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Adapting to Changing Consumer Demands with a Flexible Supply Chain

Keeping pace with rapidly changing customer demands, behaviors, and expectations has become a full-time job for most companies. No longer able to operate in a “business as usual” manner, organizations must respond and adapt to customer requirements or risk losing them to their nearest competitor. Driving the trend is a consumer who wants everything from clothing, to cars, to computers, to food when he or she wants it—or sooner, preferably.

Compounding the challenge is a consumer experience that’s become highly personalized and specialized over the last decade. This translates into more customized orders, shorter delivery windows, tighter compliance standards (on the part of major retailers, for example), and an overall intolerance for any shipment that’s late, incorrect, damaged, or otherwise unsatisfactory.

Industry experts credit online retailing giant Amazon with driving a good portion of these higher expectations. “Amazon is dominating the headlines by constantly challenging the logistics status quo,” writes PARCEL’s John Haber in Amazon Is Redefining the Supply Chain. “What started out as the leading online retailer of books in 1994 has evolved over the last decade to become ‘the earth’s most customer-centric company.’ To support this self-proclaimed title, Amazon has built a unique supply chain network that is transforming the way supply chains are built and managed.”

As a result, today’s logistics network is moving closer and closer to the customer. “Shortening time from order, to fulfillment, to delivery is critical to a growing segment of the population,” Haber writes. “These days many consumers want their packages next day, same day, or even within one hour. Amazon’s fulfillment network reflects these changing customer preferences and, in some aspects, may even be responsible for changing consumer behaviors.”

Other key trends impacting the logistics space—and driving companies to rethink their end-to-end supply chains—include:

  • Consumer preferences that are becoming more complex and personalized
  • Companies that are producing more customized orders
  • An e-commerce channel that continues to grow globally (40 percent of worldwide Internet users [1 billion+] have bought products or goods online via desktop, mobile, tablet or other online devices
  • Delivery windows for orders that are shorter than ever
  • Retailers who expect their vendors to keep up with their compliance regulations
  • Retailers who need their suppliers and logistics providers for help navigating these changes
  • Companies that must be able to ship everything from full pallets of goods right down to single orders to be delivered right to an end user’s home
  • Order-to-shelf cycles that have tightened, particularly for retailers (and, subsequently, their suppliers)
  • The list goes on…

Streamlining the End-to-End Supply Chain 

As customer preferences continue to change—and as the complexity associated with those changes grows exponentially—the end-to-end supply chain has become a focal point for any company seeking operational efficiencies and related improvements. Within the supply chain, the transportation component plays a critical role in ensuring that customer requirements and expectations are met or exceeded.

Take the food sector, for example. Consumer behavior and preferences are rapidly changing—arguably at a speed that many industry providers are not prepared for, according to Deloitte’s Food Industry Logistics: Trends That Matter. “We are witnessing an explosion of consumer interest in locally sourced, fresh, organic, natural, and sustainable products. Furthermore, consumers are increasingly expecting food companies along the value chain to be responsible environmental stewards and corporate citizens.” In response to these new demands, several disruptive innovations from the supply side have begun to appear in the marketplace, Deloitte reports.

“[These] consumer demand elements are just starting to bring to light the dramatic adaptation of logistics infrastructure and execution that will be required in order to keep up with the new food environment. From smaller, closer-to-market, and more responsive distribution and consumption sites all the way to entire production systems built on predictive demand analytics and real time information, the field of food and beverage logistics is changing rapidly. Organizations must remain flexible and ready to implement change today. They must know how the market is changing and anticipate the next market move.”

Logistics Partners Answer the Call 

With no end in sight to the number of customer behavior and preference “shifts” that are taking place right now, the real question is:  How can companies successfully navigate and address these shifts while remaining profitable and healthy in an increasingly competitive business environment?

According to PwC, these trends are creating new demand patterns for the commercial freight transportation and logistics industry. Shippers want logistics partners that can operate across their diverse supply chains and distribution networks and that are strategically inclined — as comfortable in the C-suite as in a buyer’s office. “Shippers particularly seek carriers that can accommodate spikes in volume and maintain a high level of performance during disruptions,” PwC reports in 2016 Commercial Transportation Trends. “And they are looking for business-enhancing opportunities, such as 3D printing and digitally-enabled solutions that provide visibility into multiple vendors, greater price transparency, and a consumer-like user experience.”

Ultimately, PwC says shippers’ supply chains are becoming ever more complex, even in market segments where their needs have been relatively straightforward in the past. “…shipping is no longer a tactical decision influenced solely by cost, but rather a strategic consideration based on such factors as customer expectations, sales volume, and product mix.”

These realizations present significant opportunities for companies that work with their logistics providers to create agile, flexible, and efficient transportation chains. With core competencies in global freight transportation management, as well as a full range of logistics and supply chain management services, DB Schenker has the right solution to help you better manage and control your supply chain in a world where customer preferences and requirements are in constant flux.

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