Amazon's Ship Date Transparency Exposes B2B Companies' Communication Gap

INTRODUCTION

In today's fast-paced world, consumer expectations have been significantly influenced by the seamless order delivery experiences provided by e-commerce giants like Amazon. Consumers now have the ability to know with a high level of confidence when their Amazon orders will arrive even before placing the order. This heightened level of service performance has created a widening expectation gap between consumer-facing order delivery experiences and those in the B2B realm. Business customers, who are also consumers themselves, carry over these expectations to their B2B interactions.

Accurately providing customer order ship dates is crucial for B2B companies that sell or distribute goods. However, the complexity of determining future ship dates for sales orders poses significant challenges in meeting these expectations. In this blog, we will explore the impact of a B2B CSR team’s inability to communicate accurate ship dates for future customer orders and discuss the complexities involved in accurately determining these ship dates.

DETERMINING SHIP DATES FOR B2B CUSTOMER ORDERS IS A COMPLEX PROCESS

(caution – math ahead!)

Most distributors accept sales orders, which in many cases contain items that can not be filled until stocking orders arrive at their warehouse. These stocking orders have a substantial impact on the ability for your CSR team to quickly answer customer’s questions about sales order ship dates. When a B2B customer places an order that will ship in the future, and therefore likely need the arrival of a replenishment order to fill, it introduces a level of uncertainty into the order fulfillment process and the resulting order ship date.

Managing ship date communication in the B2B world presents various challenges. Firstly, coordinating and aligning the availability of multiple items (SKUs) from different suppliers can be intricate. Each item's availability is subject to its own production and replenishment cycles, supplier lead times, and unforeseen disruptions. This intricate web of dependencies and variables makes it challenging to accurately predict when an out of stock item will become available.

A unique problem – the combinatorial explosion problem - further exacerbates the difficulty of providing accurate ship dates. Here’s the typical process a customer service rep follows to determine a ship date for a sales order shipping in the future.

Let’s say sales order 12345 has 5 items on it. To answer the customer’s question regarding this sales order’s ship date, a CSR team member starts with the first item on the order, for example: model ABC with a quantity of 3. For item ABC, they look at the inventory report to determine if current stock levels are adequate to fulfill the order. If yes, they move on to the next item on the order. If no, they look at the inbound stocking orders and identify which order or orders include item ABC in the quantity required.

At this point the CSR may request that procurement determine the estimated warehouse arrival date for those inbound restocking orders. Procurement looks for all stocking orders that include ABC, then reaches out to the supplier to collect an expected ship date or to the freight provider if the stocking order is enroute. Note that the retrieval of this information can take hours or even days to collect. Procurement takes this raw information and often applies assumptions to it to arrive at an expected warehouse arrival date, which is then communicated to the CSR team.

Unfortunately, even after receiving the expected arrival date for item ABC from procurement, the CSR really has no way of knowing when order 12345 might ultimately ship to the customer. This is because there may be other open orders with a higher priority that will consume item ABC, resulting in no inventory remaining from the inbound stocking orders to fulfil order 12345. Even without this data, the CSR team communicates a date, because answering a customer’s question about a future ship date is expected by their employer and the customer. It shouldn’t be surprising that in many cases the communicated ship date to the customer is incorrect.

Keep in mind, the process discussed above is only for one item on the sales order. This process must be completed for every item on the sales order. This process must be repeated for every sales order for which a customer has requested a ship date and has not yet been picked. The result is the combinatorial explosion problem.

The combinatorial explosion problem becomes particularly pronounced in industries such as medical supplies or industrial products that offer a multitude of items procured from dozens or hundreds of suppliers and where each customer order includes several items all with varying lead times and dependencies.

Let's consider a distributor that offers 10,000 items (SKUs) and imagine they have 100 customer orders with an average of 5 items per order. To grasp the magnitude of the challenge, we can calculate the number of possible combinations of 5 items per order using factorials.

