyx President Ken Fleming Examines Machine Learning Adoption for Supply & Demand Chain Executive

In mid-2020, Logistyx President Ken Fleming spoke with Supply & Demand Chain Executive (SDCE) on the “emerging technologies that claim to help companies in the supply chain.” During this conversation, Ken mentioned the evolving role of artificial intelligence (AI) and machine learning (ML):

“In the near future, supply chain AI will begin to migrate to machine learning. Currently, supply chain AI consists of developers programming business rules, telling computers what to look for and what action to take when it encounters those situations, but as AI migrates to machine learning, it will begin to think for itself. As machine learning becomes more advanced, technologies will increasingly be able to make note of repetitive situations and past experiences to start learning and making recommendations on its own. Technology like this has already deployed on a wide scale in other industries, and it has the potential to rapidly automate and improve a wide range of supply chain processes.”

A year and a half later, Ken revisited this prediction and checked on the state of machine learning adoption in the supply chain in a follow-up article for SDCE, “Machine Learning in the 2022 Supply Chain.” Ken reported that while tech adoption is on the rise overall, machine learning lags. He offers a potential explanation of companies’ reticence but explains they’re leaving themselves vulnerable to the competition:

“As noted by Harvard Business Review, ‘those that adopt AI in the coming months and years will achieve significant competitive differentiation.’ As AI becomes ML, it can optimize supply chain operations in ways that manual processes simply cannot. By taking in large volumes of data, ML can rapidly spot trends and make recommendations for immediate improvement, whether the global supply chain is still bogged down by bottlenecks or not. It can learn, optimize, inform, simplify, verify, and scale, all in a much more time and cost-efficient manner.”

Read Ken’s full article for full details on how machine learning can rapidly unlock supply chain optimizations from the voluminous data generated by companies’ supply chain processes.

Entrepreneurs Tackling Supply Chain Basics with Logistics Technology

Supply chain problems continue to plague industries around the world: material and supply shortages, labor shortages and strikes, significant weather events, you name it. As companies seek solutions that can provide relief, some are looking to entrepreneurs tackling the basics, at least according to The Wall Street Journal:

“Rather, entrepreneurs are tackling the most basic challenges that plague all supply chains. Their innovations include more nimble systems for managing warehouses and tracking inventory. They are also developing software and services that make it easier to rent out unused warehouse space, or to help retailers position goods closer to consumers so they can reach them quickly. And they are working on new ways to automate parts of the labor-intensive supply chain, not just to reduce the need for scarce workers but to help make the employees that companies do hire more productive and happy.”

This follows reporting from The Wall Street Journal late last year that many supply chain and logistics technology companies are drawing big investments, including those focused on tools for operations such as managing warehouses, matching freight loads to transportation capacity, and mapping out cost-effective routes to move goods.

Of course, as new technologies enter the market, there are hurdles for which all parties must account, most critically, the pervasiveness of legacy technologies already in place. New tech solutions are only as good as their ability to integrate seamlessly with existing solutions for a unified experience. Disparate systems that don’t communicate or require manual processes in-between will struggle to keep pace in a fluid environment such as supply chain logistics.

At a bare minimum, new technologies must be able to integrate with the most common legacy systems, including major WMS, IMS, and shipping systems to become an integrated part of the technology stack. Basically, it’s imperative emerging technologies walk before they run. A new technology may do an incredible job of solving for one key issue, but without the ability to integrate quickly and easily with complex enterprise operations, it will likely stumble out of the gate with low adoption.

In today’s global economy, businesses recognize the importance of logistics technology for solving long-standing supply chain issues exacerbated by recent events. We look forward to seeing the innovations that emerge as entrepreneurs tackle these issues backed by greatly increased investment.

Contact us today to learn how advanced multi-carrier parcel shipping technology with robust technology integrations can help your organization take control of its logistics operations.

Investors Pumping Money into Logistics Technology

As more companies race to digitize operations to help address the world’s supply chain gridlock, an investment rush into logistics technology has emerged.

According to The Wall Street Journal, many supply chain and logistics technology companies are drawing big investments, including those focused on tools for operations such as managing warehouses, matching freight loads to transportation capacity, and mapping out cost-effective routes to move goods.

