WT100 Blog

The Consumer-Driven Transportation Network

Consumer channel preference is driving changes in retail supply chains.

December 6, 2012

The rise of the omni-channel consumer – the multi-channel shopper dedicated to finding the best combination of product features, price and service – has changed virtually every aspect of the way retailers and manufacturers conduct business.

Brick-and-mortar retailers are forced to compete with alternative channels on the basis of price while also keeping service quality high. Manufacturers are challenged to operate with razor-thin margins while still offering the innovative products and continuous updates dictated by today’s shorter lifecycles.

While the omni-channel consumer has created new challenges in every part of the supply chain, a significant impact is felt in the area of transportation, as consumers have quickly grown accustomed to the “fast and free” home delivery.. Many companies are finding that their traditional transportation networks are simply not built to serve the demands of the new omni-channel consumer.

This ongoing transformation requires both brick-and-mortar retailers and their manufacturing partners to rethink their traditional transportation strategies. As we look toward the future of transportation, a key strategy for both parties will be to increase their level of collaboration and information sharing.

While demand from online channels might seem volatile and unpredictable, advanced technology solutions can help analyze this demand at a high level and identify patterns that retailers and their suppliers can respond to more proactively. Based on the specific demand trends that are identified, retailers and manufacturers can partner to devise new ways of delivering products to the ultimate consumer.

For example, it might make strategic sense for manufacturers to take a larger role in shipping their products directly to consumers in small packages instead of sending truckloads to a regional retail distribution center – and then placing the onus on retailers to deliver products across all their channels, including in-store and at-home deliveries.

Working in partnership with retailers, manufacturers can also study demand trends at a granular level to ensure that their in-stock levels at every store and distribution center match local demand trends, minimizing the need for expedited deliveries that erode profitability.

Whatever strategy they employ, today, manufacturers have a real opportunity to differentiate themselves and demonstrate their value to their retail partners by helping them manage the challenges presented by the omni-channel consumer.

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