NEW REPORT: Aligning the Supply Chain in the Age of the Delivery Economy

In our last report, we explored the impact of the Delivery Economy on a company’s brand and perception, uncovering how they’re experiencing pressure to meet and exceed new delivery expectations. But, we also wanted to explore this effect on the supply chain.

One small issue can cause a delayed delivery. And with 74% of customers saying that when a package isn’t delivered when expected, it hurts their impression of the company, delayed delivery can cause major problems for a brand’s image.

Even though the Delivery Economy — the pervasive sentiment in which customers expect low cost, fast, and highly transparent delivery of goods — has emerged largely because of consumer-focused tech and experiences, such as delivery options and apps (think Grubhub, Instacart, Amazon Prime), the impact spans beyond the retail industry and has become a critical issue for B2B companies as well. Eighty-five percent of B2B supply chains are feeling pressure to improve or expand upon delivery capabilities.

For the second report in this series, we blind surveyed 300 supply chain professionals in October 2019 to explore the delivery ecosystem in detail, the challenges each stakeholder in the supply chain must overcome to meet customer expectations, and the risks posed to businesses that do not adapt.

What we found was a mounting pressure for the supply chain to meet expectations, with 73% of supply chain professionals saying they’re experiencing pressure to improve and expand their delivery capabilities as a result of the Delivery Economy. Even more notably, the research uncovered that different stakeholders are not always in agreement on what needs to be done, which makes it difficult to fund the necessary initiatives to survive and remain competitive. Additionally, an inability to meet expectations for tracking as well as inadequate processes and legacy systems are hindering the supply chain.

Bridging the Supply Chain with Communication and Collaboration

Many supply chain professionals reported miscommunications within the supply chain itself. Eight-two percent of managers say they are experiencing pressure to improve and expand their capabilities, versus 57% of executives who said the same.

Without alignment between leadership and those on the ground, supply chains won’t have the resources or focus needed to meet customer expectations. From the front-line supply chain managers to the C-suite, bridging this disconnect and improving inadequate collaboration across the delivery ecosystem is imperative to a company’s success.

Supply chain professionals also identified a need for better collaboration with the commercial side of the organization. More than three-fourths (79%) said the supply chain and marketing have to collaborate to meet the needs of the Delivery Economy.

“I don’t think the marketers communicate changing customer demands clearly and frequently enough. And the supply chain does not reevaluate supplier performance frequently enough. There needs to be dynamic visibility to production, inventory, and carrier statuses,” explained Dirk Martin, Senior Director of Transportation for Univar Solutions, the world’s largest chemical distributor.

Legacy Processes and Technologies are Holding Supply Chains Back

It’s critical supply chains improve collaboration and gain the support needed to replace legacy processes and technologies with solutions that will enable their organization to adjust as the market evolves.

For many supply chain professionals, inadequate processes and legacy systems are making it difficult to keep up with the demands of the Delivery Economy. Seventy-nine percent of supply chain professionals are using a combination of suboptimal methods to manage transportation processes. These tools include manual processes, paper documents such as spreadsheets, email, and disparate software systems for different parts of the supply chain.

These manual workflows make it nearly impossible to provide the real-time tracking — minute-by-minute and mile-by-mile — that customers are demanding. A majority (73%) of supply chains are lacking the capabilities to provide real-time tracking — a feature 70% of customers stated they want. With more and more companies hearing “where’s my package?”, this feature is moving from the “nice-to-have” column to the “absolute essentials” list.

Strong Links Equal Success for the Supply Chain

The reputation of organizations depends on the ability to keep up with the Delivery Economy as delayed deliveries impact customers’ impressions of the brand. Nearly half (44%) of the supply chain managers said they need better technology to meet these growing demands.

“Grass roots management is experiencing the direct impact of the compression and must perform within shrinking time allocations —same activity but less time— 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,” said Elaine Singleton, Supply Chain Program Director at the University of South Florida.

Supply chain professionals need to work more closely between departments and stakeholders to ensure their investments and efforts are communicated and implemented across the entire supply chain. Otherwise, they face the inability to remain competitive, potential market losses, and difficulty delivering results to shareholders.

Learn more about the challenges supply chains are facing and how they can take on the Delivery Economy.