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Supply chains are like ocean liners. Both are big, complicated beasts with a lot of moving parts.

Supply chain operations aren’t all that different. Because of their complexity, most supply chain operations aren’t nimble enough to react quickly to unanticipated changes.

Considering that a recent survey shows that supply chain professionals list demand volatility as their number one concern, the inability to sense and react quickly presents a real problem in terms of fulfillment. The same survey also shows that enterprises often try turning to social media to gauge current customer sentiment, but half of the respondents reported that doing so didn’t help improve demand sensing and forecasting.

On top of that, consumers expect an increasing amount of engagement and service from companies. One recent survey shows that 50% of people reported abandoning a purchase online simply because they were unhappy with the choice of delivery options. Once a customer’s loyalty has been compromised, it’s hard to get him or her back.

The upshot: Many companies are forced to run their supply chain operations without a lot of insight, meaning that they’re in “reactive” mode. Businesses that aren’t able to be more proactive by anticipating what’s ahead are going to lose market share.

However, this environment also presents an opportunity. Enterprises that are able to use real-time analytics to get ahead of the curve can increase competitiveness by using logistics solutions – specifically tracking and tracing – as a differentiating factor.

It’s time to teach an ocean liner how to react more like a speed boat.

Using tracking to build cost efficiencies and customer satisfaction

Customers want to know when they can expect their delivery relative to the time they placed the order. Of course, between those two events, many things are going on behind the scenes. From the shipper’s perspective, one question stands out: “How can I optimize transportation needs to help improve margins?”

We all know that logistics is very cost driven. Efficiencies are key when dealing with multiple channels, fulfillment options, and carriers, so working in reactive mode is a recipe for losing money.  Today, it takes more than tracking when a parcel is put on a truck to be efficient. For example, using automated sensor networks to conduct process monitoring during the entire end-to-end cycle creates real-time visibility that can help enable order consolidation and collaboration with business partners to speed delivery times.

And alert features can provide the data companies need to analyze customers’ processes and then adjust cycle times and distribution strategies to meet customer expectations and speed up the fulfillment process. That’s the difference between merely observing trends versus sensing and responding to those trends.

Looking at past data from seasonal rushes, product launches, or weather events can help enable preparation for faster adjustments when future volatility strikes. For example, businesses will have the foresight needed to collaborate with carriers and service providers during demand fluctuations.

Having this kind of visibility on a very granular level can provides insights to help improve on core KPIs like cycle times, or delayed or partially-filled orders. This all makes for a seamless experience on the customer side – and that breeds loyalty.

Visibility through tracing – a win for customers and businesses

From the company side, being able to know how a product was built, who touched it and at what level can be important for recalls and regulation. Beyond that, being able to trace batches is extremely important, especially in anything involving food- or drug-related operations.

Traceability – once a somewhat back-office function – now presents another opportunity for companies to differentiate themselves using logistics in the face of demand volatility.

More and more, consumers are demanding to know the genealogy of a product. They may have questions such as “Where were the materials sourced?” or “Are the components really organic or produced in a sustainable way?”

Customers want to know the path from “farm to fork,” even for nonfood products. Enterprises that are able to automate tracing processes to provide visibility into the creation of goods can make huge inroads in fostering customer engagement.

Customer-centric value from supply chains

From the customer side, it’s clear that speed matters. But in today’s competitive market where options abound, businesses can’t afford to ignore customer experience.

Visibility into logistics has a double benefit. It can not only help companies anticipate and react to demand volatility, it can have a surprising positive impact in building customer loyalty – and that can be the key to getting ahead of the competition.

For more information on issues affecting supply chains, see From Supply Chain to Demand Network: Keeping Pace with the Evolution of Logistics andFulfillment in SAP Insider.

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