This blog has been adapted from a talk given at the Leaders in Logistics: Last Mile event.

In the past, meeting up with friends meant setting a specific time and place and hoping everyone showed up as planned. In today’s world, we continuously update one another with real-time data: live locations, text updates, and routes shared via mapping apps. This shift has drastically reduced the uncertainties involved in meeting up. Unfortunately, many supply chains are more like the “see you there” approach, and the uncertainties that follow are costly.

The role of uncertainty in consumer experience

Consumer expectations have evolved, and reducing uncertainty is key to meeting them. Behavioral expert Rory Sutherland has a great example about the role of uncertainty: the most impactful change in terms of user satisfaction for London’s train service was not the introduction of faster or more comfortable tube trains – it was introducing electronic displays that informed passengers of the next train’s arrival time. Simply put, we prefer knowing that we’ll wait 10 minutes to waiting 5 minutes wondering when the next train will be.

In logistics, this principle of reducing uncertainty is still underutilized. Delivery windows remain vague, often measured in days rather than minutes. While services like click-and-collect or parcel lockers offer more certainty, the e-commerce experience still leaves a lot to be desired. To truly improve the consumer experience, supply chains must reduce uncertainty by changing how businesses operate and how they collaborate with trading partners.

From collaboration to cooperation

Collaboration is often discussed, but the analogy of the group meet-up shows us that it’s not just about collaboration. The point of those real-time location views and live updates is that everyone sees the same picture and acts upon it – they cooperate, on a platform, in real time, to reduce uncertainty. In the same way, supply chains increasingly benefit from a single, shared view of real-time data to achieve genuine cooperation.

This goes beyond simply working together; it’s about having a real-time, single source of truth that breaks down operational silos and enables departments and businesses to act cohesively. When the entire supply chain — including trading partners — shares data on a single platform, businesses can move from reactive to proactive management, unlocking new levels of efficiency and customer satisfaction.

Dynamic Inventory and consumer visibility

The consumer experience has certainly advanced from the early days of e-commerce, where you’d often only find out at checkout whether an item was in stock. Today’s product pages may offer more information, but gaps in visibility still exist, especially when it comes to delivery times and stock availability.

The low-tech approach to combat inventory uncertainty is by simply over-investing in inventory. This strategy ensures that products are always available, but it’s costly and inefficient. A better approach is what we call Dynamic Inventory — having a complete, real-time picture of stock, including what’s in transit and what’s in stores. That means your website can show the customer not just what is or isn’t in the distribution center (DC) on any given day, but what will be there soon, what is available in their nearest store, and how quickly they can expect to get it.

The benefits of cooperative supply chains

Dynamic inventory and cooperative supply chains enable better customer experiences, but they also deliver operational improvements. Today, most logistics providers, suppliers, and retailers work with limited visibility and control over external processes, leading to inefficiencies throughout the supply chain. For example, a retailer might order excess stock to avoid running out, or a logistics provider might add extra lead time to compensate for unknown delays. These inefficiencies accumulate, driving up costs and reducing customer satisfaction.

Cooperation within the supply chain allows businesses to share real-time demand data with suppliers, reducing the need for inflated stock orders. Logistics providers can better schedule deliveries when they have visibility into both demand and supply chain operations, and parcel carriers can offer accurate, real-time delivery windows, reducing missed deliveries and increasing first-time delivery rates.

Breaking down silos for greater efficiency

Supply chain cooperation is more than just sharing data; it enables businesses to make smarter, faster decisions. By eliminating silos, businesses can connect their supply chain in a way that enables real-time adjustments and proactive management.

For example, imagine a retailer has a high-demand item like a pair of trainers that is temporarily out of stock. With a dynamic inventory system, the retailer could see that more stock is in transit and update the website to extend the delivery window, rather than marking the item as unavailable. Similarly, if the item is available in a nearby store, the customer could be directed there for immediate pickup.

This kind of real-time flexibility not only improves customer satisfaction but also reduces waste by minimizing overproduction and excess inventory. With better visibility into the entire supply chain, businesses can plan for both demand and returns more intelligently, reducing the need for reactive, safety-buffer stock orders.

The impact of intelligence and AI on supply chains

As supply chains become more connected, the role of artificial intelligence (AI) and machine learning becomes even more critical. These tools help businesses analyze and predict trends all the way across their network, enabling them to plan for disruptions and optimize their operations. AI can automatically flag issues like weather-related delays or unexpected demand spikes, offering solutions in real time.

This level of insight also allows businesses to tackle broader issues like sustainability. The bullwhip effect, where minor fluctuations in demand lead to excessive stock orders and overproduction, is a major source of waste. By sharing real-time data across the supply chain, businesses can reduce overproduction, improving both sustainability and profitability.

Smarter inventory management and returns processing

Excess inventory is a major drain on profitability. In the U.S. alone, retailers sit on $740 billion in unsold goods annually, according to McKinsey. Dynamic inventory management can help reduce this figure by allowing businesses to optimize stock levels across their entire network. For example, if an item is in high demand but also has a high return rate, having real-time visibility into those returns can help a retailer avoid over-ordering new stock.

Returns-aware planning is another area where dynamic inventory and real-time data make a difference. Instead of waiting for returned items to go through a lengthy processing cycle, businesses can immediately identify items that are ready to be resold and route them to where they are needed most, whether that’s a store or a distribution center.

Resilience in a connected supply chain

A cooperative supply chain is better equipped to handle disruptions, whether they are caused by external factors like weather or internal issues like supply chain bottlenecks. With AI-powered tools, businesses can monitor the entire supply chain in real time, flagging potential disruptions and offering solutions before they become critical. This level of resilience is crucial in today’s global market, where supply chain disruptions can have a massive ripple effect.

Regulatory compliance is another area where interconnected supply chains offer benefits. As businesses face new requirements, such as the EU’s Digital Product Passport, having full visibility and cooperation across the supply chain will be essential for meeting these regulations.

Preparing for the future of supply chains

To take full advantage of cooperative, dynamic supply chains, businesses need to start with their trading partners. Sharing data in real time, aligning on key metrics, and breaking down internal silos are all critical steps in this transformation.

Businesses must also embrace AI-enabled tools that can handle the complexity and scale of modern supply chains. By automating routine tasks and offering real-time insights, AI allows human operators to focus on strategic decisions that drive growth and efficiency.

In summary, cooperative supply chains have the potential to transform the retail and logistics industries, reducing uncertainty and waste while improving both operational efficiency and the customer experience. By embracing real-time data, dynamic inventory, and AI, businesses can future-proof their operations and meet the evolving demands of consumers.

Discover how Blue Yonder can help retailers and logistics service providers gain visibility and control across their supply chain.