As we make the final countdown to the holidays and the end of the year, what’s the biggest issue facing your business? For a surprising number of us, it’s the success (or failure) of our supply chain logistics. Whether you’re B-to-B or B-to-C and whether you handle your supply chain in house or with the help of partners, there are millions of dollars flowing and thousands of relationships being either fortified or undone every day. This is particularly true under the pressure of the season as we either delight our customers or fail.
Consider the situation of a couple who chooses a new bedroom set for Christmas. They like the price; they trust the vendor and they place the order in plenty of time. The bed arrives and the shippers assemble it correctly. Unfortunately, one of the two nightstands is badly gouged and the other is missing.
The delivery service shrugs and departs. The couple calls the company. “Oh, that’s an issue with the shipping provider,” they hear. The shipping provider says “No, that’s an issue with the delivery firm.” There are three separate companies partnered in a supply chain process in which none of the three accepts responsibility or blame. The situation isn’t resolved until months later when the couple finally files a negative BBB report against the shipper. But the couple vows to never buy from the furniture company again and of course tells all of their friends (let alone the bad word on social media).
How many times do scenarios like this happen? An online order is placed and 7-10 days later, the company says the item is no longer available and sends a refund. Another vendor, known as one of the best in customer service, regretfully tells an unhappy customer, “Never call our chat line. It’s a mess. If you need a situation straightened out, just come into the store.”
The cost of these situations is staggering.
This week I spoke to a leading company in the supply chain management sector—Visible Supply Chain Management (Visible) in Salt Lake City. The company has been in business for 26 years, but as supply chains importance has dramatically increased over the past several years Visible has become one of Utah BusinessMagazine’s top three fastest growing companies in 2017 and 2018.
How important is supply chain effectiveness? Visible’s President Casey Adams told me the following: Many companies consider supply chains an isolated function that receives less strategic attention than any other part of a business. Yet research by Deloitte shows that 79% of businesses with better than average growth have effective supply chains. In contrast, among companies without strong supply chains only 8% achieve better than average success.
Even worse: Supply chains can account for up to 90% of the cost structure in some companies, particularly in the global market where international shipping is involved. Without optimal strategies and elite efficiency, the supply chain can be one of the biggest causes of business demise.
Here’s another issue Adams noted: The supply chain sector has evolved significantly in the past 3-5 years, which is one of the reasons the sector is growing so fast. Gone are the days of being able to do everything in house. In B-to-C scenarios, consumers are increasingly compelled by the standard of free shipping and two-day delivery available from Amazon Prime. They come to expect or demand “Amazon Prime” delivery from every other vendor as well.
How do you handle this challenge? In Vision’s case, the company acquired two other businesses – Pro Star Logistics and IntegraCore – in 2017 that allowed the company to scale rapidly. With their vastly increased buying power, they were able to ship 136.6 million small parcels in 2018, acheiving Amazon Prime delivery times in 97% of deliveries. They did this on behalf of every customer, large or small, giving every business a way to “deliver like the big guys” in an Amazon world.
The company now employs 1,000 people and is quickly becoming more “Visible” with the help of awards such as the Pitney Bowes Retail (R)evolution Award, along with Harrods, Hudson’s Bay Company and eBay.
Clearly the next generation of digital and on-demand supply networks is here. A growing number of companies have already embraced it. But if you haven’t started actively investigating the evolving sector, you may be behind.
So the moral of the logistics story is this: In the extra pressure of the holiday season, take careful note of the way your company fared. Regardless of the score, you should vow here and now to be agile, adaptive and responsive. Now would be an excellent time to put supply chain strategy at the top of your New Year’s Resolution list for 2019 and beyond.
David K. Williams is a serial entrepreneur, founder and chairman of DKW Ventures and author of “The 7 Non-Negotiables of Winning: Tying Soft Traits to Hard Results,” available here.