Executive summary

Failing to deliver on time diminishes your perceived quality of service and alienates your customers. But what happens if you let customers know when their shipment is running behind schedule? Turns out, customers appreciate this kind of information. Because what makes customers unhappy more than anything else is the feeling of being kept in the dark.

That’s why regular, proactive communication about the current shipping status is so very important. Customers perceive this as an extra service. This white paper offers tips and suggestions for making the flow of goods and shipping statuses more transparent and giving customers access to this information. The benefit is not only better quality of service but the opportunity to optimize your internal processes. And best of all: The information you need to do this already exists in your logistics and supply chain.

Delivering customer satisfaction: prerequisite for success in business

Experience shows that customer satisfaction is a key factor in determining whether businesses thrive in the marketplace. There are many reasons for this: The happier the customers, the more loyal they remain to a company and its products. Happy customers are also more open to cross-selling and often purchase multiple goods and services from a single source. They are also less sensitive to price increases than unhappy customers. Another key factor, especially in the age of social media: happy customers recommend the companies and services they like to their friends – and keeping customers happy also helps avoid negative comments and ratings, of course.

It’s not just the product that counts

Customer satisfaction basically emerges from a customer’s experience with a company, its product and services, or the brand. It is the result of comparing a company’s performance with the customer’s expectations.

The key determinant of customer satisfaction is the purchased product, of course. But reliable, on-time shipping is also an essential factor driving greater customer satisfaction. Customer satisfaction is based on a comparison of expectations and performance: the customer’s personal expectations and the subsequent experience with the actual performance. The results of this comparison can take on three forms, as the diagram on the left illustrates.

Avoiding delays

For this reason, logistics professionals must make it a top priority to ensure shipments are delivered in the proper condition and quantity before or, at the very latest, by the agreed deadline. But even the most conscientious shippers cannot rule out delays 100 percent of the time – to the annoyance of customers.

It’s an interesting phenomenon, however, that even a bad thing like shipping delays can be repurposed as an opportunity to increase customer satisfaction. Customers who feel they are kept in the information loop are not only less dissatisfied – they may even perceive this proactive information policy as an extra service. So shipping delays can actually generate greater customer satisfaction and retention.

Sound like a contradiction? It is. But try it out for yourself: True dissatisfaction arises primarily from the feeling of being kept in the dark. So the recipe for making your customers happier is to provide them with regular, up-to-date, targeted information on the status of their order and the date their goods will arrive.

First things first: smart technology for identifying and providing information

We’re all familiar with the technology in our personal lives: As soon as you order something online, you get a tracking number that lets you follow your order in the IT systems of the transport service providers, usually through a website. This is practical for private consumers who order one book a month online, for example.

Transport service providers also provide tracking numbers that allow business customers to track shipments online, but here the order volume often encompasses several hundred packages and pallets a month with many different providers, not just one order with a single provider.

Tracking the status of a shipment in the various transport service provider systems is often too cumbersome and timeconsuming. In addition, businesses sometimes need to retain shipping data and delivery confirmations for long periods of time – if an account is still open, for example – but this data is usually not accessible in the carrier systems for more than six months.

IT support is a must

To keep the big picture, you need an IT system – independent of your transport partners and integrated into your own processes – that brings transparency to your flow of goods. The challenge in all of this lies in consolidating the data from your various transport partners and presenting it in a unified format – because sadly, there is still no global standard for exchanging data up and down the supply chain

Specialized IT solutions, known as collaboration or visibility platforms, speak the languages of the various transport service providers. They make it easy to allocate information from disparate sources and formats and are typically linked to host systems – a shipping solution, for example – so they can obtain information on the status and content of individual packages and consignments. The upside is that the information is already there - transport partners always track statuses, and internal processes at packing stations or goods issue points generally capture data on the current status through confirmation scans or manual data entry. All you need to do now is make intelligent use of the information.

A visibility platform fills this role by gathering all the necessary data, consolidating it, “translating” it into a standardized format, and making it accessible. Such a system can also be used to maintain delivery confirmations for a defined period of time, since the shipping data can be retained indefinitely

5 + 2 practical tips for enhancing customer satisfaction

Simply setting up an IT system to collect and consolidate shipping data won’t do it – smart, systematic information management is critical. The success of such a platform depends primarily on the processes running on it and how they’re used. Below you’ll find five specific tips for the smart use of shipping data to enhance customer satisfaction.

Tip 1: Make sure your sales and service teams always know the score

Typically, it is the sales and service personnel who are in direct contact with the customers and need to answer questions as to the whereabouts of a shipment. Make sure that these people always know whether an order has been packed, is on the road, or has already been delivered so that they can respond to customer questions immediately. This makes a positive, professional impression.

