Logistics is on the verge of adopting a new identity within the supply chain. A function that originated in the army for mobilization of resources,has rapidly morphed into land deliveries by drone and piloted driverless trucks on the road. The term “Logistics” has traditionally been defined as the management of storage space and movement of goods. Recently, the definition isquickly evolvingwith the revolutions of Amazon, Uber and Airbnb. Companies are integrating their supply chains as well as investing in digitization to bring information to our fingertips. Logistics is viewed as a primary channel to the customer experience and the bar is rising to meet and exceed customer expectations related to delivery. An evaluation of the critical aspects of this transition starts with viewing it through the lens of a consumer.
Managing Cost – A myth or a legend?
Corporations have conventionally consideredLogistics as either a liability or a cash register.“We need to be cost efficient in logistics”seems like a reasonable directive considering logistics contributes to a significant percentageof revenue. However, if we pause to unravel the essence of the role of logistics in day-to-day business; the discussion is none short of revolutionary. Retailers are now willing to deliver a product of very little value to your doorstep without charging for shipping. The strategy revolves around customer loyalty. The mere cost of storing inventory is so significant in the auto industry that it drives marketing campaignsto inspire consumers to buy. In the world of agriculture, the broccoli on your plate may have been derived from plant breeders in North America, and grown locally, while the parents of your greens were produced in Chile. As we continue to uncover the role of Logistics in these scenarios, it’s much more complex than saving a dime. Customer loyalty and its impact on revenue is now a game changer and is truly shaping the delivery experience.
"The supply chain is craving better visibility of delivery status to provide a sneak preview and satiate the hungry customer"
Delivery- is being “on-time” the most important aspect?
An important aspect of customer service is to be “on time every time and deliver the entire order at once.” As supply chains are global in nature and subject to weather, political situations, currency impacts, infrastructure maturity, and unpresented strikes, we’re forced to understand what is truly important- delivering on time or having visibility across the supply chain? We’re entering an era where we can track our pizza dough’s conception to its voyage into the oven to landing piping hot on our doorstep. The technology advances have taken many bright minds and algorithms to simply bring visibility to a process that takes no more than 30 minutes from start to finish. As consumers, we are demanding these advances in innovation and supply chains are scrambling to keep up. Today, supply chains, much like pizza parlors, are subject to weather, traffic, major events, mysterious forecasts, anda revolving door in the work place. The supply chain is craving for better visibility of deliverystatus to provide a sneak preview and satiate the hungry customer.
Information unlocks the value
Logisticians typically chase around the inevitable question, “Where is my truck?” which has a consistent yet unconfident answer, “Well, it’s on its way…” Most supply chain partners struggle to answer this question across various industries. We are all faced with the expectation to deliver millions of deliveries around the globe via various modes of transport. Do we really expect just one tool or platform to get the information from our internal system to the mobile device of a consumer? The information must reside somewhere that is easy to mobilize in real-time. The first step in conquering the challenge is leveraging the Internet of Things (IoT), which connects computing devices embedded in everyday objects and enables them to send and receive data. We are finding it essential to connect all our devices to IoT rather than searching for a silver bullet in one software tool. We’ve also seen an emergence of technology that is focused on ease of use for consumers; which sparks us to drive change in processes, hiring, routines, and behaviors.Our ways of working are becoming a new identify for logistics. We were once tasked with reviewing multiple spreadsheets to assign loads of product to trucks; now we are focusing on an overwhelming amount of data to rapidly analyze, visualize, and drive key decisions. Sustainability and customer experience become as important as saving cost.Ultimately, it’s technology that is driving us to be more efficient; spending less time on spreadsheets and more time anticipating our customer’s next move.
The ideology shift to customer experience
When flying business class, the airline makes a very direct attempt to provide a differentiated and memorable experience; starting with the security check-in through the food and beverage services in-flight. If we apply these rules to logistics, it seems that not every delivery must hold the same level of importance. Can we differentiate the rules of the game based on product availability, customer expectations, and table stakes such as a bag of salted snacks? Several companies are now determiningbusiness decisions ona single metric called“Net Promotor Score (NPS)”. In some markets, the quality of the product is driving loyalty, but in others, the purchasing and delivery experience holds more weight than the product itself. You may have experienced this during your last fancy coffee purchase. Studies have proven that the delivery experience is one of the top three parameters impacting the ease of doing business from a customer’s perspective. There is a notion that Logistics cannot win additional business, but it is a primary driver for churn and losing business if not executed well. How a product ultimately lands in the hands of the consumer is critical to building loyalty for your brand.
Logistics and the future
If you truly want to deliver the best, you must exhibit passion about continuously evolving in Logistics. The new ideology in Logistics is exciting. It is about using data to influencedecisions and recruiting talent that can drive digital innovation. Blockchain, artificial intelligence, data modeling, drones and driverless vehicles are the new reality to fuel the supply chain forward to meet customer expectations.