In this case, the number of possible combinations for a single order can be calculated as:

C(10,000, 5) ≈ 2.12 x 10^15 = 2,120,000,000,000,000

This means there are 2 quadrillion possible combinations of all items in this product catalog for a single order with 5 items

Now, considering that there are 100 orders in the system, the number of possibilities grows exponentially again. The total number of combinations for 100 orders each with 5 items can be calculated as:

(2.12 x 10^15)^100 ≈ 4.34 x 10^1500 = 4,340,000,000,000,000,000,000,000,000,000,000

Or 4 decillion possible combinations of all items in the product catalog for a 100 orders each with 5 items

This level of complexity poses a significant challenge for human decision-making. With an astronomical number of possibilities, it becomes virtually impossible for humans to manually evaluate and make informed decisions for each order combination to determine when a specific customer order will ship. The sheer volume of possible combinations to evaluate exceeds the capabilities of human cognition and highlights the need for advanced technologies and automated systems to address this challenge effectively.

Recognizing the implausibility of human decision-making with such a vast number of possibilities, B2B companies must rely on advanced tools and algorithms to effectively manage the challenges associated with providing reliable ship date estimates to their customers. To address these complexities, B2B companies must delve deeper into their supply chain processes and develop strategies that mitigate the challenges associated with managing sales orders that rely on inbound stocking orders. By understanding the impact of inbound freight and the combinatorial explosion problem, businesses can take steps to improve their order fulfillment communication processes and enhance customer satisfaction.

INABILITY TO COMMUNICATE ACCURATE SHIP DATES IS NEGATIVELY IMPACTING YOUR CUSTOMERS

The inability to provide accurate ship dates in the B2B environment can lead to several negative impacts on customers. Let's explore five key ways in which this challenge negatively impacts a B2B distributor’s customers:

· Eroded Trust and Damaged Reputation: Inaccurate or unavailable ship date information can erode trust between B2B customers and their suppliers. When promised delivery dates are not met or information provided is inconsistent, it negatively impacts the customer-supplier relationship. B2B customers may lose confidence in the supplier's ability to fulfill their needs reliably, potentially leading to the loss of business and damage to the supplier's reputation.

· Disrupted Inventory Management: The lack of accurate ship dates hampers B2B customers' ability to effectively manage their inventory, which can have severe consequences, especially in critical industries such as healthcare. Consider a scenario where a regional hospital is awaiting a shipment of medical supplies necessary for a life-saving operation. Without reliable ship date information, the hospital faces the risk of missing the critical date for the procedure. In such cases, the inability to plan stock levels accurately can have life-or-death implications. Additionally, inaccurate ship dates can lead to unplanned out-of-stocks, leaving healthcare centers scrambling to find alternative supplies or delaying patient treatments. These disruptions not only hinder day-to-day operations but also jeopardize the delivery of essential care to patients.

· Operational Inefficiency: The absence of accurate ship date information significantly impacts operational efficiency, particularly within healthcare centers that heavily rely on the timely availability of supplies. In a healthcare environment, staff members are responsible for searching for specific supplies when unexpected out-of-stocks occur due to inaccurate ship dates. This disrupts the workflow and increases the burden on healthcare professionals, who must spend valuable time trying to locate alternative items or coordinating with suppliers for updates. The inefficient allocation of resources and time not only hinders patient care but also strains the overall operational efficiency of the healthcare center. Delays caused by operational inefficiencies can lead to compromised patient outcomes, increased waiting times, and reduced patient satisfaction, ultimately impacting the quality of care provided.

· Delayed Decision-Making: When B2B customers are uncertain about the arrival of their orders, decision-making processes are impeded. For instance, a regional hospital ordering crucial medical supplies requires accurate ship dates to plan procedures and patient care accordingly. Without this information, decisions may be delayed, resulting in compromised patient care and potential disruptions to hospital operations.

· Financial Implications: The inability to provide accurate ship dates poses financial challenges for B2B customers. Without clear visibility into delivery timelines, they may struggle to plan their budgets effectively. Unforeseen delays or discrepancies in order fulfillment can lead to unexpected expenses or impact financial forecasting. This uncertainty can strain their financial resources and overall stability.

