The Evolution of the “Customer Experience” in Logistics

At the heart of every thriving business exists an emphasis on customer service and yet, the pillars of customer service vary between different fields and importantly, between B2C and B2B industries. For many B2C industries (especially in terms of FMCG), the customer experience has always been at the heart of a strong customer service, allowing businesses that sell standardised or off-the-shelf products in a manner that stands out against key competitors. For many B2B industries, this hasn’t always been the case, with the customer experience sometimes coming second fiddle to cost competitiveness and technical competency; these are both pillars of a strong customer service, yet don’t encapsulate the complete customer experience.

In more recent years however, customer service expectations have been changing, with the customer experience increasingly becoming a key selling point for many B2B businesses and similarly expected by clientele. This shift is evidenced quite succinctly in KPMG’s 2019 report [1] on the emergence of customer service as the new “battleground” for logistics companies. In the report, KPMG highlighted research (conducted by Forrester Consulting) indicating that the top 25 customer experience leaders achieved 5 times the growth and 6 times the revenue growth of the bottom 25. Furthermore, it cited that 71% of respondents said that a customer-centric strategy was either the top, or a high priority.

There are a number of factors emphasising the importance of providing an important customer experience. With 74% of modern customers reportedly being “somewhat likely” to buy based on experience alone [2] and 1 in 3 customers suggesting they could leave a brand they love after one bad experience [3], it’s evident that customer experience is pivotal in developing a sense of brand loyalty and repeat business; this sentiment is further enforced by well-accepted research that indicated that a 5% increase in customer retention can lead to up to a 25-95% increase in profits [4]. All of this paints a very clear picture as to why B2B firms are increasingly prioritising the customer experience as the building blocks for further growth.

If we compare to the B2C sector again, we can also see the potential exposure to risk that comes with increased service expectations. Sharing insight from 8,000 e-commerce buyers, Descartes’ 2023 study [5] of the e-commerce and home delivery market showed how, of the 67% of customers who experienced a delivery problem in 2023: 68% took some form of action against the retailer or delivery company, 24% and 19% lost trust in the delivery company and retailer respectively, 21% did not order from the retailer again, and 17% avoided retailers who used the same delivery company. And when factoring in the impact that customer retention has on profitability, it’s clear that failure in this respect is damning for businesses in 2024.

As a result of both the pros and cons of enhancing customer experience, it’s of no surprise that there’s greater emphasis on enhancing the customer journey than ever before. Yet, according to research by PwC which maps the internal and external requirements of modern customer services in seven dimensions, ranging from service strategy to operational aspects [6], the transport and logistics sector severely lags behind many of its industry peers in offering that experience. According to the research, the transport and logistics sector sits at an underwhelming maturity degree of 2.3, far behind that of telecommunications (4.1), information technology (3.4), retail and consumer (3.3), and even energy and utilities (2.9). More than ever, logistics companies need to develop robust strategies to enhance customer outcomes and deliver a fast, responsive, and accurate service. For this purpose, we have the 12 “R”s of logistics.

The 12 “R”s of Logistics

As stressed by the Chartered Institute of Logistics and Transport in the UK (CILT), one cannot overstate the importance of accuracy (relating to order accuracy) within logistics. [7] Whether strategic emphasis is placed on sustainability, operational efficiency, or customer experience, order accuracy is pivotal in minimising risks and maximising outcomes. Yet, with B2B service expectations now amalgamating with their B2C counterparts, so too does the expected order accuracy for services – a figure which industry experts almost unanimously agree to be at least 96-98%, if not 100% accuracy for B2C services. [8][9][10]

Underpinning an organisation’s ability to deliver a high level of accuracy (and indeed, commercial success) are the 8 “R”s of logistics. Laid out by CILT, the original 7 “R”s of logistics are as follows:

1. Right Product: assessing product and packaging design for transportation and storage
2. Right Quantity: optimising the supply of product to meet demand yet minimise inventory
3. Right Condition: guaranteeing the safe handling of product to preserve its quality
4. Right Place: providing visibility of locational information and order tracking
5. Right Time: ensuring the on-time, scheduled delivery of product
6. Right Customer: utilising market intelligence to identify the ideal customer
7. Right Price: balancing competitive pricing with that of profitability

Over time, our understanding of these fundamental principles has evolved, with industry experts now citing anywhere from 7 to 12 [11] distinct “R”s that underpin the logistics framework:

8. Right Customer Experience: combining the other “R”s into a unified customer journey
9. Right Supplier: identifying reliable supply chain partners that meet a similar level of service
10. Right Returns: facilitating a safe and efficient returns process
11. Right Sustainability: demonstrating and adhering to environmentally-friendly practices
12. Right Compliance: covering regulation, paperwork, and legal protections

In summary, customer expectations are now at an all time high and the spectrum of interests that must be covered to ensure an accurate, high standard of service are numerous. Thankfully, through the adoption of Logistics 4.0 technologies, accuracy and service levels can successfully be scaled up at significant volumes. Evidence of this can be seen in the use of AI-powered robotics to optimise parcel sorting by circa 40% [12], and the use of AI for demand forecasts six weeks ahead of time [13] so as best to provide the “Right Quantity” at the “Right Time”.

