Supply Chain Woes Catalyzing A New Era Of Retail Logistics Transparency

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The “just in time” supply chain worked well enough to paper over the cracks, but since COVID-19, retailers have been grappling with a supply chain crisis. The pandemic closed ports, caused goods and containers to pile up, and crippled air freight. Since the economy started reopening, demand has shot up, and the flaws yawned into gaping chasms.

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Containers left on the wrong side of the world caused a shortage that drove prices sky high. A shortage of truck drivers, train drivers, and port workers added to the delays, with unloaded containers creating blockages at ports. There’s reportedly only one driver for every nine job postings, and 77% of the major ports are experiencing “abnormally long” turnaround.

As a result, online shoppers saw more than 2 billion out-of-stock messages in October. Headlines warning about major shipping delays heading into the holiday shopping season led consumers to order early, which disrupted the normal shipping rhythms even more.

The impact on retailers is significant. Independent sellers are getting squeezed out because they can’t compete with big chains who pay over the odds to get their goods. “It’s very unpredictable. I don’t know what I’m getting, or when,” says Kim Mitchell, an independent toy shop owner, while an outfitters’ business in Pennsylvania hadn’t received around 25% of its holiday orders as of early November.

The big names are also suffering. Clothing retailer Gap saw share prices crash in November due to product shipment delays, reporting losses of $152 million in Q3 2021, compared with a profit of $95 million for Q3 2020.

While the supply chain crisis could be finally ending, there’s still anxiety about supply chain crisis 2.0, as a new variant rises and more people are unable to come in to work, which could leave ports and routes closed again due to lacanpower.

Niko Polvinen, CEO of logistics tech company Logmore, says that there are steps retailers can take to minimize the damage of ongoing delays. “This is a global shipping problem that’s going to take months to sort out,” he acknowledges. “But we’re also seeing retailers and the logistics companies that serve them taking steps to change their management approaches in ways that could result in a better, smoother, and more reliable supply chain for the long term.”

Polvinen is adamant that the right tools, together with the right attitude, can mitigate the impact of the supply chain crisis, make retailers more resilient to future disasters, and help the supply chain run more smoothly even when there’s no crisis. “We believe that the changes in shipping that can help retailers cope with the crisis, can also make them more resilient and help them improve the customer experience that they offer,” he tells me.

Smoother Supply Chains Start With Visibility

Retailers need real time data, to track each shipment across the entire route. Logistics companies need to deliver visibility into the conditions, progress and potential upcoming bottlenecks of each package on a minute by minute basis – and to their credit, they are stepping up to the plate.

“We’re seeing a real change in the way that retailers and logistics teams relate to data. There’s been a significant uptake in the number of queries we’ve had from retail suppliers who see the need to offer their clients complete data and insights about their shipments,” reports Polvinen.

Logistics companies need to be able to rely on shipment data, which requires trackers that keep working in all temperatures and conditions and can be read easily without expensive or error-prone equipment. Data needs to be not just collected from multiple sources, but also shared with upstream and downstream partners.

Retailers should have access to reports about progress, conditions, etc. in real time, so they are informed, aligned with other stakeholders, and able to make decisions from a position of strength.

That, Polvinen points out, is why logistics data collection and sharing should be automated — because manual processes are unreliable. It’s easy for someone to forget to check a tracker, or an update to be delayed, etc. “I often say, let the packages tell their story,” says Polvinen with a smile. “When data gathering and sharing is automated, nothing gets overlooked.”

Transparency Breeds Trust And Loyalty

Customers naturally get frustrated when their orders don’t arrive on time, with 58% of respondents to an Oracle survey saying they’d stop buying from a brand after one to three delays or disruptions. But the way you handle it can make a big difference to their loyalty.

When asked what would improve their purchase experience at a time of frequent delays and shortages, 63% of consumers said they want more regular updates about shipping status, 59% want more transparency about inventory, and 54% want more information about potential supply chain issues.

What’s more, 78% would be more willing to buy from a company if they knew it used advanced technologies like artificial intelligence to manage its supply chain.

There’s a vast difference between telling a customer that their new gaming console has been delayed, and telling them that it will arrive three weeks late due to a bottleneck at the Port of Los Angeles. Everyone is happier when they feel like someone’s in control, so retailers who are upfront and honest about current and potential delays enjoy more trust and loyalty from their customers.

Logistics Reliability Requires The Full Picture

“As much as real time, reliable data is a game-changer, it’s not enough on its own,” observes Polvinen. “You need the wider picture. Not just where this shipment is at the moment, but what’s coming up ahead, what is happening to all your shipments over time, where there’s bad weather brewing, where the normal ‘best route’ is closed because of natural events or geopolitics or even a local holiday.”

Companies with smart data analytics capabilities know how to slice data into the insights that underpin better decisions. You’re in far better shape if you can, for example, identify which vendors or regions are plagued with more delays, so you can change routes and/or vendors as necessary; see if high delays are seasonal for certain areas so you can avoid them; and compare logistics service providers’ relative efficiency, to select the best option at each time.

Accessing this information with dynamic dashboard visualizations means you can see the best choice for each shipment at a glance, removing friction from decision-making.

Deeper insights reveal opportunities to provide better CX. For example, one route might be free from bottlenecks at the moment, but the price is high. With this information, you can offer your customers the option of paying more for on-time delivery, something for which 81% say they would pay a premium, according to Oracle.

Opportunities For Retailers To Build Back Better

Nobody welcomed the supply chain crisis, but the way that retailers respond could lay the groundwork for a more efficient and resilient supply chain for a long time to come.

By improving visibility, transparency, and agility across the entire supply chain, and keeping customers fully informed, retailers and logistics providers can stop being slaves to the unexpected and optimize supply across the board.