Interview: Charles Brewer, CEO of DHL eCommerce on effective strategy
Amazon founder Jeff Bezos once said: “If you do build a great experience, customers tell each other about that. Word of mouth is very powerful.” And when it comes to ecommerce, ensuring positive customer experiences is one of the absolute fundamentals if you wish to build a successful business.
The continual growth in ecommerce that has been witnessed was not entirely unanticipated and a number of the big logistics companies have made it an integral part of their strategic focus. Charles Brewer, CEO of DHL eCommerce, makes no bones about the importance of strategising effectively, saying that it’s essentially “where you win and lose customers” as a company in the market. Brewer, who has held his position for approaching two years now, is adamant that ecommerce fulfilment is something which is not spoken about enough.
The point was articulated in an article published exclusively on Supply Chain Digital’s website in January, where Brewer wrote: “When we think of ecommerce we tend to think of booming sales, products zooming from the screen to the doorstep, science fiction-like delivery methods and big-data making everything more efficient.
“We tend to forget the behind-the-scenes logistics involved in physically storing the products, picking them from the shelves, packing them, shipping them around the world and then delivering them to a customer’s front door. All of this falls under the term fulfilment and it can make or break any ecommerce merchant.”
Speaking now to Supply Chain Digital, he adds: “The ecommerce demand is definitely increasing, and remember we really are still at the very early stages – we once again witnessed record ‘peak’ volumes last year and I am sure we will see the same this year. The key is to plan, plan and plan again.”
There can be no doubting the Briton’s passion and he does not try to hide his excitement at the potential for innovation in what is a growing space.
Omni-channel sales is one area which is becoming an increasing point of focus for all of the big logistics companies, with DHL recently opening fulfilment centres in Australia and Hong Kong to supplement its operations.
According to DHL research, omni-channel shoppers spend 15-30% more than traditional shoppers, and given that fact, Brewer can only see ecommerce continuing to be an area of focus for the big companies as technology advances.
“Omni-channel will be the norm. Big data, artificial intelligence and automation will be important and will help businesses become better and more efficient in their processes,” he says. “These will enable businesses to learn customer experiences and deliver according to their demands.
“In ecommerce, payments and shipping – the two big enablers – will be more and more seamless. It will become easier for shoppers to shop. Cross-border will no longer be a ‘thing’ – people will just shop online regardless of geographical boundaries.”
But although it’s growing, omni-channel has created a litany of new problems for logistics companies to resolve as they strive to ensure a positive customer experience.
The process can be broken down into three main stages: warehousing, order processing and delivery. It’s the latter of these where a lot of ecommerce companies fall down, as Brewer explains.
“The majority of shoppers are less than satisfied with their delivery experience, from visibility, to choice of delivery day, time, location, etc.” he says. “The opportunity to ‘fail’ is significant, and a poor deliver experience critically impacts the likelihood of the shopper returning. That is why DHL eCommerce aims to deliver the smile in the last mile – making the delivery as engaging and exciting as the shopping experience.” That all sounds well and good, but how can that be achieved?
“An omni-channel approach requires strong logistics support at the background that allows your warehousing, inventory management, first and last mile delivery to be integrated and seamless,” explains Brewer.
“For example, when the consumer decides to try in store, shop online and deliver to their office; or any other shopping preferences they may have – the merchant is able to deliver a great consumer experience, not just delivering on time, but also providing shipment visibility, a simplified returns or exchange process, ample payment solutions, flexible re-routing if they change their minds, etc.
“All of these work together to provide greater choice, convenience and control for the shopper, and if done right, they will keep coming back for more.”
Ensuring said fulfilment is not always easy though, and even for a global player like DHL, sometimes there is a need to work in partnership with other companies to ensure that orders reach their given destination, on time.
Brewer says that building a successful ecommerce operation all starts with good upfront integration and being able to provide the shopper with options. “Getting the last mile right isn’t easy and can create incredible customer pain points as well as inefficiencies. Partnering with the right provider and doing your homework up front is where you can win.
