Poor economic climate drives focus on supply chain efficiency

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According to the latest annual Kewill shipping survey, supply chain efficiency is firmly in the spotlight as companies aim to drive greater operational efficiency in challenging economic conditions, but there are still significant barriers to change.

800 companies took part in the survey, including retailers, manufacturers and shippers, and the main findings are revealing of a continued struggle to automate supply chain processes. While the automation of supply chain processes is considered by many respondents an important factor in improving efficiency, a large proportion of respondents still struggle with manual operations. Only 11% have 100% hands-free shipping in their distribution centre (DC) operations. While the number of shippers operating hands-free increased 3% from last year, a trend we would expect, a significant 44% still manually enter data for all of their shipments, and another 22% do so for complex shipments such as hazardous or international, increasing errors, delays and the possibility of fines when travelling across-borders. Manual parcel shipping persists in nearly a quarter of respondents Distribution Centre's (DC).

On top of the continued pressure for parcel carriers to deliver on new and innovative services, the economy continues to throw off mixed signals, prompting many shippers to be conservative in their investments. That caution is reflected in respondents' planned supply chain investments. More than a third (37%) are choosing to hold steady with their current state, rather than invest in their operations. However, over 25% of participants are looking to upgrade their software and a further 25% are planning to employ staff in the next 12 months, in either shipping and/or trade compliance.

Respondents state that Parcel and LCL (less-than-truck-load) shipping is now being viewed as a vital and strategic component of supply chain activity and excelling in these areas is an important contributor to overall business goals. More than 92% of respondents ship small parcels, but they account for a wide range of parcel volumes, with 27% shipping more than 1,000 parcels a day, 34% shipping less than 100 and the balance evenly mapped between the two levels.

With increased strain put on carriers to fulfil consumer demands such as next day delivery, specific time slots or 90 minute delivery, the use of regional and niche carriers has increased by 8%, with retailers and suppliers pulling on their capabilities to deliver on such demands. For the larger more well established carriers, pushing out high volume of parcels, this specialist and in most cases individual level of execution is not possible with their internally developed systems.

When it comes to international shipping, most shippers review contracts every year (55%) or every one to three years (16%), but 19% of respondents are examining them twice a year or more often. Shippers using commercially available analytic software are most likely to review rates twice a year or more.

Just over half of the exporters that participated in the survey process between 101 and 5000 export shipments each year. Most exporters are shipping to North America (94%), Europe (85%) and the Asia/Pacific regions (83% each), but more than three quarters also export to South/Central America/Caribbean  and two thirds are shipping to the Middle East and Africa.

Alan Gold, Vice President of Marketing and Business Development for Kewill, comments "This report highlights the challenges that retailers, manufacturers and other shippers face when they have to deal with increasingly complex shipping volumes and services. Organisations that were holding steady are now showing signs of expansion again and are investing in systems to deliver business efficiency."

Gold recommends that companies with in-house automated systems, should benchmark these against industry solutions to validate their effectiveness, particularly in optimising shipments. This evaluation should consider not only initial investment but the total cost of ownership and return on investment. The multi-carrier solutions now available on the market enable companies to shop for the 'best' carrier based on cost, weight, zone, zip code or time in transit for individual shipments – instead of the companies having to relying on just one carrier at a set rate – providing flexibility of services at the best possible price. A win-win situation for all parties involved."

For the full report visit: http://info.kewill.com/2012ParcelSurvey


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