Today’s B2C supply chain is rapidly evolving as the Amazon effect revolutionizes how goods are being shipped, especially how quickly and cheaply they are being sent from vendor to customer. As more customers in the B2B supply chain demand Amazon-style delivery experiences, the B2B sector is being compelled to follow in B2C’s footsteps. Especially since Amazon has invested heavily in “supply chain predictability,” including a “maniacal” focus on technology, how can B2B supply chain operations even come close to matching what’s being accomplished by the multibillion-dollar goliath that is Amazon?
While many of the players aren’t able to spend the whopping amounts of money that Amazon sinks into its supply chain, particularly its technology, those players can ramp up their commitment to supply chain predictability in the form of supply chain visibility. If they fail to do so, they could be left in Amazon’s wake.
B2B supply chains must mimic — at least in efficiency — Amazon’s system to have any hope of surviving and thriving. Rather than be scared by Amazon, B2B supply chain leaders should learn from it.
Here are five lessons to take away from Amazon’s supply chain:
These days, everyone in logistics has their eyes on Amazon. But that shouldn’t translate into copying every single thing the company does. However, the behemoth’s customer experience can still serve a case study for bolstering the B2B supply chain.
Generally, B2B sellers are not trying to get into the game of being their own carrier. Instead, the goal should be to take similar control over how their customers experience delivery. While technology may be a key differentiator for Amazon, you don’t need to be your own carrier to achieve success, but it is important to prioritize intelligent operations like Amazon does, especially when it comes to taking control over logistics and providing an optimal experience for all customers.
According to Gartner, Amazon’s biggest leaps can be attributed to its extensive logistics network. Gartner claims: “Amazon has made vast investments in its distribution and delivery network and is poised to disrupt both the 3PL and last-mile delivery segments. By making its own deliveries, the online giant can claim a piece of the pie owned by FedEx, UPS and the United States Postal Service.” By creating its own delivery network, the company has slowly, but surely, commanded control over its entire delivery experience, minimizing variables down to the last mile.
Embrace the data.
While Amazon has created complete control over its supply chain, its culture revolves around collecting and analyzing data meticulously so that each process and feature can run efficiently. B2B companies can mimic this investing in better technology to optimize visibility into the supply chain.
According to Disruption magazine, “The growth of big data has equipped tech-savvy businesses with the tools to transform physical distribution,” and major players will be those who can use data analysis to their advantage. This kind of visibility enables Amazon to deliver great customer service — the kind of great customer service B2B clients are expecting today.
Tower above the rest.
Just as an airport relies on a control tower to guide airplanes, a B2B logistics operation should rely on a control tower to guide the supply chain. As defined by Capgemini Consulting, a supply chain control tower is a hub for capturing and using supply chain data to enhance visibility.
A control tower offers a view into the supply chain’s agility, resilience, delivery reliability and responsiveness when issues arise — all of which contribute to customer service — as well as a view into costs, according to Capgemini.
Amazon’s control tower allows it to provide seamless delivery, providing its customers positive experiences and reasons to make repeat purchases. Bezos says, “Our version of a perfect customer experience is one in which our customer doesn’t want to talk to us.” It gives customer service and operations teams alike the ability to anticipate any exceptions in the final mile and proactively resolve them before they become customer issues.
For those who are not using a control tower yet, you could be in trouble. Nucleus Research predicted in 2015 that any retailer that didn’t deploy control tower technology within the next five years would be out of business.
Pay attention to SLAs.
In logistics and transportation, just as with pretty much any other industry, key performance indicators (KPIs) are being employed to measure success, and that’s true with service-level agreements (SLAs). These contracts lay out the services that logistics providers will deliver.
It’s no surprise that Amazon relies broadly on SLAs and more specifically on KPIs. “SLAs are taken quite seriously by most online marketplaces because their reputation depends on them,” according to Browntape, a maker of e-commerce software.
In this regard, one can take a page from the Amazon book and adopt a strong emphasis on KPIs and SLAs in the B2B supply chain. Essentially, an SLA outlines promises made to the customer and holds a logistics provider accountable.
Among the items spelled out in a logistics SLA are on-time delivery targets, cost reduction initiatives, order fill rates, accuracy of inventory records, and fines for damaged goods.
Supply chain professional Charles Intrieri says a SLA can serve as a great communication tool and conflict-resolution tool that can help manage expectations, clarify responsibilities, and establish a foundation for a strong relationship between a B2B customer and a logistics provider. SLAs have worked well for Amazon, and they can work well for your organization.
Don’t bash robotics.
E-commerce players like Amazon have incorporated robotics into their fulfillment operations to improve efficiency. In particular, robotics paves the way for “just-in-time” delivery.
Robotics aren’t just for the B2C space, though. Customers accustomed to robotics-propelled “just-in-time” delivery are coming to expect that same level of precision in the B2B space.
It makes little difference that traditional warehouses typically deal with bulk shipments while e-commerce fulfillment centers handle picking, packing and shipping of individual orders. In the Amazon era, B2B warehouses will need to operate more like their e-commerce counterparts in order to survive and thrive.
The breadth and depth of Amazon’s operations require it to operate tens of thousands of robots across its fulfillment network. But it’s not the number of robots that’s important; it’s the fact that Amazon is using them so effectively. As Amazon has found, robotics and other automation tools can lead to cost and operational efficiencies.
In summary, e-commerce won’t be and shouldn’t be the sole domain of robotics. For B2B logistics providers to attract and retain customers, they’ll need to follow the Amazon model and incorporate robotics into their operations.
What’s ahead for B2B supply chain visibility?
In the long shadow of Amazon, the B2B supply chain must perform like the increasingly agile B2C supply chain. The status quo isn’t an option anymore; a B2B player must examine and re-engineer its supply chain from top to bottom to focus on its customer demands and to effectively compete in the marketplace.
For B2B sellers, customer loyalty is critical, especially in light of the fact that B2B relationships tend to be less transactional and more long-term. For one thing, more money is at stake. The cost of acquisition is more costly and complex in B2B than it is in B2C; in that regard, customer loyalty means less time and money spent on acquisition.
In order to meet customers’ expectations, control tower technology will be crucial in B2B logistics, with major investments required in data collection and tracking. Now, more than ever, the B2B supply chain must adopt technology that offers visibility into logistics factors like in-transit inventory, shipment exceptions, delivery performance to commit date and proof of delivery.
As Bezos himself would say, “Your margin is my opportunity.” Thanks to B2C innovations in supply chains like Amazon’s, B2B customers are upping their expectations from B2B sellers, demanding inexpensive on-time deliveries and simple returns processing. Companies that do not invest in streamline visibility into the B2B supply chain are destined to become relics as customers will flock to competitors able to offer seamless delivery.