“Holistically, businesses now want to move their inventory as close to their customer as possible, and in doing so reduce delivery times and fulfill orders quicker. With our sister company DHL Supply Chain, we are able to provide ecommerce fulfilment solutions on the customers ‘doorstep’. So depending on the requirement, we can provide last mile delivery in country, cross border delivery worldwide with multiple speed options and local, regional and or global fulfilment.”
No doubt that ecommerce will continue to grow, but it’s a space where there is still room for other trends and innovations to come to the fore.
Environmental factors will become more of a consideration for customers in the years to come, says Brewer, and he admits he’s interested to see how things will change in the ecommerce space in the years to come.
“The ecommerce industry is still incredibly nascent, as such we are all rapidly innovating and learning,” he adds. “Whether it be electric vehicles that ensure we play our part in a ‘cleaner’ tomorrow, alternate delivery methods to delight our customers, or route optimisation to ensure our thousands of delivery drivers have the most optimal routes, we are constantly innovating to ensure we deliver on our goals. The environmental impact that comes with ecommerce and logistics will be one that consumers become increasingly conscious about and they would want to be as green as possible.
“DPDHL Group (DHL eCommerce’s parent company) has announced that by 2050 we will reduce all logistics related emissions to zero – as we know that this will be a great concern for both consumers and businesses moving forward.”
NTT DATA Services, Remodelling Supply Chains for Resilience
Joey Dean, the man with the coolest name ever and Managing Director in the healthcare consulting practice for NTT DATA and is focused on delivering workplace transformation and enabling the future workforce for healthcare providers. Dean also leads client innovation programs to enhance service delivery and business outcomes for clients.
The pandemic has shifted priorities and created opportunities to do things differently, and companies are now looking to build more resilient supply chains, none needed more urgently than those within the healthcare system. Dean shares with us how he feels they can get there.
A Multi-Vendor Sourcing Approach
“Healthcare systems cannot afford delays in the supply chain when there are lives at stake. Healthcare procurement teams are looking at multi-vendor sourcing strategies, stockpiling more inventory, and ways to use data and AI to have a predictive view into the future and drive greater efficiency.
“The priority should be to shore up procurement channels and re-evaluate inventory management norms, i.e. stockpiling for assurance. Health systems should take the opportunity to renegotiate with their current vendors and broaden the supplier channel. Through those efforts, work with suppliers that have greater geographic diversity and transparency around manufacturing data, process, and continuity plans,” says Dean.
But here ensues the never-ending battle of domestic vs global supply chains. As I see it, domestic sourcing limits the high-risk exposure related to offshore sourcing— Canada’s issue with importing the vaccine is a good example of that. So, of course, I had to ask, for lifesaving products, is building domestic capabilities an option that is being considered?
“Domestic supply chains are sparse or have a high dependence on overseas centres for parts and raw materials. There are measures being discussed from a legislative perspective to drive more domestic sourcing, and there will need to be a concerted effort by Western countries through a mix of investments and financial incentives,” Dean explains.
Wielding Big Tech for Better Outcomes
So, that’s a long way off. In the meantime, leveraging technology is another way to mitigate the risks that lie within global supply chains while decreasing costs and improving quality. Dean expands on the potential of blockchain and AI in the industry.
“Blockchain is particularly interesting in creating more transparency and visibility across all supply chain activities. Organisations can create a decentralised record of all transactions to track assets from production to delivery or use by end-user. This increased supply chain transparency provides more visibility to both buyers and suppliers to resolve disputes and build more trusting relationships. Another benefit is that the validation of data is more efficient to prioritise time on the delivery of goods and services to reduce cost and improve quality.
“Artificial Intelligence and Machine Learning (AI/ML) is another area where there’s incredible value in processing massive amounts of data to aggregate and normalise the data to produce proactive recommendations on actions to improve the speed and cost-efficiency of the supply chain.”
