Technology Enables You to Be Positively Different
Q: How can logistics technologies be utilized as a competitive differentiator?
A: Most companies prefer to attract customers by providing unique brand-driven customer experiences and services rather than competing on price. Strategic and practical use of the right technologies enables sharp pricing competitiveness, creates better customer experiences, reduces expenses, and raises productivity.
The evolution of online retailing is a good example. A few years ago, shipping and handling was a known profit center for online retailers. Consumers bought product and paid to have it delivered. Free shipping was uncommon; a handful of online retailers offered it only during the holiday season. But times have changed. About 75 percent of the largest online retailers offered free shipping during the past holiday season. And many retailers, such as L.L. Bean and Target, are now offering free shipping throughout the year, with no restrictions.
Supply chain technologies enable such differentiations. In the example of online retailing, the logistics technologies have to dovetail into the entire supply chain structure, as online retailers must now understand and manage transportation costs and carrier quality to be able to offer their customers transportation-based incentives.
Q: How does transportation management impact differentiation?
A: Today's modern transportation management impacts cash flow and customer experiences. Smart companies know their exact costs, margins, and transportation trends, so marketing efforts such as free shipping will lead to increased revenues and profits.
A 2008 Aberdeen Group survey of more than 200 logistics practitioners indicated increasing price and service-level pressure on transportation management. Seventy-two percent of the respondents cited increasing freight rates and/or carrier accessorial charges; about half of the respondents cited increased internal and customer demand for accurate delivery status and cost information.
This survey was conducted as we headed into a prolonged, difficult world economy that brought lower revenues, combined with rising costs and increased consumer expectations. For companies offering programs such as free shipping, timely cost and service-level data were—and are —critical.
Today, companies that do not have minute cost detail may mistakenly offer price-sensitive programs—in keeping with the competition—that increase revenue but actually lose money on every transaction.
Q: What do you look for in differentiating technologies?
A: Flexibility. We consistently hear from prospects who are looking for their "next" transportation management system because they have to shape their business around dated and inflexible technology and processes. The day-in-the-life functionalities such as least-cost rating and visibility are assumed. Strategic transportation management is increasingly tied to the customer experience.