What does an Agile Approach to E-commerce Mean for Industrial Manufacturing?

Agility has become a buzzword in recent times, but for many businesses in the industrial manufacturing sector, the ability to adapt has always been a prerequisite for survival.

However the rise of e-commerce, in particular, has had a profound effect on how businesses grow across borders and as a result many have been forced to face new challenges and changes to the way they structure and manage supply chain processes.  While end-users used to buy from whole-sales distributors, they are now more likely to buy from directly from the manufacturer. This is where that agile DNA needs to kick in: from setting up their e-commerce website to integrating it into their existing technologies, agility is key in this new supply-chain element.

In the US, business-to-business e-commerce is now twice the size of business-to-consumer (Source: Forrester) and the trend is a global one (Source: Frost & Sullivan).

This change is affecting industrial manufacturers and distributors alike. Online has become the main tool for sourcing industrial distributors across Europe, and in the UK and Germany the computer screen has replaced the sales call for most purchases.

In fact, 34% of industrial buyers were now purchasing directly from the manufacturer, according to a UPS study of industrial purchasing dynamics.

(Source: UPS Industrial Buying Dynamics study – Evolution of the Europe distributor value proposition)

E-commerce has brought new opportunities, but also increased competition and raised expectations.  Customers have come to expect increasing levels of choice, flexibility and speed of service.

At the same time as businesses are considering how to meet these requirements, a number of other pressures have demanded attention such as regulatory requirements and changing trade landscapes.

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Our 2015 Industrial Buying Dynamics study found that across Europe the most challenging aspects of industrial supplies were:

  • Nearby location for purchase/pick-up — 31%
  • Shipping costs — 23%
  • Value added services — 22%
  • Returns — 20%
  • Ability to purchase on website — 20%

Although these figures were fairly consistent throughout each European country, it seems that UK consumers had less of a problem with returns (10%) and purchasing online (13%), but even one in ten is a sizeable number of unsatisfied customers.

Only agile companies can hope to tackle all of these challenges successfully. It means assessing your (and your customers’) needs and often fundamentally rethinking the way your supply chain functions.

For companies who can embrace agility and overcome these challenges, research suggests there is a real opportunity for business growth.

How can your business benefit from agile e-commerce? 

Because agility affects every part of your business, it also affects your bottom line in all kinds of ways.

Yes, it can mean you can look for new markets overseas, but it also means cutting costs associated with servicing existing customers, becoming more efficient, improving your cash flow and finding more cost-effective ways to deliver.

Companies need to build their supply chains around the customer. In the words of Martin Christopher of the Cranfield School of Management, “The ability to be able to meet the demands of customers for ever-shorter delivery times and ensure that supply can be synchronised to meet the peaks and troughs of demand is clearly of critical importance in this era of ‘time-based competition.”

From retail and hi-tech to industrial manufacturing, every sector has to contend with rising customer expectations. Industrial consumers, used to levels of service provided by consumer suppliers such as Amazon, expect the same standard of customer service at work that they get at home.

Practical steps to create agility in e-commerce

Agility is a simple concept but making a business agile can be a complex operation unless you partner with experts to guide and execute the most impactful solutions.

For many industrial manufacturing companies, warehouse and supply chain consolidation can be key to increased efficiency. Consolidating inventory from multiple warehouses into a larger centralised hub can reduce inventory levels, accelerate stock replenishment and eliminate pain points. But every business is different.

In order to assess your needs, you will need to discuss your particular challenges and objectives with your supply chain partner. Close collaboration will enable you to create a successful strategy and agree on implementation procedures.  Once these are in place, future reviews to measure the strategy’s success are vital to discuss any market changes, and adapt accordingly.

With a responsive and transparent supply chain, you’ll benefit from improved speed to market — wherever that market is —and you’ll be able to offer a better customer experience.

That’s agility.

UPS solutions for e-commerce agility

We offer a variety of useful solutions that can be combined to offer all the e-commerce agility you need.

A global integrated transport network:

  • UPS Standard ® and Express® Whether you want fast or faster we have a suite of services to ensure your package arrives on a specific date or time.
  • UPS Access PointTM locations A network of over 24,000 drop-off and collection point locations worldwide to facilitate exceptional e-commerce programs.
  • UPS Returns Makes people more likely to buy from you, knowing that if there’s a problem, it’s easy to send deliveries back.

Visibility and control technology

  • UPS My Choice™ Alerts customers to incoming shipments and gives them control to reschedule the delivery time and location.
  • UPS Quantum View™ Allows you to manage outbound and inbound shipments with delivery notifications.

After-sales is vital to building relationships and growing a retail business. See how to develop a successful strategy.

Jean-Francois Mathieu

Jean-Francois Mathieu

Industry Marketing Manager, UPS

I am responsible for ensuring we offer our customers solutions that really make a difference for their business today and into the future. I'm passionate about staying on the pulse of global trade and the evolving opportunities for businesses of all sizes and sectors. Jean-Francois Mathieu LinkedIn Profile

 

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