Evolving Procurement Models
From asking more of suppliers to beefing up stocks, Dean believes procurement models should be remodelled to favour resilience, mitigate risk and ensure the needs of the customer are kept in view.
“The bottom line is that healthcare systems are expecting more from their suppliers. While transactional approaches focused solely on price and transactions have been the norm, collaborative relationships, where the buyer and supplier establish mutual objectives and outcomes, drives a trusting and transparent relationship. Healthcare systems are also looking to multi-vendor strategies to mitigate risk, so it is imperative for suppliers to stand out and embrace evolving procurement models.
“Healthcare systems are looking at partners that can establish domestic centres for supplies to mitigate the risks of having ‘all of their eggs’ in overseas locations. Suppliers should look to perform a strategic evaluation review that includes a distribution network analysis and distribution footprint review to understand cost, service, flexibility, and risks. Included in that strategy should be a “voice of the customer” assessment to understand current pain points and needs of customers.”
“Healthcare supply chain leaders are re-evaluating the Just In Time (JIT) model with supplies delivered on a regular basis. The approach does not require an investment in infrastructure but leaves organisations open to risk of disruption. Having domestic centres and warehousing from suppliers gives healthcare systems the ability to have inventory on hand without having to invest in their own infrastructure. Also, in the spirit of transparency, having predictive views into inventory levels can help enable better decision making from both sides.”
But, again, I had to ask, what about the risks and associated costs that come with higher inventory levels, such as expired product if there isn’t fast enough turnover, tying up cash flow, warehousing and inventory management costs?
“In the current supply chain environment, it is advisable for buyers to carry an in-house inventory on a just-in-time basis, while suppliers take a just-in-case approach, preserving capacity for surges, retaining safety stock, and building rapid replenishment channels for restock. But the risk of expired product is very real. This could be curbed with better data intelligence and improved technology that could forecast surges and predictively automate future supply needs. In this way, ordering would be more data-driven and rationalised to align with anticipated surges. Further adoption of data and intelligence and will be crucial for modernised buying in the new normal.
These are tough tasks, so I asked Dean to speak to some of the challenges. Luckily, he’s a patient guy with a lot to say.
On managing stakeholders and ensuring alignment on priorities and objectives, Dean says, “In order for managing stakeholders to stay aligned on priorities, they’ll need more transparency and collaborative win-win business relationships in which both healthcare systems and medical device manufacturers are equally committed to each other’s success. On the healthcare side, they need to understand where parts and products are manufactured to perform more predictive data and analytics for forecasting and planning efforts. And the manufacturers should offer more data transparency which will result in better planning and forecasting to navigate the ebbs and flows and enable better decision-making by healthcare systems.
Due to the sensitive nature of the information being requested, the effort to increase visibility is typically met with a lot of reluctance and push back. Dean essentially puts the onus back on suppliers to get with the times. “Traditionally, the relationships between buyers and suppliers are transactional, based only on the transaction between the two parties: what is the supplier providing, at what cost, and for what length of time. The relationship begins and ends there. The tide is shifting, and buyers expect more from their suppliers, especially given what the pandemic exposed around the fragility of the supply chain. The suppliers that get ahead of this will not only reap the benefits of improved relationships, but they will be able to take action on insights derived from greater visibility to manage risks more effectively.”
He offers a final tip. “A first step in enabling a supply chain data exchange is to make sure partners and buyers are aware of the conditions throughout the supply chain based on real-time data to enable predictive views into delays and disruptions. With well understand data sets, both parties can respond more effectively and work together when disruptions occur.”
As for where supply chain is heading, Dean says, “Moving forward, we’ll continue to see a shift toward Robotic Process Automation (RPA), Artificial Intelligence (AI), and advanced analytics to optimise the supply chain. The pandemic, as it has done in many other industries, will accelerate the move to digital, with the benefits of improving efficiency, visibility, and error rate. AI can consume enormous amounts of data to drive real-time pattern detection and mitigate risk from global disruptive events.”