American retailers’ expectations are at an all-time high. Now, more than ever, they expect their shipments to be delivered on-time, in-full with timelines as fast as two days or even same day delivery.
With these expectations, lingering supply chain disruptions triggered by the global COVID-19 pandemic and technology advancements, supply chain management is more complicated than ever. So, how can you continue to meet demands in this everchanging landscape? In this blog, we look at trends to help inform your strategy as you work to meet elevated expectations and navigate supply chain complexities in the coming year.
Consumer expectations have increased over the last five years and remain high for retail shipping needs. Consumers have come to expect that they can place an order and receive it the next day, or in some cases, the same day. In response, retailers continue to create additional requirements for their vendors to ensure shipments are on time, complete, and in perfect condition, which puts increased pressure on your teams to meet these shipping mandates.
One of these adjustments is an increased focus on vendor scorecards. When they launched, scorecards forced us to examine issues in the supply chain at the manufacturing capacity and inventory control levels, and they made the supply chain better. They required vendors to be more selective in their carrier partners. This meant carriers were forced to find ways to deliver on-time and in-full to remain competitive.
As retailer requirements tighten, delivery windows continue to shrink. Carriers are being measured on their on-time pickups and dependable transit times, as well as on-time delivery. The retailer requires that your shipment will arrive at a certain time, and it should be your carrier’s responsibility to deliver on that requirement. Not only could missed delivery windows result in fines and chargebacks, but it can harm retailer relationships.
Shipments delivered in-full is perhaps even more important than on-time but less straightforward. Carrier service can be used as an indicator.
“Transportation now has to be more precise than it's ever been,” said Joe Metzger, former Executive Vice President of Supply Chain Operations at Walmart and 30-year veteran in consumer product goods supply chain leadership. “Service has always been more important than anything, and now the providers that can be really close to perfect, their delivery is going to be great. When we tighten up every aspect of transportation that's what’s going to take to take care of the American consumer.”
So many factors come into play to keep freight intact and damage free. A critical first step for shippers is understanding how to properly package their freight to minimize the risk of damage throughout its supply chain journey. Carriers need to be managing the shipment on the dock appropriately and packing it in a truck with care and precision to protect the shipper’s freight. A good partner can provide guidance on this process, and help you understand the steps they take to ensure your product is handled appropriately through every stage of the shipping process.
Collaboration across the entire supply chain remains vital and will help deepen relationships between retailers, shippers, and carriers. Retailers and manufacturers must work together to know how much they need to procure, produce, and inventory. This means getting the right demand signal for the day, week, month, quarter, or even next several years. Carriers must continue to strengthen their “must arrive by” date services and find ways to help you avoid costly chargebacks and penalties.
To ensure products are on the shelves and improve the cost structure for everyone, the industry must work together.
“I think the answer that we all have to continue to work on is that we have to plan across industry so much better,” said Metzger. “There's always been a hesitancy to do that, but I really believe that ultimately we have to plan at a much more transparent, granular, detailed level so that we can truly have the American consumer front and center.”
Technology can help make this happen by allowing us to better communicate, plan for demand and increase transparency for your customers.
In the last few years, analytics capabilities have exponentially expanded. With AI tools and machine learning, computers can now take in massive amounts of data and perform calculations on a previously unheard-of scale. As more data is acquired from retailers, manufacturers and suppliers can plan more accurately allowing for the entire industry to better keep up with trends, manage the supply chain and meet demand. Choosing a carrier that can integrate into your existing system or provide turnkey resources will be imperative to delivering on increasing demand.
“The key going forward is collaboration across the entire supply chain in terms of sharing of data,” said Greg Plemmons, executive vice president and chief operations officer at OD. “We know that vendors are measured more closely than ever regarding on-time and in-full deliveries. As an industry, we’ve reacted with beefing up our must arrive by date services, and at Old Dominion, we’ve instituted a chargeback research tool to help vendors, in many cases, dispute the chargebacks and penalties that they've been assessed with.”
So, when you are looking for that carrier partner who can help you meet those rising consumer expectations and provide a high-level of service here are some questions you should be asking: