This holiday season promises to be the most digital of all time with forecasts calling for e-commerce growth to handily outpace overall industry sales. At UPS, the multi-channel movement is a trend we have watched intensify and helped facilitate during the past decade. Chances are good one of our delivery vehicles will visit your home or that of a family member this Christmas.
The holidays drive home just how much the growth of e-commerce has altered supply chain dynamics. Retailers and their trading partners are striving to satisfy an expanding set of customer expectations around product availability, payment methods, delivery options and returns processing. In this world of boundless customer expectations and relentless competition, those with the most efficient supply chains rule. This has been a fundamental business reality in the retail industry for many years but it will become even more so in the future.
Among retailers and their trading partners it is widely understood that the way forward to achieve new levels of supply chain efficiency revolves around increased collaboration. While the objective is often clear, what’s less well understood is the collaboration process itself and the value that a freight carrier can bring to that process. This is true whether the carrier is UPS or one of our competitors.
A carrier might seem like an unlikely partner in the collaboration process, at UPS we are able to glean efficiency insights as a result of our vantage point as a facilitator of worldwide commerce. We see what works and what doesn’t and how to achieve more of the former and less of the latter. We know that the effects of collaboration can be greatly magnified the further upstream in the supply chain they occur.
For example, we know that routing guides might not be the first place retailers and suppliers think of when they strive to collaborate more effectively to unlock supply chain opportunities. Yet this document offers tremendous potential because they can provide a structure that offers solutions to improve accuracy, consistency, and transparency. A routing guide can help transition a relationship from purely transactional to one that is more collaborative and focused on adding value.
A common example we see involves the point at which a purchase order is executed, retailers have sent the routing guide and suppliers are assessing the real-life impact on operations and logistics. At this point, the order fulfillment process is no longer hypothetical, the goods and information are moving and consequences are real. If it’s a new relationship between supplier and retailer, many requirements within the routing guide may be new to the supplier and their ability to perform is up until this point often an unknown for the retailer.
Presumably, good planning between the parties has reduced the room for error and disruptions, but this isn’t always the case, especially if the parties aren’t leveraging the collaboration potential of their routing guide.
For example, if the carrier hasn’t been integrated into the process they should be. Most routing instructions require a specific carrier based on order specifications, and while the retailer usually selects their preferred carriers based on a relationship, retailers should be asking how that carrier is adding value to the supply chain in terms of tools that increase visibility, accuracy, consistency and transparency. Retailers and CPG companies often talk about shopper insights, but a carrier should be able to provide supply chain insights.
It’s a missed opportunity for all parties every time a supplier starts using a carrier based on routing requirements who hasn’t integrated solutions that will enhance their business processes.
At the end of the day, there is a role for a carrier, whether it is UPS or one of our competitors, to play an active role in the collaboration process. It is no longer enough for a carrier to operate a fleet of highly efficient vehicles that transport goods. Even if done at a high level of reliability and a competitive price, the real value a carrier brings to the supply chain in the future will be as a facilitator of collaboration and a provider of tools that can be customized for each retailer’s unique business process.
In addition, carriers should be adding value to suppliers by giving them the ability to fulfill their retail customers orders with easy-to-integrate, no-cost or low-cost solutions that eliminate key entry errors, provide customizable templates to match label or order requirements and efficiently send ASN’s. All of these features can reduce compliance expense and increase supplier scores and serve as the foundation for a stronger, more collaborative relationship.
Kiel Harkness is a senior marketing strategy analyst at UPS working within the retail industry. He is focused on UPS’ strategic fit in enhancing supplier and retailer relationships through solutions that benefit both ends of the supply chain and led the development of a solutions website dedicated to retail supply chain suppliers at www.ups.com/retailsuppliers. He can be contacted at firstname.lastname@example.org.