“Shipping bottlenecks and shortages of everything from semiconductors to chicken wings are drawing more attention to technology aimed at streamlining supply chains and boosting efficiency in distribution networks. Companies are also looking to automation and software to help tamp down rising logistics costs and meet growing demand for e-commerce and delivery services.”

This significant advancement of and attention to logistics technology driven by the pandemic and subsequent e-commerce surge echoes recent comments from Bart De Muynck, VP analyst for transportation technology at Gartner Inc.: “The dramatic growth of parcel volumes, and the increasing complexity and breadth of delivery networks, has only heightened the need for more advanced, flexible, and adaptable multicarrier parcel management technologies.”

Navigating supply chain challenges and the complexity of global distribution scenarios can make it difficult for shippers to meaningfully plan shipments and compete in the same-day delivery economy. That’s why investment in logistics technology has become so critical for shippers looking to meet today’s consumers’ delivery expectations.

With the right multi-carrier shipping software that supports a higher degree of automation, shippers can effectively manage carrier contracts, rating, rate shopping, carrier compliance, delivery event track-and-trace, and more – all in one solution. The agility of a cloud-based multi-carrier shipping system offers the ability to scale quickly to accommodate surges in shipping volumes and quickly onboard new carriers with minimal impact on internal IT departments.

Shippers seeking to optimize their parcel shipping strategies can achieve immediate benefits by turning to multi-carrier shipping systems to get the most value from their transportation networks – automating carrier service rate shopping according to their business rules and within their own contracted carrier network to ensure the right carrier and service is selected to meet customer expectations for the best cost.

Utilizing this advanced technology combined with other high-value offerings like business intelligence can provide shippers with a roadmap for future success by aggregating, normalizing, and reporting transportation data while also offering insights to help contain costs and improve operations.

In today’s global economy, businesses can no longer overlook the importance of logistics technology. Parcel shipping technology is poised for continuous improvement, delivering ongoing, cutting-edge functionality and increasingly intuitive operational platforms that make it possible to reduce transportation costs, achieve on-time delivery rates, and create best-in-class omnichannel customer delivery experiences.

Contact us today to learn how investing in advanced multi-carrier parcel shipping technology can help your organization take control of its logistics operations.

Logistyx President Ken Fleming Chats with ARC Advisory Group on Trends and Challenges in Shipping and Logistics

Logistyx President Ken Fleming recently sat down for a chat with ARC Advisory Group’s Chris Cunnane – the 20-minute discussion covered many areas, including:

  • The state of parcel shipping
  • The holiday season
  • Cross-border sales
  • Industry trends
  • Returns management

For the quick recap, visit: https://logisticsviewpoints.com/2021/10/20/parcel-shipping-logistyx-technologies/

Otherwise, you can view the entire conversation on YouTube:

Contact Logistyx today to see how we can prepare you for current and future shipping and logistics challenges.

 

Logistyx Technologies Recognized as 2021 Top 100 Logistics IT Provider by Inbound Logistics

Logistyx Technologies has been named a 2021 Top 100 Logistics IT Provider by Inbound Logistics. The importance of supply chain and logistics technology solutions has been brought to the forefront for many companies in the last year as a result of recent business disruptions. The Inbound Logistics audience continues to rely on technology solutions to drive efficiencies, provide visibility, and hone execution.

“Logistyx Technologies continues to provide solutions Inbound Logistics readers need to achieve the visibility and control that drives successful supply chains,” said Felecia Stratton, Editor at Inbound Logistics. “As shippers, carriers, and 3PLs increase their use of logistics IT, Logistyx stays flexible and responsive, anticipating the evolving needs of both customers and the market. Inbound Logistics is proud to honor Logistyx for innovative solutions empowering logistics and supply chain excellence in 2021.”

The leading cloud transportation management system (TMS) for high volume parcel shipping, Logistyx helps manufacturers, retailers, and logistics providers ship millions of parcels worldwide at the lowest possible cost. Logistyx’s flagship software, TME, is the world’s first single engine specifically designed for parcel shipping. Combining advanced Business Intelligence and a global network of 550+ carrier integrations, TME provides carrier compliance, predictive analytics, and tracking on shipping from start to finish to enable on-time delivery and increase profits per shipment.

