Comment & Analysis

Why an ‘elastic’ logistics mindset is essential for the modern retailer

By Jan-Paul Boos, SVP-sales at BluJay Solutions

The ‘now economy’ has been fuelled by the reliance on e-commerce during lockdown. Without the ability to pop out to the local High Street, consumers have brought their expectations of convenience and immediate availability to online storefronts. But behind shiny interfaces, many retailers cannot offer the same speed, communication and customer service as the website or app might suggest. Logistics and business infrastructure challenges leave them unable to compete on scale, network, capacity and innovation with the big guns like Amazon and Alibaba.

Challenges such as fluctuating demand and events like Brexit and Covid-19 mean these companies find it harder to transform and leave their old selves behind. An elastic approach is needed – one that’s always-on, consumption-based and scalable. The good news? It’s achievable for all.

Focussing on the customer helps drive innovation

For decades, supply chain innovation has been driven by a desire to reduce costs. However, new research commissioned by BluJay Solutions found supply chain professionals expect customer experience to overtake price and product as the number one-brand differentiator in the next five years.

A shift in market behaviour means that businesses, whether delivering packages, experiences or any other product or service, should start to view customer satisfaction as crucial to delivering value. In the supply chain, this means focusing upon the all-important last-mile logistics, as well as real-time visibility based on evidence that customer satisfaction is increased by digital communication between supplier and consumer.

Delivering value in this way requires systems that provide seamless partner connectivity and data quality. The technology exists to help businesses adapt to this market shift; it is only a matter of which businesses are ready and willing to rework their priorities.

How Danone got flexible through data-driven collaboration

A good example of this is Danone, a leading global food company that partnered with BluJay to address increasing customer demands and complexity in today’s fast-changing marketplace. As customer-demand grew, Danone needed a way to deliver products to supermarkets as quickly and efficiently as possible. This meant tracking hundreds of loads daily across three manufacturing plants, six distribution centres and liaising with numerous trucks from third-party carriers.

The challenge was coordinating the above while meeting customer demands for better scheduling options and increasing on-time delivery windows. With BluJay’s guidance, Danone moved away from outdated processes and systems like communicating via faxes and phone calls between siloed departments, to BluJay’s Transportation Management (TMS) solution to support planning, execution, claims and appointment scheduling, enabling end-to-end control and visibility across the entire supply chain.

As the Danone case study illustrates, having an optimised supply chain allows tracking systems to update both businesses and customers alike, while data-driven collaboration between logistics partners helps ensure that goods can be moved efficiently. Instead of focusing on ‘lean’ practices, logisticians are wise to look to flexible systems to expand and reduce capabilities, accommodating changes in demand within the supply chain.

Uncertainty is certainly here to stay, so get prepared

As it stands, global customs and compliance can be a challenge for businesses. Add to this political disruption, like the US-China trade tensions or the post-Brexit fallout, and there is prolonged uncertainty for the supply chain community. Supply chains can survive such barriers with end-to-end supply chain visibility to help mitigate disruption.

A good example of this is the ongoing China-US trade tension, which for the US spurred a surplus of soybeans and other high-volume exports previously consumed by China. The flow-on effect of this lowered the price US producers will be able to get for their products, creating a spiral effect where farmers were unable to meet their financial obligations, reducing related industry purchases such as equipment and likely leading to more government subsidies to keep them afloat. Here, the flow-on effect resulted in higher manufacturing costs and steel tariffs, encouraging companies to implement changes to their supply chain.

Considering the heightened tariffs and instability, many US multinationals are looking to alternative sourcing in countries such as India. Here, navigating India’s complex customs rates, which vary according to the product, user, specific export promotion program that’s open to administrative discretion, makes supply chain predictability a challenging task.

Why elastic logistics can help

How can businesses set up their supply chains to withstand disruption and capitalise on growth opportunities that may arise?

The answer: become ‘elastic’. Modern supply chains require flexibility to manage fluctuations in consumer demand and disruption, like the aforementioned scenarios. No doubt, operation in a static, closed on-premise transportation solution limits what an organisation can achieve. With the use of elastic logistics practices comes efficiency, visibility, the ability to scale and optimise quickly and increase overall customer satisfaction.

One important step to achieving an elastic supply chain is being part of a network, where logistics software applications are connected to a global trade network. The power of network lies in its ability to bring clarity and visibility to everything that is happening within the supply chain, while offering on-demand connections to potential carriers that have execution capabilities when needed.

Transportation management platforms built for this type of network connectivity can scale with your business, helping experts create frictionless, high-performing supply chains where goods cross borders quickly, information is shared easily, users operate efficiently and cost is reduced from operations.

Adaptability is key for the logistics industry

In reality, it takes focused effort to prioritise innovation as a continuous process in logistics. Many companies only look to their supply chain when things are obviously wrong but, the winners will be those who can continuously transform, those who improve and innovate on a daily basis – those reaping the benefits of elastic logistics.

Jan-Paul Boos is SVP-sales at BluJay Solutions

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