Author’s Note: The following is an excerpt of what I presented recently in a webinar organized by Descartes Systems Group (a Talking Logistics sponsor) focused on “Delivery – The Moment of Truth.” I encourage you to watch the archive of the webinar for the full presentation, including the content presented by Brian Hodgson from Descartes.
If you’ve been in the industry for a while, you probably remember “the moments of truth” that former P&G President and CEO A.G. Lafley defined back in 2005. The first moment of truth is when a customer first confronts a product, either online or at a store; it is when “a consumer chooses a product over the other competitors offerings.”
If a product is out of stock — if you miss that first moment of truth — not only do you miss the sale, you risk losing that customer for life if they end up shopping at a competitor or buying a competitor’s brand.
Poor Delivery Experience Can Negate It All
Of course, delivery has always been part of the order fulfillment process, but it’s only been in recent years that it has emerged from the shadows, from being a cost center and a back-end process to becoming a competitive differentiator and a key driver of customer experience.
Everything can go perfect on the front end of the sales process, you can succeed in meeting those moments of truth that Lafley talked about, but a poor delivery experience can quickly negate it all.
I’ll give you a quick personal example. Last year we bought a new refrigerator. We did all of the research online on the retailer’s website, which had great comparison features, photos, videos, technical specifications, customer reviews, and so son. The check-out process was easy, and so was scheduling the delivery online.
Then came the day of delivery. We were given a four hour window, which wasn’t great, but it was the best they could offer. The four hours went by and no sign of the delivery truck. When it finally arrived an hour late, the workers unboxed the refrigerator, but it was assembled incorrectly — the doors opened left-to-right instead of right-to-left as we had specified. I complained and the workers grumbled a bit, but they disassembled and reassembled the doors, which consumed another hour of my time.
Who’s brand do you think took a hit from this negative delivery experience — the delivery contractor’s or the retailer’s? I’ll give you a hint: I have no idea who the delivery contractor was, but I know who I bought the fridge from.
So, yes, delivery is a new moment of truth, a moment where you can further delight your customer and strengthen your brand reputation, or a moment where you can potentially lose a customer for life.
The other reality today, driven by e-commerce and the so-called Amazon Effect, is that customer expectations are becoming more demanding with regards to delivery — we want things delivered quickly (preferably within a day or two, in some cases same-day), we want to specify the delivery window (not four hours, but maybe one or two hours), and we want things delivered for free or as cheaply as possible.
This is having a ripple effect on supply chain and distribution networks. Simply put, supply chain and distribution networks, which were originally designed to flow truckloads of products from large distribution centers to stores, are becoming outdated in this new market where speed of delivery and inventory reduction are paramount.
And it’s not just retailers that are transforming their networks, it’s manufacturers too — including P&G. As reported by the WSJ this past February, P&G is undertaking “a multibillion-dollar effort to remake an antiquated and inefficient network of factories, warehouses and offices into a new model that gets goods to stores more quickly […] Once complete, P&G said its new supply chain will enable 80% of U.S. production to reach stores within 24 hours.”
The bottom line is that while there’s a lot of buzz and discussion today about supply chain digital transformation, what’s becoming clear is that companies also have to transform their physical supply chain networks to adequately meet the more demanding challenges and opportunities before them.
For the rest of my comments and Brian Hodgson’s presentation, watch the webinar archive.