Manufacturers traditionally served as a mid-point in the supply chain, where raw materials were transformed into products for retail sale. In recent years, however, a number of factors have created a much more dynamic supply chain; increasing customer demands for delivery speed and precision, competition from new countries, political tensions and the emergence of e-commerce platforms are profoundly impacting manufacturing.
These developments have many manufacturers exploring a direct-to-consumer sales approach to better navigate this increasingly complex environment. As manufacturers determine whether to undergo this transition, they should consider the following logistics trends.
1. Digitization of the Sales Process
Brochures, order forms and emails traditionally utilized by sales representatives are declining as laptops, tablets and cell phones record orders directly into systems. Customers can now visit a brand’s website and buy directly, often enjoying attractive discounts on bulk orders.
Manufacturers previously focused on increasing productivity and reducing costs must transition to increasing brand value and improving the customer experience. Rather than competing on price or product, manufacturers should leverage their greatest advantage: brand experience. By providing personalization and service level choices, manufacturers can differentiate their brand from the competition and foster brand loyalty. Implementing a tech stack with multiple malleable systems provides the flexibility to appease modern consumers.
Modern consumers blend online and offline channels seamlessly to identify and purchase goods, meaning they can order products, have them delivered and return them anywhere, anytime. To accommodate these consumers, omnichannel retailers must offer a range of delivery options. Buy online, pick up in store (BOPIS) has also risen in popularity as a time- and cost-saving alternative to delivery. Manufacturers taking the direct-to-consumer step need excellent logistics to compete in this environment, including visibility into all incoming order channels, logistics service provider data, and real-time access to shipment status and preemptive alerts when anything changes for consumers.
3. The Rise of Carrier-Agnostic Logistics Technology
Fueled by the demand for flexible deliveries, manufacturers should avoid long-term agreements with a select number of carriers, instead leveraging multiple carriers to secure lower prices. Multi-carrier shipping software makes it easy for shippers to compare carrier service levels and costs and automatically select the right carrier service for each order according to the point of origin, point of destination, carrier contracts, and business rules; create or acquire the tracking, labels, and documents; monitor delivery events and automate event exception workflows; manage the manifest and end-of-day processes; and analyze carrier performance.
Consumers increasingly select brands with sustainable business models. For manufacturers, being ‘green’ has become an essential requirement in an era when product origin is more transparent than ever. Green logistics starts with eco-friendlier packaging. Both the material of the packaging itself and the amount of “air” in the shipment have become critical factors. Consider replacing plastic packaging and filling materials with recyclable alternatives. Also reduce package sizes; in addition to weight, carriers charge based on the size of consignments.
Beyond the packaging, shipping mode and method have a major influence on carbon footprints. While rapid delivery may be increasingly important, the use of planes or poorly filled vans for shipping hurts sustainability. Eco-conscious consumers often prefer slower logistics services with minimal environmental impact.
Asia’s steadily increasing wages combined with 3D printing of parts and the use of robotics in production have created a clear trend towards near-shoring or re-shoring of production sites. Eastern and Southern Europe have become popular locations for European organizations, and North American companies are once again opting for domestic production. The main advantage, of course, is that delivery times decrease considerably. Following Amazon’s lead of trading mega-warehouses for smaller, localized warehouses, manufacturers can achieve the ultimate goal: near-instant delivery of consumer purchases.
6. Internet of Transparency
In manufacturing, the Internet of Things (IoT) make machines ‘smart,’ enabling precise calculations regarding when machines need maintenance or replacement parts. The same applies to logistics: wireless sensors are paving the way in logistics transparency. Already popular in container transport, as solution costs decrease, parcel transport will also benefit from the technology, including temperature tracking of refrigerated shipments or measuring the movement of fragile shipments. The greater the transparency, the greater the capacity to avoid or correct potential issues in shipping and keep customers happy.
7. Big Data and Analytics
Shifting from bulk shipments to parcels provides a rapidly growing amount of logistics data, including the performance of logistics partners. For example, analyzing the intervals between shipment tracking statuses reveals whether carriers are meeting their service levels as contracted. This information significantly strengthens the shipper’s position during contract negotiations, as shippers can compare invoices with source data for delivered shipments and flag and dispute any differences. As carriers impose a separate surcharge for each exception or non-standard package, data analysis could reveal a significant source of savings.
It is also possible to use the data to manage customer relationships. Manufacturers-turned-retailers can proactively send customers updates when a promised turnaround time isn’t met. This way, shippers continue to control the customer experience, even if suppliers are underperforming.
After decades of relatively quiet global trade, turbulent international relations, trade wars and climate change are shaking up the role of the manufacturer in the supply chain, as many explore transitioning into direct-to-consumer sales. Aided by the internet’s transparency and retailers’ commitment to ensure a perfect customer experience, customers are more critical than ever - both about the price they pay and about the service they experience, and manufacturers new to the consumer purchasing process may experience a few hurdles along the way.
By understanding and preparing for the seven logistics trends outlined above, manufacturers can more effectively ease the transition and meet customer expectations.
Dipti Gupta brings more than 20 years of experience as a supply chain leader to her role as Chief Operating Officer at Logistyx Technologies. Throughout her career, Dipti has served as a visionary team leader of high-growth, customer-focused enterprises with experience in SaaS products, supply chain transformation and technology implementations.