Manufacturers: Say goodbye to your rigid, if efficient, supply chains

To compete in B2B ecommerce, manufacturers need to learn how to meet the demands of today’s B2B buyers for a retail-like experience in order fulfilment, writes Ken Fleming of Logistyx Technologies.

Manufacturers that supply businesses are increasingly finding that their customers now demand a delivery experience that’s akin to that provided in online retail by the likes of Amazon.  But while business purchases are rapidly moving from offline to ecommerce, is the logistics focus of the manufacturing industry also shifting? Discover why efficiency in logistics is now secondary to the online experience of your customers.

Aided by the rise of 3D printing and robotics, production is shifting to decentralised locations, increasing the number of shipping locations in manufacturing.

As a consumer, I can order a laptop today and have it delivered tomorrow, often in a specified time slot between getting home from work and heading to the gym. From the moment I order, I get constant Track & Trace updates, so I know exactly when to expect my parcel.  And if the laptop is not entirely to my liking, it will be collected and returned free of charge, wherever and whenever this suits me.

Ecommerce becomes the standard in B2B

This scenario is the norm in business-to-consumer ecommerce. But for business buyers, it is still far from reality where the delivery of business orders is still often a black box in which the receiver enjoys little to no control or transparency. The question is: for how long will this remain acceptable?

Ecommerce is rapidly replacing the product catalogues  and physical order forms that have dominated B2B sales for decades.  According to a 2018 study by Gartner, 75% of all business procurement within five years will take place via online marketplaces and sales platforms. This creates a huge opportunity for manufacturers, but it also brings challenges.

According to a 2018 study by Salesforce Research among 6,723 business buyers, 69% now expect an Amazon-like buying experience from their B2B suppliers. 67% admitted that they had already switched vendors to one offering a more ‘consumer-like’ experience, with the figures even higher among the new generation of decision-makers born between 1981 and 1999 (age 21-39).

What does this mean for the delivery of goods?

This consumerisation of the business purchasing process is leaving its mark on suppliers. No fewer than 84% of B2B providers now consider it their top external threat, according to a recent survey of 700 B2B executives by Episerver. This also translates to the delivery of goods: shipments become more fragmented and smaller, which increases dependence on parcel carriers.

Although cutting transport costs continues to lead the list of shipping challenges, the rise of ecommerce has become the No. 2 challenge for today’s shippers,  closely followed by improving customer service, according to a recent report in US title Inbound Logistics.

With the knowledge gained from B2C ecommerce, we are likely to see the following delivery services become increasingly important in the B2B space:

1. Choice of multiple delivery options.
   In a business environment, there is usually someone available to receive a shipment during business hours. However, this does not mean that one-size-fits-all shipping is sufficient. One customer might be willing to wait longer, for a lower delivery charge.  Another might need same day delivery and be prepared to pay accordingly.  Offering a wide range of delivery options and delivery speeds is therefore crucial; from same-day delivery for the most time-critical shipments to economy-options for slower deliveries. You might be able to offer these via a single delivery partner, but due to ongoing carrier specialisation, a mix of carriers is becoming more common and preferable.
2. Full transparency of shipping costs.
   Just like consumers, business buyers do not like to be surprised. By offering maximum transparency about delivery costs, including any handling fees and costs for customs clearance, you prevent uncertainty and significantly improve customer experience.
3. Real-time Track & Trace Insight & Updates.  
   By proactively informing receivers about the status of their shipments, especially in the event of any delays or exceptions, you keep control over the customer experience and prevent customers from contacting you or your carriers in frustration.
4. Localisation of delivery options.
   With ecommerce, you can theoretically sell anywhere in the world, provided you can also deliver. In B2C ecommerce, we are currently seeing retailers localise their delivery offerings, combining major carriers such as DHL, FedEx and UPS with local specialists. This isn’t just for cost-saving reasons. Local carriers typically meet the demand of end-customers in a particular geography better than other carriers.
5. More shipping locations.
   Affordable, but fast, delivery is definitely at the top of the customer wish list. As a result, the distance between shippers and end-customers is reducing. It shows in the opening of several, smaller shipping locations as a replacement or extension of traditional mega warehouses. Ship-from-store is the ultimate example of this trend. Omnichannel retailers use their store locations for the fulfilment of online orders, making even same-hour deliveries feasible in urban areas. But this trend is also visible in the manufacturing space. Aided by the rise of 3D printing and robotics, production is shifting to decentralised locations, increasing the number of shipping locations in manufacturing.

How do you respond to this as a manufacturer?

The major logistical change that successful B2C and B2B ecommerce parties bring about is the shift from push to pull. Where previously the supplier dictated delivery conditions, it is now the customer who determines where, when and by whom goods are delivered.

Partly due to this development, successful manufacturers are now saying goodbye to their efficient, but very rigid, supply chains. To meet the needs of the new generation of business buyers, flexibility is the new adage. By building in flexibility at tactical places in your supply chain, you prepare yourself for the rapidly changing demands and the wide array of wishes of all your customers. Take a look at your supply chain through the eyes of customer experience and ask yourself: What would I think of this as a consumer? The answer might hold the future of your manufacturing business.

Ken Fleming is president of Logistyx Technologies, a provider of transportation management for parcel shipping. Since the mid-1990s, Ken has led launches of technologies and services in such areas as supply chain management, ecommerce and systems integration. He can be reached at https://logistyx.com/contact/.