Are third parties the biggest reason delivery costs keep going up?
A survey of 237 retail supply chain executives finds delivery speed isn’t the end game anymore as cost concerns rise. One of the major hurdles to controlling costs, however, was found to be the need to partner with third-party providers such as carriers.
Sucharita Kodali, VP and principal analyst at Forrester Research, who was interviewed as part of the study, said retailers need to rely on third parties for the information necessary to control costs as well as to improve the customer experience (CX), but the related sources of data and their handoffs so far are found to be effectively black holes.
“To get the costs down and get your items to customers, you usually put together a patched together solution of lots of different carriers,” said Ms. Kodali. “The reality today is that most retailers don’t own their own delivery network and they’re still dependent on other companies and carriers to execute the last mile, and maybe there’s a sense that it’s difficult to reduce costs, and there’s a sense of not knowing what you can cut in an experience that you don’t control anyway.”
The survey from eft Supply Chain and Logistics Business Intelligence on behalf of Convey, a logistics software provider, found supply chain leaders greatly concerned about delivery costs. Eighty-one percent indicated they don’t feel confident that they can balance CX initiatives and expectations in the face of rising transportation costs.
Indeed, retailers were found to be increasingly prioritizing speed over costs for delivery, except for critical times such as holiday. Some retailers are letting customers choose which day they receive their packages, a strategy the study noted Amazon is also pursuing.
Although efficiencies could help, 61 percent of supply chain executives indicated their existing systems do nothing to improve CX — only a five percent improvement since a similar study in 2017. The two top customer service concerns were the inability to connect disparate data, cited by 65.5 percent, and the inability to take action on distressed shipments, 54 percent.
DISCUSSION QUESTIONS: To what degree is working with third parties a hurdle to driving profitability in online delivery? What advice would you have for working with third parties in resolving both delivery and customer service issues?