Every April, Inbound Logistics editors recognize 100 logistics IT companies that support and enable logistics excellence. Drawn from a pool of more than 400 companies, using questionnaires, personal interviews, and other research, Inbound Logistics selects the Top 100 Logistics IT Providers who are leading the way. Editors seek to match readers’ fast-changing needs to the capabilities of those companies selected. All companies selected reflect leadership by answering Inbound Logistics readers’ needs for scalability, simplicity, fast ROI, and ease of implementation.

The Top 100 data drives the Logistics IT Decision Support Tool, where the Inbound Logistics audience can enter their IT requirements and match the solutions providers best suited to their needs.

To learn more about this recognition, check out the official announcement from Inbound Logistics here.

 

How to Get Last Mile Delivery Right

Even before the COVID-19 pandemic shut down non-essential retail worldwide, e-commerce was the biggest driver of growth in parcel shipping volumes.  But customer expectations for quicker and cheaper deliveries have made it difficult to manage these volumes and getting last mile delivery right is one of the biggest challenges facing both online retailers as well as the carriers within their transportation networks.

Unfortunately, the stakes are high.  Consumers make purchasing decisions based on the delivery experience.  In fact, almost 50 percent of all online shoppers will forego a purchase if they’re dissatisfied with their delivery options, and a new study from Voxware reports that 69% of consumers “are much less or less likely to shop with a retailer in the future if an item they purchased is not delivered within two days of the date promised.”

But what makes success in the last mile so elusive?  The answer lies at the intersection of cost and efficiency.  According to the Supply Chain Last Mile Report 2020, supply chain executives identified transportation spend and on-time delivery as their two biggest challenges in the last mile landscape.

The Challenges of Last Mile Delivery

Last mile delivery is expensive – the most expensive portion of the end-to-end delivery equation. According to BI Intelligence, the total cost of shipping for the last mile is 53 percent of the total delivery cost.  And with the ubiquity of “free shipping,” customers are unwilling to pay a delivery fee, forcing retailers to absorb the cost.

Why the high price tag?  For starters, consider that in the last mile there are multiple delivery stops, each with a low number of parcels, and there’s significant manual labor involved compared to other transportation segments.  In last mile delivery in a suburban or rural environment, for example, drivers go door-to-door to drop off parcels, and there might be several miles between those doors.  In cities, the delivery landscape isn’t any better.  What urban areas make up for in delivery stop proximity is quickly neutralized by traffic congestion and continuous delays.  And if there are several delivery attempts because the recipient wasn’t home to sign, the delivery costs increase that much more.

ebook logistyx future-proofing-supply-chainIn addition, the definition of “parcel” has changed.  As e-commerce continues to boom, the products purchased online are expanding. Suddenly, shoppers are buying furniture and home appliances online, and there has been a substantial increase in “white glove” last mile delivery services, where the purchase is delivered, and then assembled and installed in the customer’s home.  For manufacturers and retailers, the good news here is there’s a growing e-commerce market for their products. The challenging part for these shippers, however, is that while brick and mortar retailers have provided this service for a long time, the service usually came with a fee, set delivery days, and large time windows for delivery.  But in today’s market, customers now expect these services to come with the same flexibility as their small parcel deliveries.

The Future of Last Mile Delivery

What will last mile delivery look like in the future?  It’s likely Pick-up/Drop-off (PUDO) and Buy Online Pick-Up In-Store (BOPIS) options will be a popular solution.  Spurred by the COVID-19 outbreak, BOPIS increased 208% April 1-20 compared to the same period a year ago and shows no signs of stopping.  In fact, as restaurants and brick-and-mortar retailers experiment with different ways to connect with customers and keep team members employed, many are adding BOPIS to their distribution mix – and for good reason.  BOPIS is a win-win for retailers and customers, as shoppers can get products quickly and in person, and retailers keep customers coming to their storefronts, maintaining repeat interaction with their brands.

