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Where are brands applying innovation to supply chain and logistics operations?

The turbulence of the past two years has shown senior management the importance of supply chains and logistics. Within this business landscape, the need for retailers to innovate to adapt their supply chain and logistics operations to meet the challenging market conditions has never been more important.

While every company’s challenges and opportunities are unique, it has also become important to establish whether there are any common technology innovation themes across organisations.

With that in mind, Descartes, in conjunction with SAPIO Research, surveyed 1,000 supply chain and logistics executives’ opinions in the UK, Europe and North America to determine where organisations are placing their innovation emphasis and technology deployment focus. Some of the results will be surprising, while others show how market hype distorts innovation realities – further, what can retailers learn from these findings?  Chris Jones, EVP, Descartes reveals all and shares some of the key findings and insights from this study…

Digitisation Initiatives

Digitisation efforts are closely aligned with supply chain and logistics innovation, because they’re about transforming company performance in ways that allow customers to see the positive difference. Supply chain and logistics operations are very extensive, so it’s highly unlikely that companies would have digitisation programs that address the entirety of their operations. The study identified the top digitisation initiatives companies have focused on as order fulfilment (47%), customer experience (45%) and transportation processes (44%). Notice that these initiatives are largely “customer facing” as opposed to back-office operations.

Supply Chain and Logistics Applications

The answers to three questions paint a picture of where companies believe they’re most innovative in their supply chain and logistics operations, where they have the greatest need for innovation and where they will focus innovation for the next two years. In general, no one application area dominated the results for the state of innovation today and future focus.

The degree of application innovation in a given area is also a function of its importance to the organisation and past innovation focus. In some cases, supplychain and logistics applications, such as warehouse management systems (WMS), simultaneously topped the list for most innovative part of the business and the list of those applications having the greatest need for innovation.

Application Innovation Requirements Explained

This is further elaborated on by considering application innovation according to three categories: most innovative; most in need of innovation; and the innovation focus over the next two years.

Most innovative

Over a quarter of respondents feel their companies are most innovative with their WMS (28%) and transportation tracking (26%). Transportation management systems (TMS) were third (25%); however, this figure rose to 28% for those who said senior management believe supply chain and logistics innovation is very important and declined to 18% for those who said senior management believe it less important.

Most in need of innovation

WMS (24%) was also cited as the top area with the greatest need for innovation, followed closely by inventory management (22%). While inventory management is second, it’s fairly low, which is surprising given how many problems companies have experienced either with having excess inventory or not enough of the products that customers want.

Innovation focus next two years

The top focus areas for innovation for the next two years are customer experience (25%), TMS (24%) and WMS (23%). Customer experience was the highest priority for manufacturers, retailers and distributors, but the fourth highest priority for carriers and logistics services providers. TMS was the highest priority for carriers and logistics services providers, but the fourth highest priority for manufacturers, retailers and distributors.

Advanced Computing Technologies

Advanced computing technology has been touted as the next wave of supply chainand logistics innovation, but it’s still early stage for most companies, including retailers. When looking at full deployments, with the exception of data analytics (40%), most advanced computing technologies such as machine learning (20%), artificial intelligence – non machine learning (17%) and robotic process automation (16%) are still in the early stages of full production use. For pilots or partial deployments, however, there is a lot of advanced computing technology activity in supply chain and logistics operations: robotic process automation (52%), machine learning (52%), data analytics (50%) and artificial intelligence – non machine learning (47%).

Conclusion: Momentum Exists, But There’s Work To Do in Retail

The last several years have been an accelerator of supply chain and logistics innovation with almost two-thirds (65%) of the study’s respondents indicating they’re increasing IT innovation funding. Given the scale and scope of supply chain and logistics, companies are focusing on transforming customer-facing processes and operations. No single supply chain or logistics application stands out as the dominant way to innovate, which speaks to the diversity of challenges and opportunities companies – such as retailers – face, and the need for a wide array of solutions.

For many companies, they’re early in their advanced computing technology journeys, but the next two years could prove interesting as pilots and partial deployments come to fruition. What technologies will your retail organisation use to innovate its supply chain and logistics operations?  

Consumers want retailers to have sustainable home delivery services

43% of consumers feel retailers are doing a good job of using sustainable delivery practices, while more than 60% indicate they are quite/very interested in environmentally friendly delivery methods.

That’s according to Descartes’ 2023 Home Delivery Sustainability Report: Consumers Expect More! survey, which examined consumer sentiment of retailers’ sustainability practices around their delivery operations.

Additionally, 59% said they are willing to act if they’re not satisfied with retailers’ sustainable delivery efforts.

