The New Battleground for Customers
Over the years, logistics companies and carriers have waged war on various fronts. Pricing is an obvious one, and service level is another (next-day air, next-day AM, same-day), but today these have largely normalized across competitors. Now a new front has opened: customer visibility and experience.
Shippers—whether retailers, distributors, or manufacturers—are increasingly looking for real-time visibility into where their shipments are in the supply chain in order to identify issues that cause production or availability problems—problems that may ultimately affect their sales. At the same time, customer visibility and experiences provided by ride-sharing companies (Uber, Lyft) and food delivery companies (Instacart, Grubhub) are increasing customers’ expectations. These experiences are rarely seen (yet!) in logistics but, as with fast shipping, are likely to become standard.
Here’s a partial list of capabilities that drive a great customer experience and are not widely available in logistics. Over the next few years, they will become important for shippers and the carriers they work with if they are to meet evolving customer expectations. (Remember when Amazon Prime seemed like a luxury, and how within six years customers would no longer accept 5-to-7-day delivery?)
1. Photo and name of the driver, and vehicle information – Uber has set the standard on this one;
2. Real-time driver location – GPS location of driver when inbound for delivery or pickup;
3. Estimated delivery time;
4. Scheduling – customers should be able to schedule a reasonable time window for their delivery or return pickup (i.e., not the typical cable company four-hour window);
5. Driver quality score – know others’ ratings of the driver or carrier;
6. Real-time survey – capture feedback immediately after the delivery or pickup is complete;
7. Easy customer support access – access that doesn’t require a phone call or a cumbersome contact form, and that reaches the shipper, not the carrier, directly;
8. Centralized delivery visibility – one shipper-controlled place for the customer to track deliveries, as opposed to providing a tracking number and making the customer go to the carrier, as is typically the case today;
9. Simple online claims submittal and processing – for example for damages, lost items, etc.; and,
10. Notifications subscription – customers pick and choose when and how (text or email) they are notified/alerted to events (out for delivery, delivered, etc.).
As in every competitive environment, there will be early adopters who provide these capabilities before the rest. The early adopters will build market share, potentially gain pricing leverage, and also become stickier relative to the laggards—the capabilities mentioned above have been key ingredients in Uber’s rapid rise. Some of these enhancements are easy (e.g., online claims submittal), but most are difficult due to most companies having old legacy technology and not investing in new technology for logistics.
Even UPS, who proudly claims to spend more than $1 billion on technology every year, is moving slowly toward this next-frontier customer experience. In 2011 UPS started Fast Forward, which allows recipients to choose a delivery window in certain situations. And in 2016 they rolled out a map for recipients to see the real-time location of their delivery. But these services are only available for non-business customers of Next Day Air and International shipments—both of which are less than 1 percent of their business. This slow progress is an indication of how hard it will be for even large carriers, and therefore their shipper customers as well, to meet emerging customer expectations.
The irony is that the very technology investments that allow carriers to provide visibility to their shipper customers, and in turn to their end customers, also improve efficiency and reduce costs for the carriers themselves. To provide a high-quality customer experience, carriers need to get their own houses in order first. Real-time operational visibility, systems integrations, and paperwork elimination are all drivers of cost reduction as well as prerequisites for shippers to give customers a great delivery experience.
The very largest carriers and shippers with in-house technology teams may be able to improve their systems on their own, but the bet here is that most will need to adopt external technology to keep up. Who knows how long it will take for an Uber-like experience to become a requirement for shippers, but good times are likely in store for supply chain software companies that can meet these visibility needs.