Looking even further ahead, ground vehicles with lockers, basically roving Pick-Up/Drop-Off (PUDO) facilities, are a possibility. Bots are another.  To no one’s surprise, Amazon is assuming a leadership position on this front, investing heavily in its Scout autonomous bot.  Drones and other autonomous vehicles are also a consideration, though upgrading to a fleet of autonomous-delivery vehicles would be expensive, not to mention putting the necessary regulations in place and winning consumer confidence in these technologies.

The One-Two Punch of Omnichannel Distribution and Cloud Multi-Carrier Shipping Software

To overcome challenges in the last mile, retailers should utilize an omnichannel inventory approach, maximizing their number of inventory sources, including distribution centers, warehouses, and stores, so they are closer to the customer.  A key component to this approach will be cloud multi-carrier shipping software, which seamlessly integrates with a retailer’s system of record to automate high volume, multi-carrier, omnichannel shipping.  The software will automatically select the right carrier service for each order according to the point of origin, point of destination, carrier contracts, and business rules; create or acquire the tracking, labels, and documents;  monitor delivery events and automate event exception workflows; manage the manifest and end-of-day processes; and analyze carrier performance.  With the one-two punch of omnichannel distribution and cloud multi-carrier shipping software, retailers can satisfy customers’ delivery requirements and drive down the cost of shipping – transforming logistics into a profit center within the business.

Furthermore, cloud multi-carrier shipping software also ensures retailers have the right mix of last-mile carrier services in their transportation strategy from the onset.  The software aggregates and normalizes shipping data across carriers, so retailers know when deliveries moving to a particular region, customer, or via a particular carrier are not meeting service levels. Retailers can hold carriers accountable for failing to meet expectations and wield hard data to support rate negotiations.

Finally, the right multi-carrier shipping solution will also have a Control Tower that allows the retailer to provide customers with visibility into their parcel’s delivery journey, including in the last mile.  The system will send early warning signs when there are parcel delivery issues or “exception events,” empowering customer service teams to proactively trouble-shoot the exception event and communicate delivery updates to the customer in real time. For example, perhaps the product can be sent from a different distribution center to arrive on time. Or perhaps the customer is willing to retrieve the product from a nearby store or locker.

A Control Tower even makes it possible for retailers to provide customers with the ability to track and trace shipments on their own (not the carrier’s) website – reducing inbound calls about shipment status to customer service and increasing the customers’ browsing behavior while on the website, which (fingers crossed!) could lead to additional purchases.

Take the Lead in the Last Mile

Delivery can make or break the way customers experience a brand, and the last mile is the mile customers will remember.  As a result, it’s become the first place retailers are looking to implement new technologies that drive process improvements and give them a lead over competitors.

Retailers using cloud multi-carrier shipping software are able to execute an omnichannel distribution strategy and leverage the services different carriers offer in the last mile – optimizing costs from the point of origin to the point of destination.  They also have the tools to ensure their carrier transportation network can meet their delivery promise to the customer.

To learn more about how multi-carrier shipping software can help you improve delivery in the last mile, contact a Logistyx expert today.

Logistics in the Manufacturing Industry: The Shift from Efficiency to Customer Experience

Business purchases are rapidly moving from offline to e-commerce. But is the logistics focus of the manufacturing industry shifting along? Discover why efficiency in logistics is now secondary to the online experience of your customers.

As a consumer, I can order a laptop today and have it delivered tomorrow night, right between dinner and my visit to the gym. From the moment I order I get constant Track & Trace updates, so I know exactly when to expect my parcel. And if the laptop is not entirely to my liking, it will be collected and returned free of charge, wherever and whenever this suits me.

Black box for business buyers

This scenario is the norm in B2C commerce. But for business buyers, it is still far from reality. The delivery of business orders is still often a black box in which the receiver enjoys little to no control or transparency. The question is for how long will this remain?

E-commerce becomes the standard in B2B

business buyers' expectations chart - next paragraph explains data

E-commerce is rapidly replacing the physical order forms and product catalogs that have dominated B2B sales for decades. According to Gartner (2018), 75% of all business procurement within five years takes place via online marketplaces and sales platforms. This creates a huge opportunity for manufacturers, but it also brings challenges.