The study of 8,000 consumers across nine European countries, Canada and the United States provides retailers and logistics organisations with insights into the importance of sustainability in consumer purchase and delivery decisions and how perspectives vary by age and geography.

“Compared to our 2022 study, consumers are much more interested in the environmental delivery practices of retailers. They’re influenced by these factors when making purchasing decisions and willing to take eco-friendly home delivery options, which are often also lower cost delivery methods for retailers,” said Chris Jones (pictured, above), EVP, Industry at Descartes. “Retailers need to heed these important trends as they provide more ways to differentiate, grow revenue, create greater customer loyalty and reduce delivery costs.”

The study analyses consumer sentiment around the sustainability of retailers’ delivery operations, how this is impacting purchasing decisions, how consumers evaluate retailer efforts in sustainable delivery, which goods are most impacted by sustainable delivery performance and how consumers want to receive goods.

In addition, it delves into the changes in purchasing and delivery decisions that consumers are willing to make to help the environment.

Lastly, it provides insight into how the importance of sustainable delivery varies by geodemographic factors, the influence of geodemographics on buyer behaviour, the delivery decisions consumers are making, and consumer expectations of retailers’ sustainable delivery efforts for the future.

Retail logistics: The year that was, and preparing for the retail year ahead…

2022 continued to present an array of challenges for retail, logistics and supply chain professionals. Although Covid19-related restrictions were lifted, its challenges were replaced by the war in Ukraine and the subsequent knock-on-effects relating to it; including energy cost increases, a rise in inflation and cost-of-living, and sustainability concerns. Meaning, for many retailers agility has remained key to business resilience, and growth.   

Andrew Tavener, Head of Fleet Marketing EMEA, Descartes Systems Group, reflects on the energy cost challenge businesses and consumers face. He explains the key role that route planning and optimisation plays in enabling retailers to tackle 2023 with optimism.

UK fuel and energy costs are a cause for concern for many in 2023

Since the war in Ukraine, inflation peaked in the UK at 11% in October 2022 – related to this is the cost of fuel and energy, which is presenting significant challenges for consumers and businesses. In the case of consumers, it has caused them to evaluate their spend on non-essential purchases.  For instance, UK homes have cancelled 2m streaming services as the cost of living has soared.

In comparison, the spike in energy and fuel costs has consequences for retailers that are operating buildings, outlets/stores, or delivering goods;  with diesel costing £2 per litre last autumn. Thankfully, though, in January, falling petrol and diesel prices have caused some relief; with petrol averaging around £1.50 a litre, and diesel on its way to below £1.70 (source: Parkers and RAC Fuel Watch). This cost decrease has to be viewed with pragmatic foresight. A predicted rise in fuel duty is expected in March 2023, with The Office for Budget Responsibility (OBR) forecasting fuel costs will rise by 23%. As you can imagine, this will impact retail deliveries across the board.

Alongside this, the cost of electricity continues to increase. This naturally has consequences for the entire retail value chain. Buildings will cost more to operate and electric vehicle fleets will likely cost more to run too. It begs the question – how can retailers minimise the impact on their costs and prices to the consumer?

Keeping vehicle fuel costs down with effective route planning and optimisation

Clearly, many macro-economic factors are challenging the retail outlook. So, what can retailers improve and control as they take on 2023? Digitisation continues to offer a powerful answer; but what technology in particular can help make a significant difference to retailers’ cost base as they seek to operate as efficiently as possible?

In the case of many bricks n’ mortar and ecommerce retailers, products will need to either be transported to a respective retail outlet and sold directly to the consumer; or stored within an ecommerce fulfilment centre and eventually delivered to a consumer. In either case, fleets of vehicles are used to transport goods. So, as fuel costs spike, this needs to be factored into the total cost of sale. With diesel and electricity costs set to increase, fleet managers need to consider the vital role their fleets can play in keeping the total cost of sale (and returns) down.

This is where specialised route optimisation and delivery scheduling tools enables retailers to minimise the miles driven and increase the delivery density; to reduce fuel consumption and CO2 emissions, to  offer a more sustainable delivery to consumers. Therefore, using less fuel and fewer vehicles to deliver more in fewer miles also equates to lower vehicle maintenance. Further, as many organisations face increasing global, governmental and consumer pressure to reduce carbon footprints, this technology has a crucial role to play. Used effectively it will cut costs and carbon emissions; which can hopefully be passed to the consumer in a way that enables the retailer to profit, while supporting consumer needs.

Topps Tiles, the leading U.K. tile retailer, for instance, is optimising its fleet delivery capabilities with Descartes’ cloud-based route planning and optimisation solution. It is decreasing the average kilometres driven per delivery route by two percent, and gaining a better understanding of the potential impact of changes to its delivery strategies.

