Top 6 Logistics Challenges in Consumer Product Companies

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Consumer Product companies, or CPG companies, face a constant battle for retail shelf space and market share. Hence, the sudden spike in cross-border eCommerce (USD 3,042.2 MN by 2028) and complex logistical operations only add to the already tantalizing price points. Further, the rising freight costs and manual negotiations in freight procurement not only add to the freight spend but also spur cost leakages across the entire goods movement trajectory.

Stats suggest that 42% of retailers across the globe report an increase in logistics costs because of new fulfillment strategies, and 28% of them feel at a loss of any kind of leverage with the emergence of parcel shippers. Further, 27% of the retailers report that the supply chain has become too long and too complex, and 22% of them accept their supply chains were not built for direct to consumer model. 

While the troubles for supply chain managers are amplifying as the customers want more goods, at a rapid pace, with zero delivery costs, having a robust and well-thought supply chain strategy is the right answer. 

Here are the top 6 logistics challenges that supply chain professionals and CPG companies should focus on solving while strategizing for customer and market success.

CPG Success Strategy 2023: Top 6 Logistics Challenges to Focus On

Tedious Freight Procurement Processes

Manual bidding and freight procurement negotiations and lack of visibility over market rates result in significant cost deviations and wastage of time. While the manual processes lead to high turnaround times, the legacy systems, such as Excel & Document-based RFQ creation, hinder the ability to get the most profitable deals. 

The majority of companies struggle with floating RFQs across shipping lines & freight forwarders and do follow-ups over calls, which makes communication and collaboration highly siloed and unusable for future decision-making. 

Further, the manual collation of bids, comparison, RFQ amendments, and bookings affect the negotiations, bid rankings, and the overall convenience of bookings.

Manual Document Handling

Offline and manual document generation and collection, accounting, and record-keeping procedures, along with email-based communications with stakeholders, contribute to costly errors and delays. Offline process for document generation and collection – SI, VGM, etc. also keep the communication siloed.

Hence, the shipment delays, audits, billings, invoicing, port handling, and customs navigation – the vulnerability towards multiple risks, such as delays, frauds, and incorrect calculations is high. 

The inability to automate highly-used documentation services, such as label generation and label printing, also make it impossible to deliver across the speed and delivery SLAs in case of glitches or order mix-ups.

Growing Incidental Costs

Lack of real-time visibility into incidental costs like detention and demurrage charges significantly dent bottom lines. Owing to the lightning-fast growth of cross-border commerce and intense eCommerce penetration, detention and demurrage charges are on the rise. 

Stats reveal that detention and demurrage charges have grown significantly over the last decade and now exceed USD100 per container per day

Port congestion, lack of predictive alerts, poor real-time visibility over shipment movements, and inability to orchestrate flexible pickups and deliveries based on dynamic ETAs are also the key drivers of the growth of incidental costs.

Lack of Shipment Visibility

More than 69% of businesses lack “total visibility” of their supply chain. This significantly impacts ETA accuracy, logistics planning, just-in-time shipping, and customer experience. Owing to siloed communication between teams, data inconsistency, inaccuracies, and lack of visibility into the key milestone events, CPG shipments are at high risk in terms of well-being and timely deliveries.

As the companies themselves lack this real-time tracking functionality and rely on shipping lines’ interfaces or individual service providers, they are also unable to send reliable alerts and notifications to their end customers.

Poor Customer Experience

Spreadsheet-based tracking and the need to visit multiple freight forwarders and shipping line websites make it impossible to provide customers with real-time container status. These methods consume more than 7 minutes to track a single container each time.

Companies either track their shipments through multiple Shipping Line websites or monitor the ETAs and exceptions through spreadsheets and calls. This manual data consolidation and reporting, combined with redundancies introduced by multiple tools of communication, impact the overall quality of customer service. 

The end customers are not able to get real-time updates for shipment movement and are left guessing for delay reasons. This increases the query resolution loads and also affects the overall business productivity.

Absence of Analytics-Driven Logistics Planning

The majority of enterprises suffer from a lack of actionable historical data. This directly impacts critical aspects of the supply chain like carrier selection, trucking operations, KPI benchmarking, and more.

They lack end-to-end visibility in shipment execution and transparency over market rates and cost deviations. As the majority of data and communications are siloed with multiple employees and parties, supply chain professionals are unable to process this unstructured data to dig for actionable insights.

Owing to the lack of data-driven planning, businesses struggle with strategizing, which is reduced to a hit-and-trial process.

While we discuss the key considerations for strategizing for the CPG market and customer success in 2023, it is important to talk about the guiding methodology as well. Having automation is a job half-done, as automation needs to be highly agile, flexible, customizable, smart, and progressive in nature for the best results. 

Highly integrated and zero-code platforms like Shipsy, with dashboards for creating, floating, comparing, negotiating, and confirming freights, come first. Such platforms for collaboration and communication facilitate effective shipment execution and documentation and offer automated real-time tracking of shipments with key milestone events. 

Shipsy’s smart offerings with AI/ML capabilities, advanced analytics & reporting, and data visualization for business intelligence have helped businesses unlock:

  • 80% Reduction in incidental chargers
  • 5 Days faster Plan to Ship time
  • 65% Person hours saving 
  • Enhanced decision-making & seamless stakeholder collaboration

To know how you can achieve the above efficiencies and more using Shipsy’s smart logistics management platform, simply sign up for a quick demo here.

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