Report: Most supply chain managers face rising pressure to increase shipping speed, reduce costs

by Jeff Della Rosa (JDellaRosa@nwabj.com) 199 views 

The trend in which customers expect low-cost, fast and transparent delivery of goods doesn’t look to be going away, and it has expanded into business-to-business shipping, according to a new report.

Visibility platform provider project44 released Tuesday (Nov. 12) “Aligning the Supply Chain in the Age of the Delivery Economy” after surveying 300 supply chain professionals about overcoming challenges to meet customer expectations and the risks to businesses that don’t adapt. The report follows the Aug. 6 one on how consumer shipping expectations have been impacted as a result of expedited delivery services, such as Amazon Prime.

In the new report, 73% of supply chain professionals said they are facing pressure to improve and expand delivery capabilities. Respondents said every part of their company’s business has been impacted by the pressure.

More than one-third of respondents said this has led to increased costs of distribution and transportation and the need to update distribution and transportation models. Half of the respondents said they face the expectation to deliver goods at a lower price to customers, and 54% said this is the hardest expectation to meet. More than half of respondents said they face the expectation to process and deliver goods faster, and 44% said this is the most challenging expectation to meet.

The pressure to provide low-cost, fast and transparent shipping started as a result of consumer-focused technology and delivery options such as Grubhub, Instacart and Amazon Prime, but the issue has expanded beyond the retail industry to business-to-business companies, the report shows. And, 94% of people who make purchases for their company expect the same level of customer satisfaction as when they’re making personal purchases. Nearly two-thirds of business-to-business companies face rising expectations to process and deliver goods faster, and 85% feel pressure to improve or expand delivery capabilities.

With regard to transparent shipping, 70% of customers want the ability to track the progress of shipments, but 73% of supply chain professionals said they don’t have the capabilities to provide real-time tracking. The report highlights a disconnect between supply chain professionals and marketing and customer experience executives, with 82% of the executives believe they are meeting customer expectations with regard to tracking. But only 39% of supply chain professionals said they’re set up to provide more insight into a shipment’s progress and delivery information to customers. To meet the rising customer demand, 79% of respondents said supply chains and marketing have to collaborate.

Also, a disconnect extends to company executives, with 57% of executives saying they have experienced pressure to improve or expand their capabilities. However, 82% of supply chain professionals said they’ve experienced pressure to improve and expand their capabilities. Also, 78% of executives say their team works with marketing regularly, while 55% of supply chain professionals say their team works with marketing regularly.

More than one-third of supply chain professionals said their processes and systems are not set up to manage delivery demands of the future, and 79% are not using optimal methods to manage processes with regard to production, logistics and delivery throughout the supply chain, the report shows. Supply chains are struggling to meet delivery expectations because of the processes and technology that are being used to track shipments, according to the report. Legacy systems don’t have the ability to incorporate predictive analytics and fragment the supply chain. And manual processes can impact the ability of a supply chain to gather data and insight.

“Grassroots management is experiencing the direct impact of the compression and must perform within shrinking time allocations — same activity but less time,” said Elaine Singleton, supply chain program director for the University of Florida. “This forces the need for automation and process improvement. Companies need to research and find inexpensive technology tools to further automate data extraction, analytics and information broadcast.”

More than half of supply chain professionals use email to track transportation, 42% use manual processes like spreadsheets and PDFs, 39% use paper documents in their process and 40% use unrelated software systems for different parts of the supply chain.

To meet consumer demand, 44% of supply chain managers said they need better technology, 40% of respondents said they need to overcome issues related to outdated systems that can’t handle change or future needs and one-third need more streamlined communication between various parts of the supply chain. When companies don’t meet the demand, 60% of supply chain professionals say that customers blame the company when goods or products aren’t delivered as expected.

“Supply chain professionals are feeling the pressure of customer demands for faster, cost-effective and more transparent delivery,” said Tommy Barnes, president of project44. “These demands only stand to increase, and meeting them will require the adoption of better processes and technology combined with organization-wide collaboration. From marketing to transportation, and from managers to the board room, it is imperative that businesses close the communication gap, so that the entire delivery ecosystem is poised to successfully face a rapidly changing landscape.”

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