Yet, there’s a problem. Despite Logistics 4.0 offering a clear pathway to a strong customer experience, the sheer cost of implementation remains insurmountable for SMEs and even larger organisations might require a rather bespoke implementation that may be difficult to deploy. Primarily this is a result of the varied logistical infrastructure required for the successful deployment of Logistics 4.0 technologies, including everything from the AI technology through to cyber security (a compounded area of risk as digitalisation is applied) and workforce training. It’s perhaps for this reason that some have speculated that the shift to Logistics 4.0 will lead to the rise of Fourth Party Logistics (4PL) [14], as external providers capable of assuming the cost.

Vic Faulkner, Operations Director of X2 (UK), explains: “Customer service level expectations are rising at a rapid pace and without significant investment into digitalisation, IoT, and Logistics 4.0 implementation, it’s almost impossible for traditional logistics to keep up. At X2 (UK), we’re always looking ahead at new ways in which we can increase end-user satisfaction, champion sustainability, and streamline communication, primarily through the implementation of Logistics 4.0 and leveraging our strategic capabilities as a Fourth Party Logistics (4PL) partner.”

Fourth Party Logistics (4PL): Enhancing Customer Experience

As has already been covered quite extensively, there are a number of key benefits to working with a Fourth Party Logistics (4PL) logistics partner, but these aren’t often discussed from the customer experience perspective; typically, the benefits promoted instead vary from things like operational efficiency improvements through to a rebalancing of the CapEx:OpEx spend ratio by incorporating an asset-light solution, and ultimately addressing the void of logistical expertise typically within SME and growing businesses. Yet, as a form of managed service, 4PL specialists can offer a number of unique benefits that enhance the customer journey in a traceable way.

4PL Reliability: Minimising Risk & Maximising Accuracy

As initially stressed by CILT, accuracy is key, especially when it comes to ensuring customer loyalty and developing a pipeline of repeat business. When it comes to a growing SME, however, managing both internal functions and an external logistics supply chain can be incredibly problematic as talent is simply drawn too thinly to cope; ultimately, this can be damning on accuracy and can easily lead to an unreliable standard of service. Perhaps more importantly, the impact of unreliability within the logistics supply chain can be damning on client operations.

Particularly within the B2B side of the industry, the risk of delays within the supply chain can come with a sizeable impact on the bottom line. This is particularly the case within construction, where research from Yardlink [15] reported that an average of 46% of construction projects run over budget, primarily as a result of inefficiencies in the management of the supply chain. In particular, the research showed that the speed of service by suppliers presents a challenge to 28% of senior procurement managers (citing communication and delivery issues as key problems), with the same experiencing delays in equipment collection.

The food and drink manufacturing industry suffers from a similar level of risk, but in a different manner. While construction businesses suffer in the spiralling cost of project delays, food and drink manufacturers suffer from the faced paced nature of the industry (as a FMCG sub-sector) and the significant impact that supply chain delays have on the day-to-day operation of foodservice and retail businesses. Unsurprisingly, disruptions within the food and drink supply chain have also led to the deterioration of many supply chain partnerships as a result; this has, however created opportunity for those organisations able to position themselves as a reliable supply chain partner (we’ll touch on this shortly).

As a managed service, 4PL partners are able to offer the strategic management and insight required to take this risk off the shoulders of key clients. By assuming responsibility over the entire logistics supply chain and deploying the talent required to manage it, a 4PL partner has constant eyes on logistical operations and can ensure a high level of accuracy, and reliability. What’s more, thanks to the 4PL’s ability to invest more aggressively in Logistics 4.0 technologies, a level of transparency and oversight of operations can also be provided to the client. As a result, a client can benefit from both a sense of security and enjoy the benefits of greater reliability.