Conclusion

As we come out of the pandemic, many retailers have had a rough 2022. Although the market is fraught with inflationary, cost of living, cost of energy and recessional pressures, consumers are still purchasing goods – their expectations and hopes are, however, somewhat skewed towards locating the best deals and delivery experiences  for their spend. So if retailers can get more out of their  transport operation they don’t need to pass excessive cost spikes to their shoppers. In addition to maintaining proof that their efforts are having a net positive effect on sustainability initiatives, this will all help provide a competitive edge and have a positive impact on their brands, as they look to make it through 2023 and onto growth.

65% of companies plan to accelerate supply chain and logistics innovation investment

More than two-thirds of organisations plan to increase their technology spending over the next two years, though 87% indicated they still face internal inhibitors to supply chain and logistics innovation.

That’s according to a Descartes study Supply Chain and Logistics Innovation Accelerates, but Has Long Way to Go, which examined how technology innovation is changing supply chain and logistics operations and executives’ plans for continued investment.

Moreover, 59% of companies surveyed accelerated the pace of innovation investment and deployment over the last two years.

The study of 1,000 supply chain and logistics decision-makers across nine European countries, Canada and the United States provides supply chain and logistics organizations with critical insights into the importance of innovation and differences in the strategies, tactics and technology decisions of top financial performers and those companies whose senior management thought innovation was very important.

“The recent past has highlighted that supply chain performance can make or break companies and the need to innovate supply chain and logistics operations has moved to the forefront of many C-suite agendas,” said Chris Jones, EVP, Industry and Services at Descartes. “The study shows that, while efforts in supply chain and logistics innovation are accelerating, many companies are relatively early in their innovation journey in areas such as digitization and especially in the use of advanced computing technologies such as machine learning.”

The study analyses the connection between innovation and business success, the drivers of supply chain and logistics innovation, the expected benefits of innovation to companies, and the obstacles inhibiting the pace of innovation and innovation investment.

The study also examines where supply chain and logistics innovation is considered to be the strongest and the weakest, the degree to which key supplychain and logistics innovative technologies are deployed and innovation focus areas today and in the future. Lastly, it provides insight into how the importance of supplychain and logistics innovation changes on a geodemographic basis.

To learn more, read the report Supply Chain and Logistics Innovation Accelerates, but Has Long Way to Go.

CDS is here – And this time, it’s for real

By Martin Meacock, Vice-President of Product Management, Descartes

With a global pandemic, chaos at the borders, an HGV driver shortage and ensuing supply chain chaos, compounded by political uncertainty, inflation and a fuel and energy crisis – it’s fair to say UK business has had a challenging few years. And that’s not to mention Brexit.

Since exiting the EU, UK traders have weathered the introduction, delay and ultimate abandoning of some of the rules and regulations for importing goods into the UK. They’ve adopted the new, full controls on exports in the other direction and adapted to new processes laid out by the Northern Ireland Protocol. To add to the disruption, the way UK Customs declarations should be filed is changing and a new customs declaration system (CDS), will take over from the legacy CHIEF.

After the best part of four years, HMRC has finally set dates, and the deadlines are looming. Going by the current schedule, CHIEF will be withdrawn in two stages:

  • After 30 September 2022, you won’t be able to make import declarations on CHIEF.
  • After 31 March 2023, you won’t be able to make export declarations on CHIEF.

Lack of preparedness

HMRC recently sent letters to 220,000 GB VAT registered traders and although not all of them will be importers and or exporters, and many will use the services of a broker or forwarder, this communication is indicative of the lack of awareness – and lack of preparedness – for the impending move. An estimated 4,200 companies made customs declarations in 2017. That figure’s only increased post-Brexit, with a number of new players entering the intermediary market from consulting and the IT world, .

While some traders were early adopters (and Descartes was the first company to get its customers onto the new system way back in 2018) a huge number have yet to make the switch.

Fear of the new system as well as scepticism about HMRC and trade readiness has been understandable – as too the expectation of further delays based on precedent – yet, the consequences of inaction are now speeding dangerously close to becoming a reality. It seems it’s taken the announcement of two final deadlines to spur the remainder into action – to find out exactly what’s required – and to many that’s come as a shock.

From the latest data requirements and processes, to the sheer scale of the challenge associated with new systems and software; the move from CHIEF to CDS is far from straightforward. CDS is a dramatic shift away from the previous ways of working in CHIEF, right from the way the customs declaration looks, to the new data needed.

