Customers Drive Hi-Tech Logistics Toward Supply Chain Analytics

On any given day, there are many stories about the rapidly evolving e-commerce industry and its impact on some aspect of the economy. Most are focused on the direct impact to brick and mortar retailers, delivery providers or technology providers. Perhaps not as apparent is the impact to manufacturers which are at the core of supply chains. And perhaps none face a bigger challenge than the hi-tech manufacturers who must navigate not only the evolving demands of e-commerce but must contend with the rapid change in technology, product obsolescence, and high expectation of superior customer service.

Recently, eft Supply Chain and Logistics Business Intelligence published The State of the Hi-Tech Supply Chain Industry Report which is the result of a survey of hi-tech manufacturers, logistic providers and technology suppliers. The report includes a variety of industry aspects including industry growth rates, regional growth, global sourcing, supply chain agility, demand planning, aftermarket services, risk, customers and other facets.

The report is based on a survey of 180 respondents which includes “Shippers” – manufacturers and retailers in the hi-tech industry that ship products and “Enablers” – solution providers, logistics service providers and other providers of services to hi-tech and electronics manufacturers and retailers. In each focus area, the report recaps responses separately for shippers and enablers. While there is a fairly aligned response from both groups on some facets, of particular interest is the Customer aspect of the report that provides insight on the priorities and demands of the Customers. See figure 1.

Figure 1: Customer feedback from both Enablers and Shippers. Source: eft

Both Shippers and Enablers are aligned in the top priorities their customers are demanding. Delivery Speed, Delivery Flexibility and Delivery Visibility rank as the top 3 concerns. Responding to these demands can have a significant impact on customer satisfaction, but, equally, a significant impact to transportation logistics cost.

Shippers indicate that supply chain analytics is the key tool they use to understand their customers’ experience. There are numerous analytical tools to provide insight into overall customer experience, but there are fewer options for Shippers to analyze the cost impact of alternate services that improve delivery speed. See figure 2.

Figure 2: Supply chain analytics is the top choice for Shippers wanting to learn more about their customers’ experience. Source: eft

One supply chain analytics platform that is ideally suited to enable shippers to manage this aspect of transportation logistics is Optimize™ from Grand Canal Solutions. Optimize is a cloud-based supply chain analytics platform that provides, among many other things, the capability to model service mode switch where shippers can use actual shipping transactions moving under one service to evaluate the cost impact moving to a different service level. See figure 3.

Figure 3: Carrier and mode switch modeling from Optimize. Source: Grand Canal Solutions

As expected the faster service is more expensive. However, Optimize also models the impact of earned discounts on the current rates. Using the above example, the model showed a 56% increase in cost based on the weekly spend of under $8,744. But if the shipper had increased shipping activity to $10,000 per week, the impact would be only a 2% increase. See figure 4. The devil is in the details, and deep supply chain analytics can surface these opportunities easily.

Figure 4. Dynamic analysis of shipping spend with shipping activity. Source: Grand Canal Solutions

Optimize provides the ability to understand the details about the carrier agreement so that shippers can target areas in which to improve the rates. It provides the visibility to understand if improved discounts should be sought in base rates, earned discounts, or surcharges. This enables shippers to truly optimize their shipping in order to satisfy their customers’ demands.

This is only one of a number of capabilities of Optimize that enables shippers to meet customers’ demands while effectively managing their transportation logistics. Give it a try, we even offer one free analysis.