To make sure this happens, it’s a good idea to give all service and sales representatives access to this kind of IT platform so they can always call up the status of a shipment or information on a given order when asked. Ideally, such access should be through a Web-based application so that the data is available anywhere, anytime through a simple Internet browser. That way, the platform reduces the administrative workload of sales and service reps by putting shipping information at their fingertips and eliminating the time-consuming task of checking with the carrier or the logistics department

Tip 2: Provide information on line items and shipping units

People from different departments of the same company have distinct perspectives of a shipment, so it is no surprise that they often have access to different data about that shipment. A service representative who has a customer on the line wants to know the status of the order as quickly as possible and may only have a purchase or sales order number. Someone from shipping who needs to know the whereabouts of a shipment, on the other hand, may only have the consignment number handy. The head of logistics, who is waiting for a package from a supplier, wants to know when the truck will arrive or may have a specific interest in knowing whether a particular item has already been packed or is en route. The buyer or dispatcher wants to know when an order will arrive.

Given the wide array of perspectives and the variety of available data, it makes sense to give employees the option of searching for any object or document: individual orders, delivery notes, batches, containers, truckloads, packages – everything in the system should be accessible. The IT system needs to be designed for this and offer the appropriate search options. It’s also important that objects are linked to the sales order – the relationship between orders and consignments should be transparent.

Tip 3: Give your customers access to their order status

Even if sales and service representatives can quickly access the status of a shipment, customers still have to call or e-mail to learn the status of the shipment they’re waiting for. So ideally, companies should let customers access the information platform online and look up their own shipping status. Access rights can be customized to ensure that customers only see their own order data. Cus tomers can log on anytime to track their orders, see the expected delivery date, and know right away if this date changes.

Another benefit: The platform also lets customers access documents such as delivery notes or proofs of delivery even before the shipment arrives.

Tip 4: Set up text or e-mail alerts

Anyone who needs to know the whereabouts of a shipment can go to the visibility platform and find the status quickly. But it’s even better to be alerted proactively of possible delays. This means having the system automatically sound the alarm if a delay is expected. The advantage of timely, proactive alerts is that they let you initiate possible solutions, such as requesting an alternative rush shipment.

And even if no such option exists: When businesses provide their customers with proactive text or e-mail alerts about the latest shipping status and the new anticipated arrival time, customers can deploy their resources more effectively and better prepare and control their own logistical processes. And what’s more, partners perceive proactive alerts as an extra service.

Tip 4.1: Define “sensible” milestones and not too many

To be able to sound the alarm proactively, you need to first define a chain of events that mirrors the actual shipping process as accurately as possible. This chain of events forms the basis for the alerts that are issued when milestones are not reached on time.

It’s often sufficient if a company defines two internal milestones, such as when packaging is complete and when the goods are picked up by the carrier. After that, the main activities of interest take place with the carrier – when the goods arrive in the depot or are loaded onto the delivery truck, for example. Every company should look at its own individual physical flow of goods and define its own relevant milestones to monitor shipments – but not define so many milestones that monitoring is cumbersome.

Tip 4.2: Define tolerances so that you aren’t flooded with e-mail notifications

IT systems let you define tolerances so you can determine when an e-mail alert is issued if an event does not occur at the defined time. Excessively low tolerances yield a flood of alerts that are not necessary when the deviation from the schedule is only minimal. Managers need to be notified only when severe disruptions occur and there is a major change to the scheduled arrival time – such as when a container and its contents are damaged during shipping and the container does not make it onto the ship.

Tip 5: Give your service representatives access to the visibility platform from their smartphones

Smartphones are becoming more central to everything we do. These small pocket computers accounted for a large number of today’s overall mobile phones in use, according to a representative study by the Nielsen market research firm. The trend toward smartphones continues unabated. That’s why it makes sense to include smartphones when talking about transparency in the supply chain.

Visibility platforms should include an app to allow access from mobile devices. One scenario would be an app that shows transactions, statuses, and disruptions in the supply chain and makes it possible to see a list of current shipments – anytime and anywhere, of course.

Leverage transparency to improve your internal processes

No one actually welcomes shipping delays. But in an age of increasingly global and therefore complex supply networks, one must always expect the unexpected. It’s not just snowstorms, tornadoes, and labor strikes that cause delays – usually, it’s just traffic congestion, a shipping mishap, or a holdup at customs that lead to late deliveries.

A visibility system that maps predefined milestones, updates statuses, and monitors when they are reached not only makes it possible to spot trouble ahead of time, it also helps identify the source of the problems and initiate corrective actions. Recurring delays on certain routes or with specific milestones can be taken into account for future planning. The logistics department can ensure that picking operations begin earlier, for example, or assign more employees when order volumes are high.

Visibility solutions can also generate reports and analyses to evaluate the reliability and on-time performance of transport service providers. Repeated violations can trigger the appropriate actions – including the replacement of unreliable partners with more reliable carriers.

In the end, these internal optimizations further increase customer satisfaction by making the company more reliable and responsive.

Bottom line: transparency is a win-win proposition

Information on the current status of shipments is already available in the supply chain. Companies now need to be smart about using it. The benefits are obvious: This information can be used to enhance customer s atisfaction as described above and optimize your own logistical processes. And the expense of setting up this type of system pays for itself, as a 2011 study by the market research firm Aberdeen Group shows. Nearly 30 percent of those surveyed indicated that they expected a return on their investment in less than one year after introducing visibility software, and the average expected ROI was 18.2 months.