HMRC has tried to introduce some simplifications. For example, a blanket document code to declare that no prohibitions or restrictions apply “999L” has been temporarily introduced under CDS to speed up onboarding. And, like other software houses, Descartes continues to make changes to ease the process; however nothing can replace the time necessary to learn a new system and there is nothing like real user experience to drive improvement.

“Companies will need significant help to make the change

Training and education are essential as is access to test systems to ensure organisations understand the new processes and steps required. In recent weeks, Descartes has seen an exponential increase in companies engaging to be ready for CDS, showing a new hunger for education and training that we expect to increase as we move ever closer to the end of CHIEF.

Changes are also necessary to ensure that brokers are able to act efficiently on behalf of traders, including where traders must ensure they have set up their duty deferment accounts properly, digitally allowing brokers to use them on their behalf and ensuring they have put new direct debit mandates in place.

Brokers will also be looking to get more specific instructions from importers, not only regarding any prohibitions or restrictions but also with regard to the trading relationship between buyer and seller, and whether any considerations have to be made about the valuation of the goods being imported.

For die hard customs geeks this is nothing new, but CDS has brought this back into focus with specific declaration elements and the risk of a broker being considered jointly liable for any customs debt, if they are unable to prove they received specific instructions and are acting under a ‘direct representative’ status.

With all the pressure on resources to reach the maximum efficiency, automation is key part of CDS. But unless companies have already put in place the level of integration or master data required, then it might be too late to benefit.

Reality bites

There is a great deal of source information available. HMRC has provided documents, such as declaration completion guidance; while systems providers such as Descartes have created online training courses, videos and other online guides as well as further technical solutions to guide users without making decisions for them. But those who have left it until now hoping for individual attention are going to find it difficult and it may be impossible to receive the attention they would prefer. With just a few months to go, group sessions from software providers on how to use the software, or external training organisations who can provide more generic CDS guidance are now the most likely to help.

And while both software providers’ and HMRC’s support teams have been bolstered in anticipation of the surge of questions and enquiries, it’s inevitable that there will be delays in responding, which is why self learning and education is going to be vital.

Time critical

It’s never been more important for declarants to understand the requirements to submit the customs declarations they need to, and be aware of changes in the codes used or information required.

If you choose to use a broker rather than submit your own declarations there are still five steps that should be taken:

  • Register for a Government Gateway account if you do not already have one;
  • Apply for an Economic Operator Registration and Identification number if you do not already have one;
  • Register for the Customs Declaration Service via www.gov.uk/hmrc/cds-get-access . This will allow you to obtain your Import VAT and Postponed VAT statements as well as authorise declarants to use your deferment, cash or security accounts;
  • Choose which payment method to use and ensure you have set up the correct Direct Debits or authorisations;
  • Set up a process to ensure your broker has clear instructions and information about your consignment. For example – the incoterms, awareness for all values, the location information, and nature of transaction information.

Traders using brokers should also be prepared for the fact that the type of evidence and data they receive today will change – the old CHIEF prints just don’t exist anymore, the C88 is dead and the data is structured differently.

Conclusion

So even if there is a further delay to CHIEF decommissioning, or perhaps you only submit export declarations, it remains vital to take action today and be CDS ready; even if you do not plan to go live immediately you can both get on the front foot and take advantage of any dual-running possibilities.

Over time of course, CDS will become the new normal. Until then, let’s not fool ourselves that it’ll be a smooth ride, it’s a bumpy road to progress.

Six supply chain predictions for 2022

2021 saw many major challenges for logistics and supply chain professionals. With capacity constraints, ecommerce growth and driver shortages creating dilemmas for many as well as the increased focus from the industry on environment and machine learning, it was a year that was definitely not without its tests. 

While reflecting on some of the ways the industry sought to overcome these challenges, Chris Jones, Executive Vice President, Industry & Services at Descartes Systems Group, takes a look at what to look out for in 2022… 

Global supply chains will be busy, congested, and chaotic.

The challenges facing global supply chains show no signs of slowing down, with UK businesses left to navigate the complexities of Brexit and the subsequent delays to their operations, alongside the extra administrative burdens. Whilst some of the uncertainties surrounding the transition are beginning to ease, many firms remain concerned about how delays could impact their operations post-Brexit.

The key to navigating customs clearance is undoubtedly preparation. Planning is crucial not only for compliance – but also for growth and resilience – and businesses that are yet to lay the groundwork risk accidental non-compliance and further congestion at ports. With full UK customs changes now in effect as of January 1st 2022, businesses should prioritise the implementation of supply chain software solutions to take back control and handle customs declarations in-house or ensure they work with a customs partner who can provide full transparency at every step of the process.