FIVE STRATEGIES TO ADDRESS THE CHALLENGES:

Equipping customer service representatives (CSRs) with accurate and up-to-date information is crucial. B2B companies should provide CSRs with access to tools to provide timely and accurate information to customers, reducing the need for repeated inquiries and improving overall customer satisfaction. To overcome the challenges associated with providing accurate customer order ship dates in the B2B environment, companies can adopt several strategies:

· Improving Communication and Collaboration with Suppliers: Establishing clear lines of communication and collaboration with suppliers is vital for accurate ship date information. However, the current system of emails and phone calls to gather shipping information for inbound inventory delays the process and introduces timing error when determining the customer’s sales order ship date.

· Enhancing Supply Chain Visibility: B2B companies should strive to improve visibility throughout the supply chain. By implementing robust tracking systems and technologies, they can gain real-time insights into inventory levels, supplier lead times, and other critical data points. This increased visibility enables more accurate estimations of ship dates, empowering customers with reliable information.

· Implementing Real-Time Inventory Management Systems: Investing in advanced inventory management systems that provide real-time data updates can significantly enhance order fulfillment processes. These systems allow B2B companies to monitor inventory levels, track backorders, and adjust delivery schedules proactively. By automating inventory management, companies can minimize inaccuracies and improve ship date accuracy.

· Leveraging Predictive Analytics and Machine Learning: Harnessing the power of predictive analytics and machine learning can help B2B companies forecast ship dates more accurately. By analyzing historical data, supplier performance, and other relevant variables, these technologies can identify patterns, anticipate delays, and generate precise estimates. Leveraging these insights improves the accuracy of ship date predictions.

· Integrating the three techniques mentioned above: `By integrating these strategies, companies establish a powerful synergy where real-time visibility feeds into inventory management systems, providing accurate and up-to-date information on inbound replenishment items. This information, combined with predictive analytics and machine learning algorithms, enables more precise estimations of when sales orders will ship. The integration of these strategies creates a cohesive ecosystem, ensuring companies have a comprehensive and dynamic understanding of their supply chain. This approach minimizes uncertainties, streamlines operations, and ultimately improves ship date accuracy, meeting customer expectations more effectively in the evolving B2B landscape.

By implementing these strategies, B2B companies can enhance their ability to provide accurate ship dates, align with customer expectations, and strengthen customer relationships.

USE CASES

Company A: Global Equipment Manufacturer

This company, a leading B2B supplier in the equipment manufacturing industry, faced challenges in providing accurate ship dates for the majority of each month’s booked orders. The CSR and procurement teams spent up to 30% of their time each week fielding customer questions about ship dates as well as attending weekly meetings to estimate the monthly financial roll up based on the latest inbound inventory arrival dates. To overcome this, a decision tool was implemented that integrated internal and external near real-time data feeds. This enabled the most accurate view of each order’s status, delivering improved order visibility.

Company B: New Auto Dealer

Almost 20% of visitors to auto dealerships “walk away” because the specific auto the customer has in mind is not on the dealer’s lot. Implementing a tool that provides real time arrival dates for all inbound inventory – including arrival dates for autos in the production plan – would reduce the walk away rate by enabling the sales person to communicate when the customer’s desired vehicle is arriving to the dealership. By taking a deposit on the inbound vehicle, the sale is virtually guaranteed.

CONCLUSION

In conclusion, inaccurate ship dates for customer orders pose significant challenges in the B2B environment. Customers' expectations, influenced by consumer experiences, demand more transparency and reliability as it pertains to order shipment communication. Meeting these expectations is crucial for maintaining customer satisfaction and loyalty.

To address the challenges, B2B companies should invest in solutions and strategies that improve ship date accuracy. By enhancing supply chain visibility, collaborating with suppliers, implementing predictive analytics, communicating transparently, and embracing a culture of continuous improvement, companies can enhance their ability to meet customer expectations and drive operational efficiency.

In the evolving business landscape, it is paramount for B2B companies to prioritize customer satisfaction, as it directly impacts their reputation, customer retention, and overall success. By investing in solutions to improve ship date accuracy, B2B companies can not only meet customer expectations but also gain a competitive edge.

It is essential for B2B companies to take action now, leveraging technology, data-driven insights, and optimized processes to improve ship date accuracy and provide a superior customer experience.