Companies with strong e-commerce strategies are reaping the rewards of rapid growth. Globally, we are nearing one in four human online purchasers, and Amazon commands 14% of these global online sales. Within the US, they dominate with +50% market share of online sales. The ‘Zon’s’ ability to predict and deliver on clients’ expectations for same day, workplace, Sunday, pick-up and locker delivery options (beyond traditional carrier options) while also reducing transportation costs has been a force of industry change. The “Amazon effect” has heightened delivery service expectations of consumers around the world, and carriers have taken notice – now offering myriad same-day delivery options as well.
Meanwhile, Shopify made history in 2018 by surpassing $1 billion in revenues, with more than 800,000 global businesses using its platform – further testament to the e-commerce boom. And adding yet another dimension, static and mobile 3D Print and Ship (or deliver) operations of e-commerce products is projected to grow as well.
The writing is on the wall: to survive and compete, organizations need to properly execute their e-commerce shipping strategy.
To succeed, the use of Business Intelligence is critical. While larger organizations are already disciplined with data strategies and use of business intelligence, small organizations may be so focused on buzz words like ‘big data’ that they have overlooked the importance of ‘right data.’ Management may not fully realize the value of business intelligence, or they may feel overwhelmed when they understand they lack key informational insights or have data trapped in silos. Regardless of organization size or maturity, however, the importance of business intelligence cannot be ignored.
Key Benefits of Business Intelligence in Ecommerce Shipping
Identifying carrier delivery performance improvements and cost saving opportunities provide the incentive for businesses to gather, store and interpret data to assist with decision making and gain competitive advantage. In traditional financial audit processes, this can track back to identifying and adjusting improperly invoiced items relating to contractual rates, accessories, guaranteed service rebates, claims management, address correction validations or even manifested but not shipped transactions.
Optimization analysis can identify even more significant cost savings. Using Business Intelligence to model and compare selected carrier services against actual carrier performance to find routing alternatives with lower cost implications and/or faster delivery times is a starting point. When these results are uncovered, they may require a corresponding behavioral change within the retailer organization. A simple example is use of a premium overnight expedited service level for a carrier, when the lower cost ground option offers the same delivery time to the end customer at a much lower cost. Use of business intelligence can increase confidence levels when making this decision. Carton consolidation opportunities within the warehouse and fulfillment workflow may also arise from an optimization analysis.
More advanced optimization strategies could emerge if analysis includes static or fluid zone ship opportunities affected by seasonal spikes or more effective ways to position facilities and inventory around the globe. These analyses are more complex. However, the overriding principles of near immediate delivery options to satisfy consumers’ need for instant gratification at as low a delivery price as possible are maintained.
In total: the results of each – let alone all – of these analyses can be profound and significant from a cost savings perspective.
Prepare for 3D Print and Ship market growth. Manufacturers and retailers who focus on business intelligence now will be prepared for new, and growing, distribution models tomorrow such as 3D Print and Ship, one of the trends discussed in our eBook, Omnichannel Merchants Shift Closer to the Consumer. Take, for example, a dishwasher manufacturer. Over time, small components within the dishwasher may fail. If the company expects the widget will fail 5% of the time, business intelligence can provide insight into inventory holding costs for this product, or as an alternative, utilize a 3D printer to print and ship to a customer on demand from strategic locations closer to the end customer.
Silos of Shipping Data
Often, smaller organizations operate with data in silos, or worse, ignore data access and leave data outside of their control in the external environment. Traditional data sources relating to shipping business intelligence traditionally begin with manifested shipping data. From here, visibility or event management feeds are available to manage the transaction within carrier networks. Control Towers manage these feeds and should generate ticket events to address problems proactively as they are identified from these carrier status feeds. On average, in North America, there are nine different status messages per small parcel transaction. Finally, the financial data from carrier invoicing is required to effectively close the loop on what has occurred with the transaction from the point of label generation through the carrier network to delivery. Exceptions are segregated and handled quickly to ideally maintain preferred carrier status. Carrier invoice adjustment responses further generate financial data through payment cycle acknowledgements, enabling reliable accrual modelling. Some more progressive companies will align line item details down to the SKU-level within this analysis to attain more detailed business intelligence validating budgeted product costing models and trend analysis results.
Use of this information is also vital for planning/procurement. When organizations understand where their customers are located, along with order characteristics, frequencies and trends, they can properly manage the carrier RFP process. Evaluating carrier proposals against predicted future transactions or historical data sampling reveals the cost impacts of working with various carriers. Focus can then be applied within these contract negotiations to identify relevant areas of negotiation specific to their environments. The days of carriers telling shippers what they have done and how they have performed should be long gone with proper business intelligence to facilitate carrier scorecards. Retailers leveraging manifest, visibility and financial data with business intelligence can now truly address business transportation problems openly with carriers to mutual benefit.
Data Connections Produce Valuable Insights
When businesses connect the data from shipping execution, visibility and finance, and then apply business intelligence, complex decisions and tasks get simpler. Opportunities to significantly shift, reduce and manage global transportation costs and monitor KPIs – without sacrificing service – are just a few of the most basic, immediate and impactful ways interconnectedness pays off for shippers.
And the customer service benefits of business intelligence can pay off in spades. As global consumers’ sophistication and expectations evolve, so too must the information that supports the decisions to facilitate the delivery of their orders. The players that leverage business intelligence to achieve on-time delivery in full can win the e-commerce consumer loyalty game and the repeat purchase revenue that comes with it.
Based in Toronto, Mike Eisner is vice president, business intelligence at Logistyx Technologies, the leader in Transportation Management for parcels, where he oversees a team responsible for helping global businesses create value and leverage strategic information with BI within their supply chain operations