Online buying will continue to fuel growth in home deliveries, presenting challenges that demand new strategies.

The pandemic saw an increase in ecommerce that is set to continue in 2022 as the changes in consumer buying behaviour become more structural. This clearly presents both an opportunity and challenge for retailers and last mile logistics companies. The increase in volume will increase the challenge on an already tight last mile delivery capacity. Speed and reliability of deliveries will either come with a premium price, or remain as uneven as it has been over the last two years. For example, Amazon’s Whole Foods business is now incrementally charging for delivery to offset increased delivery costs.

We anticipate that more companies will re-evaluate their “free” delivery strategies and look for alternative delivery strategies such as combining deliveries for individual customers or locations, in order to minimise delivery costs and maximise the available delivery capacity.

The Great Resignation will accelerate the existing driver exodus, increasing the focus on retention.

Whether long haul or last mile, the driver shortage is endemic and will continue to materially impact retail, distribution, and logistics companies. While finding new drivers to replace or add capacity will remain important, it’s also much harder to find drivers now than it has been in the past.

Instead, in 2022, companies will focus more on driver retention and productivity. Lowering turnover – which has traditionally been high – puts less pressure on the number of drivers that need to be hired and keeps the more experienced ones improving delivery performance. Keeping drivers driving and reducing stress will be the top retention priorities. Companies will need to do a better job at reducing wait times and improving driver quality of life through routes that are more realistic to execute, that don’t result in extended wait or on the road time and facilitate more predictable hours.

Driver shortage will force an emphasis on better planning.

The increase in home delivery and driver shortage combined exacerbated supplychain vulnerabilities that, until now, retailers were just about managing to cope with – and have paid the price in terms of consumer expectations.

In the absence of effective planning, logistics companies and retailers will compromise a satisfactory delivery experience. While continuing to seek to recruit and train drivers, improving the overall productivity of existing drivers by optimising delivery routes should be the first port of call. By using advanced route optimisation software, all delivery options can be evaluated instantaneously, ultimately maximising capacity and increasing efficiency.

Sustainability will become an opportunity, not a challenge for supply chains.

The focus on sustainability will increase in 2022 and it won’t just be from consumers. Many investment funds are taking an increasingly stronger stance on companies’ sustainability strategies and actual performance. This powerful combination will push companies to move faster to reduce their impact on the environment. It also presents an excellent opportunity for supply chain and logistics professionals to raise the visibility and value of supply chain strategies and operations. Productivity enhancement is at the heart of any good supply chain performance improvement program and almost always results in greater efficiency, reduced paper and other waste that directly translates into reduced greenhouse gas emissions. Equally, many consumers are looking for delivery choices that help the environment, which presents retailers with the opportunity to look at innovative ways to combine or steer deliveries to reduce the mileage associated with home delivery. This will not only benefit the environment and delight the consumer but will also result in lower delivery costs for retailers.

Machine learning will go mainstream in supply chain technology.

This year, we expect machine learning (ML) to continue to be quickly adopted by supply chain technology providers because of the rich supply chain data that exists to teach ML algorithms. The result will be more accurate plans, estimated-time-of-arrival (ETA) and improved recommendations that make supply chain and logistics operations more productive and reliable. Rather than displace existing supply chain technology, ML will augment it through embedded uses, such as optimising stop times, delivery locations, drive times and ETAs, or as part of greater data analytics solutions that are used to provide deeper insights into supply chain performance.

While 2022 will undoubtedly be a challenging year for logistics and supply chain professionals, the “C-suite” will recognise that their supply chains need to be world-class to help drive revenue and profitability. This will provide plenty of opportunities to show the value of advanced logistics and supply chain strategies, tactics and technology—and transformation will not only be the key to success but, for some, the key to survival.

Chris Jones – Executive Vice President, Industry & Services at Descartes Systems Group Chris has over 30 years of experience in the supply chain market, including the last 10 years as a part of the Descartes leadership team. Prior to Descartes, he has held a variety of senior management positions in other organisations including: Senior Vice President at The Aberdeen Group’s Value Chain Research division, Executive Vice President of Marketing and Corporate Development for SynQuest and Vice President and Research Director for Enterprise Resource Planning Solutions at The Gartner Group and Associate Director Operations & Technology for Kraft Foods.

Just 16% of UK consumers are satisfied with delivery services every time

Over two thirds (68%) of UK consumers have had an issue with delivery in the last three months – and, as a result, 24% lost trust in a delivery company and 24% lost trust in the retailer.

That’s according to Descartes Systems Group’s latest Consumer Online Delivery Research, which set out to assess consumers’ online purchasing experiences across Europe.

