Can You Reduce Transportation Costs AND Improve Customer Satisfaction? Absolutely.
It is a brave new world of marketing, with convenience and speed often being competitive product differentiators. And of course, everyone wants a good (low cost) deal. And, one of the new selling points has become “free shipping” for online consumers. Amazon has reported that displaying an icon for free shipping on its Amazon Prime site led to a 20 to 25 percent increase in conversions.
However, we all know that there really is no such thing as “free” shipping. Companies work to drive efficiencies in their supply chains to reduce transportation costs so that they can support value ads that are quickly becoming the norm, like free shipping.
But, supply chain performance has to be cost effective AND support customer satisfaction. If the flat screen television bought just in time for a Super Bowl party is broken when it arrives, does it really matter that it shipped free? The consumer is likely to be angry with the retailer that sold the product- not the carrier that delivered the damaged product. Regardless, the retailer may have negotiated a great rate with a carrier, but lost a customer in the process.
Carrier selection is just one aspect of supply chain management that impacts both cost and customer satisfaction. For years, companies have selected Transportation Management System (TMS) solutions to reduce costs – according to ARC, a total of 70 percent of buyers indicated this as their primary reason for investing in the technology. However, in today’s consumer-driven market, supply chain managers must reduce costs AND deliver outstanding service to drive customer satisfaction.