ADM Contract Extension: The Reliable Supply Chain Partner

ADM, a prominent producer of branded and customer-owned brand-packed oils and white fats in the UK, originally partnered with X2 (UK) in 2021 after the packaged oil company experienced a significant expansion in operations. Its in-house logistics and customer service teams were left struggling to keep up with the demands of a more intensive delivery schedule. ADM needed help streamlining day-to-day activities such as order management, advising warehouse teams, planning loads, verifying deliveries and managing an increasingly complex network of haulier relationships. The company, looking to centralise control of its logistics operation and related financial administration, partnered with X2 (UK), known for its innovative 4PL solutions (Fourth-Party Logistics).

Prior to the partnership, ADM faced significant logistical challenges, managing 50 different haulage companies with 50 separate invoices each week. This complexity led to late deliveries and a lack of data visibility. The results of the partnership include:

• Significant improvement in on time deliveries. X2 (UK) is now achieving in the first 28 weeks of this year a remarkable 99.2% on-time delivery rate, a significant improvement from the previous rate of less than 70%. This increase has been instrumental in elevating the company’s customer service standards, and nurtured greater trust and satisfaction among its customer base.
• Consistent customer communication. X2 (UK)’s dedicated team maintained consistent and proactive communication channels, keeping ADM’s customers informed and updated at every stage of the delivery process.
• Real-time visibility of collections and deliveries. Leveraging X2’s advanced tracking and monitoring systems, ADM gained real-time visibility into collections and deliveries. This transparency provided invaluable insights for decision-making, helping the company respond swiftly to operational challenges and optimise its logistics processes for greater efficiency and effectiveness.
• Comprehensive haulier management. X2 (UK) assumed full responsibility for managing all of ADM’s haulier relationships, including handling invoice payments. This centralised approach streamlined coordination and communication, reducing administrative burdens and ensuring seamless operations across the logistics network.
• Alignment with customer needs. Through meticulous examination of haulier availability and a thorough understanding of customer requirements, X2 (UK) made sure that every delivery was precisely tailored to meet the unique needs and preferences of ADM’s customers. This customer-centric approach not only boosted satisfaction—it strengthened relationships and loyalty, too.
• Increased volumes. The X2 (UK) partnership facilitated a notable increase in ADM’s weekly loads, scaling from an average of 80-100 to 100-130 per week. As a result, ADM was able to accommodate growing demand without compromising on service quality or efficiency.
• Optimised delivery organisation. X2 (UK)’s detailed delivery planning optimised ADM’s operations, minimising delays and heightening efficiency. Through strategic routing and scheduling, X2 (UK) achieved smooth and timely deliveries, raising overall productivity and performance across the logistics chain.

4PL Resiliency: Protection from Internal & External Disruption

A fundamental characteristic of partnership with a 4PL specialist is the consolidation of communication into a single point of contact. As a managed service, 4PL partners assume responsibility for the management of an expansive logistics network that functionally operates somewhat “behind the scenes”. Although clients ultimately benefit from the flexibility and capacity offered by a sprawling logistics supply chain, the entirety of that capability is consolidated into a single point of service. At face value, this process simply saves time for the client in mobilising or addressing the logistics supply chain, yet this misses the most fundamental benefit.

The pursuit of perfection is key in just about every industry, however we have to accept that mistakes happen, unforeseen challenges arise, and uncontrollable factors emerge – logistics is no exception. Whether an issue is created in the market, within your own internal business, or within the logistics network itself, the immediate short-term problem is far less of designating accountability and far more of finding an immediate resolution to ensure the continuation of “business as normal” and to minimise the deterioration of service standards.

As a single point of contact, a managed 4PL service not only consolidates communication, but also merges accountability and a resolution into a single interaction. Should seasonal variance result in a sudden uptick in volume, communication with the 4PL allows for an immediate flexing and mobilising of that capacity without any real disruption to service. Similarly, should a haulier be unable to fulfil a particular job for any reason, it’s the same single interaction (with the 4PL) at the other end of the supply chain that leads to an immediate resolution – in this case, via redirecting the workload towards a logistics partner (within the 4PL’s logistics network) that can pick up the figurative slack.

By consolidating communication, accountability, and a resolution into a single point of contact, working with a 4PL partner protects operations from disruption both internal and external to the business. Fundamentally this guarantees zero disruption in the on-time delivery of product (“Right Time”), the ability to vary the volume of product on the fly (“Right Quantity”), and ensures the continued delivery of a standardised customer experience (“Right Customer Experience”).

Altogether, partnership with a 4PL can offer businesses reliability and resilience in a market where the customer experience is deemed among the most important indicators of success. Able to invest far more aggressively into Logistics 4.0 and fully focused on the logistics function, a managed 4PL service is not only able to support the customer experience needed in 2024 but is specifically driven to do so in a manner that is both cost-effective and facilitates a long-term, prosperous partnership.

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