Undertaken by SAPIO Research during July 2021, the interviews with consumers across Europe highlighted that quality of the delivery service is undermining overall customer perception of both delivery companies and retailers – leading to lost sales.

The research concludes that retailers need to take ownership of the end-to-end experience, in order to address consumer expectations regarding tracking and communication; safe delivery and ease of return; and, increasingly, environmental considerations.

Key findings include:

  • The quality of the experience has been far from perfect: just 16% of UK consumers are satisfied with the delivery service every time.
  • Over two thirds (68%) have had an issue with delivery in the last three months – and, as a result, 24% lost trust in a delivery company and 24% lost trust in the retailer.
  • Over a third (37%) of consumers also share their perception of both delivery company and retailer with friends and family – creating a ripple effect that rapidly undermines consumer perception.
  • 71% of European consumers consider the environment when making an online order
  • Almost a third are interested in bulking all orders to one weekly delivery.

Since the beginning of the COVID-19 pandemic, the proportion of purchases made online has grown from an average of 32% to 43% and is expected to remain at 41% for the foreseeable future. More than half (51%) of consumers have increased the number of purchases they make online, and 51% now make an online purchase at least once a fortnight – almost double the number (28%) pre-pandemic.

Despite these statistics, the research findings underline the fact that deliveries are failing to achieve complete customer satisfaction, with nearly nine in ten (87%) customers not always satisfied with the delivery services received. With satisfaction rates even lower for consumers who have reduced their online buying behaviour during the COVID-19 pandemic, the implications of inadequate delivery experiences cannot be overlooked.

Timing is the biggest issue for home deliveries – with two in three (68%) UK consumers reporting a delivery problem in the last three months. Delivery problems radically affect customer perception – and not just of the delivery company. While almost a quarter (24%) lost trust in the delivery company, 24% also lost trust in the retailer and 23% did not buy from that retailer again.

Given that many consumers were a captive audience during COVID-19 pandemic lockdowns, these delivery problems should raise serious alarm bells for retailers. With just 16% of UK consumers confirming they are totally satisfied with the delivery service, a company’s ability to meet its delivery promises will become increasingly important to reinforce the quality of customer experience and maximise the chances of customer retention.

Descartes says questions retailers should, therefore, be seriously considering, include:

  • How proactively is the retailer tracking delivery performance?
  • What is the strategy for managing spiralling delivery costs and optimising driver time?
  • What is the strategy for meeting customers’ environmental expectations? Can the delivery model support bulk orders and green scheduling? Are the right vehicles being automatically assigned to deliver in Clean Air Zones?

Pol Sweeney, VP Sales and Business Manager UK, Descartes, said: “Consumers will not return to pre-pandemic shopping habits; having become used to the convenience of ecommerce, online purchasing will continue to dominate. Individuals have become far more confident and sophisticated online over the past 18 months and expectations have risen, leading retailers to enhance the online experience, but as this research reveals, the quality of the delivery service is undermining the overall customer perception and leading to lost sales. Retailers that take ownership of the entire end-to-end experience and truly optimise the delivery process have the opportunity to transform customer perceptions, drive additional sales and, critically, entice customers from poorer performing competitors.”

Early preparation ‘remains key’ to avoid Brexit & COVID supply chain disruption

43% of businesses have been impacted negatively by Brexit in 2021 – but 19% of businesses are thriving in a post-Brexit world.

That’s one of the conclusions of Descartes Systems Group’s latest Brexit research report: Beyond Brexit: The Realities of Brexit for UK-EU Cross Border Trade.

Following its 2020 research on Brexit preparedness of UK companies, this latest report analyses how business has been affected by both Brexit and the COVID-19 pandemic and the level of uncertainty around the future.

Undertaken by SAPIO Research during March 2021, the interviews with supply chain managers assessed the specific elements of EU trade that have been affected, the resulting disruption and the expected performance of supply chains in 2021.

Key findings include:

  • Mixed performance: 43% of businesses have been impacted negatively by Brexit in 2021 – but 19% of businesses are thriving in a post-Brexit world.
  • Disruption reality: 90% of businesses have faced disruption since the end of the Brexit transition period.
  • Economic impact of Brexit: 53% expect their 2021 turnover to be lower than if the UK had remained in the EU – and the average reduction is 29%.
  • Pandemic impact: 76% had their Brexit response disrupted by COVID-19.
  • Early preparation has proven key to success, with those businesses that started their customs filing preparations in 2019 (24%) and early 2020 (33%) thriving most.