The new generation of decision makers effortlessly projects the service they receive at Amazon, Zalando or Zappos onto their expectations towards business suppliers.

According to research among 6723 business buyers, 69% now expect an Amazon-like buying experience from their B2B suppliers (Salesforce Research, 2018). 67% already switched vendors because they offer an experience that is more alike the one in consumer retail. Both percentages are even higher among the new generation of decision makers born between ’81 and ’99.

What does this mean for the delivery of goods?

This consumerization of the business purchasing process is leaving its marks on suppliers. No fewer than 84% of B2B providers now consider it their top external threat (Episerver, 2019). This also translates to the delivery of goods. Shipments become more fragmented and smaller, which increases your dependence on parcel carriers.

inbound logistics chart

Source – Inbound Logistics, 2019

Although cutting transport costs continues to lead the list of shipping challenges, we see that the rise of e-commerce has become the number two challenge for today’s shippers. Closely followed by improving customer service. With the knowledge gained  from B2C e-commerce, we are likely to see the following delivery services become increasingly important in the B2B space:

Choice of multiple delivery options

In a business environment  there is usually  someone available to receive a shipment during business hours. However, this does not mean that one-size-fits-all shipping is sufficient. One customer might be willing to wait longer, at lower delivery costs. Another might need his delivery today. To meet this varying demand, offering a wide range of delivery options and delivery speeds is crucial; from same-day delivery for the most time-critical shipments to Economy-options for slower deliveries. You might be able to offer these via a single delivery partner, but due to ongoing carrier specialization, a mix of carriers is becoming more common and preferable.

Full transparency of shipping costs

Just like consumers, business buyers do not like to be surprised. By offering maximum transparency about delivery costs, including any handling fees and costs for customs clearance, you prevent uncertainty and significantly improve customer experience.

Real-time Track & Trace Insight & Updates

The need for transparency remains once the shipment is in the hands of the carrier. By proactively informing receivers about the status of their shipments, especially in the event of any delays or exceptions, you will optimally meet this need. Moreover, you keep control over the customer experience and prevent customers from contacting you or your carriers in frustration.

Localization of delivery options

With e-commerce, you can theoretically sell anywhere in the world, provided you can also deliver. In B2C e-commerce, we are currently seeing that retailers localize their delivery offerings, combining major carriers such as DHL, FedEx and UPS with local specialists. This isn’t just for cost saving reasons. Local carriers typically meet the demand of end customers in a particular geography better.

More shipping locations

Affordable, but fast, delivery is definitely at the top of the customer wish list. As a result, the distance between shippers and end customers is reducing. It shows in the opening of several, smaller shipping locations as a replacement or extension of traditional mega warehouses. Ship-from-store is the ultimate example of this trend. Omnichannel retailers use their store locations for the fulfillment of online orders, making even same-hour deliveries feasible. But this trend is also visible in the manufacturing space. Aided by the rise of 3D printing and robotics, production is shifting to decentralized locations, increasing the number of shipping locations in manufacturing.

How do you respond to this as a manufacturer?

The major logistical change that successful e-commerce parties, both B2C and B2B, bring about is the shift from push to pull. Where previously the supplier dictated delivery conditions, it is now the customer who determines where, when and by whom goods are delivered.

Partly due to this development, successful manufacturers are now saying goodbye to their efficient, but very rigid, supply chains. To meet the needs of the new generation of business buyers, flexibility is the new adage. By building in flexibility at tactical places in your supply chain, you prepare yourself for the rapidly changing and the wide array of wishes of all your customers. Take look at your supply chain through the eyes of customer experience and ask yourself – what would I think of this as a consumer? The answer might hold the future of your manufacturing business.

Want to know more about logistics trends in manufacturing?

get the white paper: 7 logistics trends that will change the manufacturing industry in 2020Download the white paper “The 7 logistics trends that will radically change the manufacturing industry in 2020”. In this white paper, we cover the logistical trends that every manufacturer must know to remain competitive in our dynamic market.