Post-mortem on Christmas Logistics Chaos: On Customer Commitments and Transparency

As we look back on the chaos that erupted during the pre-Christmas rush, discussions with executives suggest that there is still a long way to go.  Most logistics companies are still far from being able to fully integrate data and analytics to better manage.  Not many people are doing much with big data and we all need better systems to manage all that data to make better decisions and cut through the massive complexity that exists in the supply chain.

One of the big new trends we are all talking about is how transparency in data is related to better customer service. One executive stated it clearly –  ” the back office is the same as the front office now.   Customers want to know where the product was shipping from! Amazon is driving that requirement.

But it’s also extending from the big box retailers into the logistics providers today.  I spoke with a colleague who operates a large third party logistics forwarding and shipping company for consumer products, and handles major accounts for all the big box retailer.  He shared with me that he was not able to come up for breath until Christmas had actually passed.  Why?  Every one of his major retail big box customers (about 6 of them) required detailed conference calls lasting an hour and a half, almost every other day, requiring detailed information on the location and origin of the just about every single trailer, shipment, ocean carrier, and third party provider down to a granular level of detail.  Pulling the data for these calls, as well as addressing the inevitable delays that will occur, proved to be a gargantuan task!

So how can companies begin to organize data to cut through the complexity, and make it simple for customers and sales team to make decisions – that drive the right outcomes?  Transparency is supposed to be a virtue in such cases, right?

Not always.  In speaking with a large manufacturer, I learned of a story where being too quick to be transparent worked against them. “On December 10, 2014, there was a big hiccup in one of our big supply markets. Something happened and our systems supply line went to zero. Everything got pushed out three weeks, and we told our customers that they wouldn’t be getting orders until December 28. We were being transparent, and committed to our customer. I even remember getting a note from a major customer, who told us that they were going to put a gift box wrapped up under the Christmas tree with our product logo on it, and his daughter would be opening it up on Christmas day. He said he was going to videotape it and post the video on YouTube – then told us “It is up to you to see what the outcome is on that video!” We were panicked about missing Christmas deliveries.”

“But then something happened – the supply category market freed up, and we discovered we could recover 80% of that market! And we went back to our customers and told them “Wait we are okay now and can make the commitment by Christmas!” But guess what…. They had all gone to competitors. So in retrospect, maybe we should have done something different other than being completely transparent, as it ended up hurting us! Perhaps we should have waited two or three days before letting our customers know… and then recover, and they would never have known anything had potentially gone wrong! This is a big question we are struggling with.”

Transparency is the essence of what the digital supply chain can deliver.  It is becoming more important then ever for sales people to understand the importance of the customer experience, and that the supply chain is the lead partner and driver in being able to deliver the customer experience. It is no longer enough to have just a commitment culture. You have to to commit to the customer, AND exceed their expectations.

Here’s a great example. We had a huge snow and ice storm in Raleigh last week.  A colleague of mind shared his experience with Amazon during this time.  “I needed a product called “Ice Melt” for the snow storm. I went on Amazon on Friday in the middle of the snow storm and they committed to be able to deliver the Ice Melt by Saturday. I was doubtful they could do it, since the roads were un-safe after the ice storm! They didn’t deliver it Saturday – but they did deliver on Sunday. I noted this to them, and they acknowledged that they didn’t deliver on-time, so gave me a 60% discount on the product. They gave away margin and maybe cost to “Wow” me – and that went a long way to impress me a a customer.

This new level of commitment and transparency and impressing the customer is raising the bar on supply chains to be able to deliver on-time, faster, and at a lower cost.  The expectation is only going in one direction….up!