As predicted in Descartes’ 2020 research, Brexit has had a negative impact on both business and the economy. Of the companies surveyed, 90% have experienced disruption in their ability to trade in and out of the EU in 2021 – with 20% experiencing significant disruption since the transition period ended. Despite the high level of concern revealed in the 2020 survey, 40% of companies have actually experienced worse-than-expected EU supply chain performance, according to Descartes’ latest report. Additional key findings include:  

  • 80% of businesses reported disruption to their cross-border trade with the EU or Northern Ireland (NI), rising to 93% for medium and large enterprises 
  • 40% have experienced delays in their supply chains 
  • 37% have experienced increased cost of imports
  • 36% have had to manage customs declarations 

The combination of COVID-19 on top of Brexit created unprecedented challenges for businesses of every size, in every market. Confidence has been affected. Three quarters (76%) of companies confirm that COVID-19 disrupted their Brexit response. 

However, a significant finding is that almost one fifth (19%) are actually thriving in a post-Brexit economy, with 35% of electronics, computer and telecommunications companies enjoying a positive outcome. Preparing early proved essential, allowing these companies to take a holistic approach by working closely with experts who understand the complexities of global trade and by putting solutions in place for customs declarations.

The research findings underline that with the next phase of Brexit changes – an end to deferred import declarations from July 2021, and safety and security filings required from 1st January 2022 — there are lessons to learn about the value of preparation and acting ahead of deadlines. When it comes to successful global trade, planning is not just essential for compliance – it makes a tangible difference to successful business operations. 

“Brexit has thrown many businesses into a spin, but the companies that prioritised Brexit preparation are thriving and provide a best practice blueprint that the rest of the market can now follow,” said Pol Sweeney, VP Sales and Business Manager UK, Descartes. “Our research highlights that with the changes due from July through to January 2022, early preparation is, once again, crucial to avoiding expensive disruption.”

For the full research findings, see Descartes’ Brexit Realities Report and for additional Brexit resources visit Descartes’ Brexit Resource Centre.

The value of global trade insights in navigating COVID-19 supply chain disruptions

By Mark Segner, VP Global Sales, Descartes

The Coronavirus pandemic has exposed the fragility of the modern supply chain, as companies struggle to acquire the products and raw materials needed to keep revenue flowing. With many businesses relying heavily on a limited number of trading partners, many located in hard-hit areas like China, the scale of the supply chain disruption has been a wake-up call. 

Pummeling the Bottom Line

COVID-19 shockwaves are being felt around the globe, with one in six companies adjusting revenue targets downward. Figures from the Office of National Statistics revealed that 72% of businesses in the UK reported that they are exporting less than normal, and 59% of reported that they are importing less than normal due to the impact of Coronavirus. 

According to a survey by the Institute for Supply Management (ISM), nearly 75% of companies reported supply chain disruptions due to the COVID-19 outbreak, with lead times doubling and delays compounded by a shortage of air and ocean freight options. A recent survey of Descartes customers also found that 31% are looking for alternative suppliers, and their usage of tools to find alternative supply sources has increased by 21%. Given the sheer scale of the disruption, many different types of businesses are unlikely to have a plan in place to address supply disruption from China and other countries.

Re-thinking Sourcing

With the global supply chain often more complex than many comprehend, very few organisations can trace their supply chain beyond their Tier 1 suppliers, and many are uncertain of the location of their second and third-tier suppliers. To fully understand supply-side risk, Deloitte notes that advanced digital solutions are “generally required to trace supply networks reliably across the multiple tiers of suppliers.” Indeed, manufacturers, retailers, and distributors are in uncharted waters as they race to identify new supply sources.

Global Trade Insights Guide the Way

With the daunting task of navigating the rapidly changing global trade landscape, where should your organisation begin? Actionable global trade data is your lifeline for supply chain resilience. In the face of COVID-19 disruptions, global trade intelligence solutions can help businesses swiftly find alternative suppliers in a concise three-step process:

  1. Identify potential sources; Know the market to make better sourcing decisions

A sophisticated global trade intelligence solution can assess market dynamics, revealing the impact of both the Coronavirus and recent tariff changes on specific commodity imports and exports by mapping the global flow of shipments and identifying recent volume shifts. Previous shipment volumes reveal which suppliers have capacity for your sourcing demands, while bill of lading (BOL) data helps you easily identify names, addresses, and contact details for each supplier.

2. Analyse costs; How much will it cost to do business?

Given the slowdown many companies are facing during the pandemic, curtailing costs is top of mind. Global trade data technology can analyse potential suppliers to calculate the total landed cost of doing business with them, including duty spend, variable and fixed taxes, shipping costs, and insurance costs. With international trade insight, businesses can also identify favourable Free Trade Agreements (FTA) or other preferential mechanisms to help maximise margins.

