Enabling Companies in the Fight Against Intermediaries
A recent study by KPMG Consulting found that nearly half of shippers are unsatisfied with their carriers’ E-commerce efforts. The findings serve as a warning to companies not yet enabled: Get integrated with Web technology or risk extinction due to a new breed of company, the e-intermediary. Read on to learn the ten initiatives that should be undertaken to become an E-commerce enabled transportation provider.
The study reveals that nearly half shippers that responded find that carriers are not meeting their expectations with respect to the use of the internet to facilitate business. Three areas in particular stand out:
1. Lack of integration between company processes and the internet;
2. Lack of common standards;
3. A failure to conduct effective means of track and trace.
Currently, most carriers are only partially integrated with the internet, and offer little more than informational Web sites and Email enabled services. Few are providing real-time information of any sort, little reporting or feedback capabilities, with such basic services as online proof of delivery, shipping documentation, or rating being spotty or inexistent. Even the most advanced transportation companies are still using the internet as a channel for existing business and processes. They are missing the opportunity to redefine their value proposition to customers through the internet.
By using the Web at only a basic level, these transportation companies are stuck in a traditional business approach, and are not using the capabilities of the internet to make their organizations more competitive, proactive and dynamic. To effectively serve customers into the future, transportation companies must embrace internet technology to redefine their business model, while creating additional value for the customer. Value creation enabled by the internet stems from leveraging and automating the relationships a business has with suppliers, partners and customers. Carriers already have the information necessary to provide unprecedented levels of service – the real-time data, from their customers, suppliers and employees. This real-time information has become essential to competitive advantage; those without it will forego the opportunity to better understand their customer’s requirements and their own capabilities. They will lose market share to the trailblazers that are embracing the internet to provide proactive services such as:
1. Event tracking and management to proactively manage service levels;
2. Fully integrated quote to pay back offices;
3. Relevant decision support and optimization for their clients.
The New Middleman: Bogeyman or Flashinthepan.com? Without a significant acceleration in the use of the internet, many transportation companies risk displacement by a new breed of internet enabled transportation intermediaries — those who have the capabilities to surpass today’s carriers’ internet sophistication and provide better services and functionality to increasingly demanding customers. These competitors can analyze tradeoffs among various carriers’ services and prices and provide the optimum shipping solution to every shipper, on a shipment=by-shipment basis, through a single site. E-business presents substantial opportunities to transportation companies that have the foresight, willingness and ability to capture the benefits and build on their existing capabilities and customer relationships. However, for those who choose not to embrace the Web’s abilities, such intermediaries pose a significant threat: They may make carriers who lack internet sophistication appear to be undifferentiated, commoditized, low cost wholesalers, serving the transportation companies and intermediaries who own the electronic customer relationship.
Ten Initiatives to Take the Offensive. In order to take advantage of the opportunities provided by E-business and to protect their competitive positions, transportation companies must transform themselves into e-partners with their customers and suppliers. We suggest you include the ten initiatives as you develop a robust go forward plan to transition to a Web-enabled, Stage III and IV transportation provider with a proactive, optimized, integrated, E-business offering.
The foundation for these initiatives, of course, is that your company creates products and services customers want.
1. Improve customer focus to personalize the customer experience. E-commerce technology enables micromarketing and allows sellers to understand individuals’ needs and to produce products and services tailored to those needs. Web interfaces can be customized to a customer’s requirements, so that only the functionality desired is presented, and so that customers are never asked a question more than once. To successfully achieve this functionality, it is imperative that customers be included in the design and development phase, and further, that customers continue to be solicited for input.
2. Promotion of the site. Much like the traditional retail sector, customers will only use a Web site if they know it exists and see its advantages. So, building awareness of your Web presence and its benefits is crucial. The sales force and customer service representatives should encourage customers to use the Web site as their first point-of-contact.
3. Make navigation easy. While fancy graphics, animations and Flash screens may make a Web site attractive, of primary importance is functionality and ease of navigation. The Web interface should be simple and straightforward enough that customers can access what they need both quickly and easily.
4. Use the internet as a way to integrate with your customers’ supply chains. The internet can provide a conduit to share information up and down the supply chain, from purchase order of raw materials through final delivery of product. Using this opportunity to become an indispensable part of your customers’ supply chain will increase switching costs and build defenses against competitors.
5. Find new ways to add value. The immediacy of information provided by the internet allows for a variety of new services and products such as real-time reporting, analysis and decision support. While carriers can learn more about their customers, so can their customers know more about the various carriers and their respective performance levels, rates, on-time ratings, and overall performance and competencies. It is imperative that this information is used to develop new pricing structures and methods of billing (paying for service levels actually received vs. promised, or to implement peak pricing to balance demand).
6. Ensure rapid speed to market. It is more important to get rudimentary but effective new services in place quickly than to perfect cutting-edge functionality for a mega-launch. To effectively service customers, find out what they want most and quickly build the functionality they require.
7. Clean up the back office. The integration of customer information is paramount to having a successful approach to customer management. A data warehouse provides a holistic view of your customer base and their needs, and can be used by sales, marketing, operations, and
| Currently, most carriers are only partially integrated with the internet, and offer little more than informational Web sites and email enabled services. | ||
customer service departments to provide personalized customer support that really meets these unique needs. Data warehouses also support the increasingly popular decentralized management structure. The flattening of the management pyramid has magnified the need for empowered employees at all levels to have easy access to data for trend analysis, planning, decision making, and customer service.
8. Build new business processes to support E-business. E-business acts as an enabler and a provider of new tools, but your company will also reap the significant cost savings once you reengineer key business processes (such as customer service and electronic transaction processing) to support E-business.
9. Web-enable your employees. A prerequisite to a Web-enabled business is a Web-enabled workforce. Employees must become adept at using the same tools as your customers. Customer service and sales representatives must understand how the Web will change their processes, and be trained on the services provided to customers by the Web so that they can properly provide support. While the integration of customer databases and back office systems provides enormous value, it requires adequate training and practice to build the sufficient skills required by employees to make the system work for your customers. Encouraging new behavior often requires rewards, various programs such as certification, making training a part of performance goals, and incentive compensation can assist in promoting the necessary change.
10. Adapt your culture to foster continuous innovation. Maintenance and improvement must continue after the new way of business operations is implemented, as part of an ongoing business improvement process. This involves updates on a monthly basis. Expect dramatic improvements at least every six months from new initiatives. Customer feedback will assist in ensuring the Web is effectively serving your business. As E-business is a rapidly evolving process, continuous improvement must become a core element of not just the Web interface, but of the business as a whole. While the transportation industry’s use E-business is in its infancy, the development of the internet will have a profound effect on how carriers conduct business in the future. Carriers that make the capital and intellectual investment necessary to internet-enable their businesses will be rewarded with customer and partner relationships that yield increased efficiencies, profitability, and competitive advantage, and will stave off the growing threat of internet intermediaries.