Too many cooks in the kitchen cause problems ranging from minor inefficiencies (do we really need two people stirring one salsa bowl?) to total meltdown (the still-enduring family feud that began with conflicting deviled egg recipes in 1987).
This month on BOXpoll, we’re pulling back the curtain on the bustling kitchens of online retailers. We surveyed 168 brands about who has final decision-making authority to select different logistics and software vendors and found significant division of responsibility—which can create unnecessary gridlock when it comes to decision making.
- Almost half (48%) of retailers assign their logistics/operations leaders responsibility for choosing a delivery carrier, while only 27% give operations teams the same authority for carrier rating and manifesting software. (36% of firms assign carrier rating decisions to their IT departments.) This can create a scenario in which the team that selects carriers has its hands tied when it comes to choosing the best technology for (wait for it) …carrier onboarding, rate shopping and selection.
- Similarly, less than one-third (30%) of firms give logistics/operations leaders authority for consumer-facing delivery tracking software. 24% assign those decisions to IT departments, with the remaining split between customer care, ecommerce and marketing departments.
Flip through the slides below to explore the data (among all retailers, as well as broken out by retailer size):
When it comes to returns, our surveys previously found that 70% of retailers are actively trying to lower the cost of returns by addressing transportation and/or processing costs. However, achieving that goal is likely complicated by shared accountability for returns strategies.
- While 42% of retailers assign their logistics/operations leaders final authority on selecting a returns transportation vendor, only 25% give operations leaders the same authority for choosing returns technology vendors.
- In our experience, this divided responsibility handicaps the ability for a decision maker to execute on a single vision for (1) the most convenient consumer experience, (2) lowering the cost of returns, and especially (3) finding an optimal balance between convenience and cost.
- When it comes to selecting cross-border carriers, significantly more retailers (44%) assign authority to logistics/operations than any other department. (By comparison, ecommerce departments get the second-biggest share of authority at a measly 16%).
- However, for cross-border duty and tax quoting, decision-making is far more balkanized, with 29% giving authority to procurement/finance and 27% to logistics/operations—effectively a tossup for the top spot.
The bottom line
Software-only or logistics-only point solutions create wedges within organizations by fracturing decision-making across different functions, which can create lose-lose situations for retailers.
The downside of split decision-making? Every team decides to pursue its own point solutions. Our BOXpoll survey found that an average of 65-75% of retailers claim to be adopting every delivery, returns, and cross-border feature we asked about (even the ones our experience told us were shiny objects and science fair projects).
McKinsey calls cross-functional initiatives "cross-cutting decisions" and its survey of more than 1,200 businesses found that only half (54%) called their cross-cutting decisions “high quality.”
As McKinsey notes (in a possibly shady reference to the classic "who has the D" advice), just having clearly defined roles, accountability, or decision rights isn’t enough for businesses to be successful. The companies that excelled at making cross-cutting decisions emphasize effective coordination processes among different stakeholders—and are 4.5 times more likely to be a McKinsey-certified “winner.”
When it comes to ecommerce, these teams could collaborate more effectively with modular solutions that can be configured to satisfy cross-functional needs—like offering your most loyal customers more convenient returns options or opportunistically expediting only the return of items with limited stock. After all, shoppers don’t differentiate between software and logistics services—they only see “experience.”