Multiple Channels Are Making Supply Chains More Complex

The global consumer packaged goods (CPG) logistics market is forecast to grow at a compound annual growth rate of 5.98% from 2016 to 2020, according to a Research and Markets study entitled Global CPG Logistics Market 2016-2020. For CPG logistics providers who are looking for and finding new ways of helping customers get their products directly to end consumers, this forecast may be conservative.

Commenting on the report, an analyst from the research team said: "One trend that is impacting the market positively is the dominance of integrated service providers. Integrators provide all types of logistics services and can act as both 3PL and 4PL providers."

Logistics providers have to be ready to manage inventory, from production right through to the end customer, and handle returns as required. Customers are demanding flexibility, transport acceleration, transport postponement, and effective and sufficient inventory levels. They want final-mile distribution and digital visibility along the entire integrated supply chain.

For logistics providers, finding the right balance between speed, costs, and inventory equilibrium levels is the key to success. It’s also about offering integrated management by using the entire service portfolio of extensive origin value-added services like quality control, labeling, reconditioning, packaging, and co-packaging; along with multi-vendor consolidation and multi-country consolidation.

To be successful, providers must offer global transport solutions (across all transport modes and in accordance with specific needs), customs brokerage, and distribution center operations, as well as final-mile deliveries into retail outlets and direct to end-users.

CPG supply chains are also becoming more varied and interconnected, servicing logistics providers with more opportunities to service their customers; but these opportunities also create a higher degree of complexity. Complexity drives the need to be more creative in the solutions we propose.

A perfect example of a creative solution was one that we suggested to a major global bath appliance customer who was paying high warehouse fees to store product that would not be released to stores until weeks or months later. The DB Schenker team recommended shipping the product from its Asian manufacturer by ocean, thus taking advantage of weeks stored at sea in transit at a lower cost than in the warehouse.

Another unique offering that DB Schenker launched in Europe last year is Netlivery. It offers small and medium businesses a customized sales and logistics service. We help them get into e-commerce and online sales quickly, taking advantage of DB Schenker’s complete range of web-based logistics and digital sales functions, using proven delivery models. From the presentation of products on the web to order fulfillment and payment, shipments, returns, repairs and even customer service—virtually everything can be done from the single-source DB Schenker platform.

Each module in Netlivery can be adjusted to the customers’ specific requirements and quickly integrated into new or existing channels. With its pay-as-you-play model, business customers are only charged for the services they need.

In addition, the shift from multi-channel retail to omni-channel retail has increased the importance of e-commerce and its integration with the other channels. A clear example is the "click and collect" or BOPIS (buy online pickup in store) business model.

DB Schenker is taking this model one step further and investigating the possibility of having consumers place their orders online and pick them up while commuting through train stations and transit hubs. Consumers can order online and pick up their purchases on their way to the office or home.

In light of changing retail and e-commerce markets, the opportunities for CPG logistics providers to increase revenues are only limited by our imaginations. It’s all about flexibility and speed.

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