With overnight delivery, same-day and even two- to one-hour
delivery becoming the norm, consumers are more demanding than ever. Extreme
focus on delivering the right product at the right place and at the right time
is mandatory for the ongoing success of consumer-centric businesses. Supply
chain analytics, metrics and KPIs are imperative to enabling organizations to operate
smarter, better and faster.
Comprehensive supply chain analytics help organizations utilize historical enterprise data to feed predictive models that support better decision-making; identify hidden inefficiencies and save money; and get a more holistic view of total organizational profitability. Expected to reach $7.1 billion in revenues by 2023 (up from $3.6 billion in 2018), the global supply chain analytics market is well-positioned to help companies extract real value from the reams of data that are being produced daily.
“Supply chains are a rich place to look for competitive advantage, partly because of their complexity, and partly because of the significant role they play in a company’s cost structure,” according to a recent Deloitte report. “And with the power of new analytics, companies can now fine-tune their supply chains in ways that simply weren’t possible in the past.”
Surveying Supply Chain and Logistics Leaders
To help shipping managers address their biggest supply chain challenges, Transplace partnered with Peerless Research Group (PRG) on behalf of Logistics Management to conduct an industry-first survey. We surveyed 125 top logistics and supply chain directors to learn more about their operations, their top challenges, and their insights for the future. The majority of respondents are manufacturers with domestic transportation networks, but that also operate globally.
Key findings from the On-Time In-Full Performance Survey include:
Supply Chain Pain
Points
Supply chain managers need help across most areas of their
operations – from hitting delivery timelines to reducing shipping errors to
better inventory management. According to respondents, meeting delivery
timelines is the biggest pain point (46%), followed by reducing or completely
eliminating shipping errors (43%), and inventory management (43%). They’re also
focused on improving decision-making and planning; better supply chain
visibility; and improved communication with their customers and carriers.
Meeting promised delivery dates is an ongoing challenge for more
companies, and the failure to do so can result in damaging outcomes. Among the leading
consequences for failing to meet delivery dates include lack of trust or
fractured relationships with customers, according to 77% of survey respondents.
The inability to meet delivery dates can further result in lost revenues (67%),
the risk of losing customers (64%), cancelled orders (40%), and fines or
chargebacks (36%). Even though missing delivery deadlines can be out of a
carrier’s control, the outcome of such an event can be wide ranging.
Fulfilling
Orders On-Time and In-Full
According to the survey, more than one-third of
companies are shipping on-time and in-full
(OTIF) between 95%-99% of the time, while 28% are
meeting this KPI on 90%-94% of their orders. Just 3% of companies are hitting
this metric 100% of the time.
To attain a favorable OTIF score with their customers, 64% of
companies are working to better understand the importance of this score—a
possible indicator that more education could be needed on this metric. The
survey found that 60% are working with a visibility provider to get better
delivery time estimates.
Fifty-six percent of respondents are using a transportation
management system (TMS) to optimize delivery, and 52% are trying to improve
communication between their various departments. Finally, 8% of companies are
ignoring OTIF and simply paying the fines associated with non-compliance.
“We have not yet perceived the value
in our business,” one professional pointed out. Another
said, “OTIF has not been a determining
factor in gauging performance levels. It is however becoming more important and as such we need
to start reviewing it as a gauge factor in performance ratings.” Others say they’re putting OTIF on their organizational
agendas for 2020.
Of those companies that are using OTIF programs, 58% say the
program has prompted changes in their operations, while 42% say it hasn’t.
When asked what changes they’ve made because of their
OTIF program results, survey respondents say they’re now paying more attention
to inventory planning, stocking strategies, cross-functional agreements and
setting values accordingly—all of which are important steps in today’s
fast-paced distribution environment. Other companies are making multiple
changes in supplier scheduling, production balancing across factories, shipping,
transit need matching, delay in transit, delivery management, receiving, and inbound
delivery processes. “We’re trying to get
better planning in advance to improve
shipping in full and
having the right transportation assets in place,” another respondent reveals.
Measuring
the Benefits
Supply chain professionals agree than an OTIF policy
produces benefits with the most popular being improved metrics and KPIs (44%).
Other benefits include being able to identify bottlenecks and improve customer
service, lead times, overall efficiencies, and supply chain reliability.
KPIs and
Measuring Performance
Used to measure operational areas and determine
efficiency and productivity, KPIs can help companies pinpoint and quickly
address areas of concern within the supply chain. According to the survey,
these measures are used by about 44% of companies.
Of those managers who are using KPIs, those measures
are focused on reducing transportation costs (63%), meeting customer service
metrics (61%), saving money (54%), and improving workflow processes (48%).
When asked how their organizations can improve their
on-time and in-full delivery promises to customers, respondents pointed to
better communication from client to purchasing through sales or client
services; better data collection and analysis (which will lead to better
direction for projects and process improvements); and improved tracking of
late/lost orders with direct feedback to company distribution centers. “[We need a] system that gives full circle
information on actual lead times,”
another survey participant explained, “rather than the order entry personnel taking an educated
guess at the lead times.”
Conclusions
As supply chains speed up, fulfillment windows shrink, and customer delivery expectations evolve, the need for comprehensive supply chain metrics, KPIs, and analytics will only expand. Many companies are already utilizing these measures to make good supply chain decisions and hit their on-time delivery performance goals, and even more will follow. With 56% of online consumers ages 18-34 years expecting same-day delivery, and 49% of shippers stating that same-day delivery makes consumers more likely to shop online, the push to meet 100% OTIF demands is on.
If they’re not already doing so, companies will need
to measure every aspect of the customer experience—the shipment and delivery of
products included. Instead of simply “reacting” to problems when a customer
calls about a late order, smart companies are putting systems and solutions in
place to better measure and improve on-time performance across their supply
chains. They’re also using the right KPIs to measure their goals, hold their
partners accountable, and meet their customers’ high expectations.
To access the full research brief for the On-Time In-Full Performance Survey, click here. Connect with a Transplace expert to learn about the Transplace Transportation Management System at transplace.com/transplace-contact.
Sources:
(1) https://www.weforum.org/agenda/2019/04/how-much-data-is-generated-each-day-cf4bddf29f/
