The Temu and Shein Effect – Get Ready for the Race!

A Joint Article by @Guido Burger and @Holger Klug

#customercentriclogistics

#datadrivenlogistics

This article in multiple parts offers a comprehensive view of the current landscape of customer-centric supply chain management and logistics, making it a valuable read for supply chain and logistics executives aiming to enhance their strategies, stay updated with industry trends, and navigate the complexities of digital transformation.

Introduction

The recent, somewhat revolutionary activities by Chinese e-commerce giants Temu and Shein have created a near "hysteria." This prompted us to reflect more broadly and share our views on how companies today can adapt and thrive in a rapidly evolving, customer behavior – driven business landscape. More so, how they can achieve competitive advantages by implementing key concepts to support customer-centric supply chain and logistics operations.

Definition

A customer-centric supply chain focuses on understanding and anticipating the unique needs, preferences, and behaviors of various customers, whether they are individual consumers, manufacturers, LSPs, retailers, suppliers, other partners, or even algorithms. This approach involves tailoring logistics operations to optimize delivery times, enhance service quality, ensure reliability, and provide transparent communication throughout the supply chain to boost customer satisfaction and loyalty.

In this environment, individual consumers seek personalized and timely product deliveries, expecting a seamless purchasing experience. B2B organizations require efficient and reliable logistics to support their operations and maintain their customer relationships. Suppliers and partners rely on synchronized logistics processes for smooth supply chain operations and mutual success. Additionally, algorithms, as customers, drive automated systems that demand precise, real-time logistics data and optimization. Addressing these diverse needs is key to achieving excellence in

Customer-centric logistics represent the fundamental layer of physical processes that ultimately connects actions implied by the key personas involved in end-to-end supply chain management.

Whilst different sectors vary by their specific supply chain requirements and stakeholders, some key developments are almost universally applicable. Direct-to-Consumer (DTC) trends, for instance, extend beyond retail and consumer goods. Whether it's streamlining supply chains, enhancing customer experiences, or offering personalized services, DTC impacts a wide range of industries.

Staying informed about these trends can help you continue to solve known challenges in an environment where new market entrants are leapfrogging established players by building from scratch. Embracing the value of innovation that has gone into today’s wealth of enabling technologies provides you with more comprehensive data analysis and data-driven process execution.

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Let’s Rethink how we are doing Logistics in the light of actual customers and not only on parcels and pallets.

Looking more into the case of Temu and Shein, they form an intriguing example of the challenges faced in today’s global logistics landscape. Their rapid growth and flooding of the global market with low-cost products have led to significant bottlenecks in air transport. The sheer volume of goods they ship daily (estimated at 600,000 packages to America alone) has put immense pressure on global air freight capacity, causing freight rates to skyrocket. This scenario serves as a stark reminder of the complexities and potential pitfalls in managing modern, customer-centric supply chains.

The case also underscores the importance of designing supply chains starting from the customer and working backward, a concept that has emerged as a game-changer. Enriching the customer experience through top-tier supply chain and logistics management has increasingly become a distinguishing factor and a source of competitive advantage.

Companies operating in global environments face a variety of transformational developments. Depending on their market position and financial and operational strength, they may act either as leaders or smart followers. The following two aspects serve as examples.

B2B with a B2C Delivery Promise

DTC strategies streamline supply chains by reducing intermediaries. When manufacturers directly reach consumers, they can optimize production, inventory management, and distribution. Industries like automotive, electronics, and pharmaceuticals are adopting DTC models to enhance efficiency and reduce costs.

Direct-to-Consumer (DTC) as a concept is not essentially new. In the first decade of the 20th century, several DTC pure-play brands entered the market. Yet, over the last few years, manufacturers of established consumer products have also started establishing DTC selling channels and supply chain operations. This is highly competitive to the retail sector, which traditionally "owned" the customer experience and intelligence.

So while customers are on their journey towards DTC, in small or at scale - do you know your Customers, really?

Well, in addition to real customers, there is a new profile - the emergence of AI agents. These AI agents are capable of searching for pricing on logistics trade lanes, optimizing routes, and even predicting future pricing trends based on historical data and market conditions. This not only increases efficiency but also allows companies to gain higher prices due to the value of the service, thereby driving transformation in the logistics industry.

The race is on, let's get closer to our customers via DTC or AI agents - but always keep the human in the loop. Where are you on that journey?

To be continued …