Why Your Supply Chain Transformation Needs to Start Now

March 18, 2016

Supply Chain Transformation

We have said it time and time again. Consumer demands are growing. We are well past the days of simply discussing consumer expecations. Now, supply chain leaders must look to meet increasing consumer demands by investing in progressing their supply chain transformation.

In a previous blog, we mentioned how Amazon: was negotiating to lease 20 Boeing 767 jets for its own air-delivery service, registered to provide ocean freight services in China, and purchased thousands of truck trailers to ship merchandise between distribution facilities. 

Alibaba Group, the other global e-commerce powerhouse we mentioned in that blog, utilizes logistics company Cainiao, which was formed to develop an efficient, China-wide parcel-delivery system. Now, according to Judy Tong, President of Alibaba's Logistics arm Cainiao, "The ultimate goal of Cainiao is to make it easy to deliver goods to anywhere, so that parcels delivered in China can arrive in 24 hours and parcels delivered cross-border can arrive in 72 hours instead of several days currently for China shipments and days or weeks for international orders." 

Is there something that Alibaba and Amazon understand that the rest of us don't? Is there some coveted secret as to why these two companies are investing so much into their supply chain? No, not at all. In fact, it is quite simple. In Amazon's case, it was fed up with third party carriers, such as UPS, struggling to keep up with the rapid growth of e-commerce. The overall message? Keep up with consumer demand. 

If we take a step back for a second, and really ponder the current state of e-commerce from a consumer standpoint (Which we all are at one point or another) it is truly quite fascinating. At any time, from just about anywhere in the world, we can order an item online, and in a few days/weeks, it will end up on our doorstep. The thing is, with companies such as Amazon and Alibaba setting such a high standard for the rest of the world, two week, or even one week deliveries will eventually become unacceptable. Soon, consumers will be expecting their goods delivered in a matter of days, regardless of where it is coming from. And that is just on the receiving end, expectations are high for returns as well. 

Not only are consumers demanding more when it comes to speed of delivery, they expect more in terms of financial as well. What I mean by this, of course, is free shipping. According to eMarketerAccent, an omnichannel customer engagement technology vendor, released data indicating that 88% of consumers would be more likely to shop online if they were promised free shipping. Along with that, a survey comScore administered to more than 5,800 US online shoppers suggested the same, adding that 83% of respondents said they were willing to wait an additional two days for delivery if shipping was free. 

Such expectations and demands are only going to grow, and that is why supply chain leaders must accelerate supply chain transformation now. If you fall behind the eight ball, you risk not achieving your growth and scale objectives. With that, your chances of remaining relevant and competitive within your industry are compromised.

Remember, the person who stated, "The consumer is always right" was in fact a consumer.

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