3. Vet potential trading partners; Limit liability and brand damage

The vetting process is vital for avoiding exposure to sanctioned parties but, given the fluidity and sheer size of restricted party lists and the rabbit hole of shell companies, obtaining an accurate view can be extremely challenging.

With a global trade intelligence solution, businesses can quickly screen potential suppliers to determine if the country or vendor are subject to any restrictions or sanctions from the government. Compliance vetting is crucial for avoiding fines and penalties but also ensures your company brand remains untarnished. 

Beyond COVID-19

Access to actionable trade insight is critical to developing a proactive supply chain response to the coronavirus and emerging from this pandemic as intact and profitable as possible. Sophisticated global trade intelligence solutions use shipment data from across the world to model trade flows globally, helping companies rapidly identify, analyse, and vet new sourcing locations. With the right approach, businesses can mitigate the impact of COVID-19 on supply chains and also strengthen and add resiliency to their logistics operations going forward.

Making tomorrow a better world in logistics

By Michel Waterschoot, Sales Manager – Southern Europe, Northern Africa, Middle East, Descartes

The health crisis that we are currently experiencing, as well as its financial and economic consequences, should not mean we lose sight of the opportunities that can be leveraged today to help businesses continue growing and developing. This situation should be used as an opportunity to identify weaknesses and design innovative solutions, sharing feedback that is relevant for everyone involved so we can better prepare for the future. 

Maintaining levels of satisfaction

In food distribution, volumes have exploded. With people confined to their homes, consumers have used ecommerce for their daily shopping more than ever before. For some players in the sector it was suddenly necessary to absorb exceptional levels of increased demand. However, it comes at a cost, as businesses must continue to satisfy long-standing customers – in terms of delivery times, slots, product availability – while meeting the demand of new and existing customers.  With this increased and unprecedented influx of orders, demand simply cannot be met under the same conditions as before. The customer relationship is therefore called into question. The retailers’ objective is, if this type of critical situation was to reoccur, they need to be able to control the level of service delivered, in a way that reduces the risk of losing historical customers while attracting new ones. 

The health crisis can lead to accelerated digitalisation

Another shift that we have been able to observe in connection with the COVID-19 crisis is that some companies who were until now very reserved about the use of new technologies, are now reconsidering their options. To limit the contagion of the disease, governments around the world have encouraged the rollout of health measures that reduce contact between people, but also the exchange of physical documents, such as proof of delivery, CMR, invoices and more. Companies therefore had to put in place alternatives to paper regardless of their concerns, for instance with delivery drivers. Their route planning was turned upside down and many were no longer in their usual geographic area as drivers had to stretch capacity to meet the consumer demand. Without their usual paper routing processes they had to use the GPS of their mobile phone to find their way in some cases. In the future, they will undoubtedly be less reluctant to use dedicated technological tools adapted for this, such as smart route planning software. This health crisis may therefore have helped to move along the digitalisation of processes that are still too often paper-based.

Combining deliveries offers benefits for all

In transport, there were around 40% fewer heavy goods vehicles (HGVs) on the roads in April and May. Logistics managers must respond to delivery requests even if the volumes are insufficient and the trucks have to run with a light load or empty on certain routes. This can increase the average cost of delivery for the transporter, by up to + 73% per tonne / km in long distance transport. These figures clearly argue the case for combining delivery efforts and collaboration between couriers, transporters and shippers alike to pool personnel, stock, storage facilities and more. These initiatives have so far been limited across the UK and France for example, no doubt because of the problems around co-responsibility but also for cultural reasons. However, the current situation will help to change mentalities on this, and the promise of the potential benefits that can be leveraged will override these initial concerns. This would be good news in terms of global optimisation for companies, but also in terms of ecological impact.

The importance of good transportation management

Many European shippers subcontract their transport of goods but given the current climate, one could wonder if the companies which control their transport of goods do better than those which entrust it entirely to service providers. With a fleet of its own, shippers who keep control of their flow of goods, through specific contracts with their carriers, get more responsiveness and flexibility, precious in difficult times such as these, especially with regard to the last mile. Shippers can therefore now question their fleet management and find the right balance with their service providers and internal teams in order to get a balance and a transport management system that provides them with the visibility and capabilities they need.

Faced with this critical situation, many companies will encounter or are already experiencing difficulties, potentially jeopardising their activity. However, it’s clear this crisis can also generate positive results by rethinking processes that were undermined during this period. The impacts on the sector are, and will be, numerous, putting even more tension on each of the logistics links. We must observe and analyse the present to make tomorrow a better world.

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