While we’re still a few years away from orders being delivered within 30 minutes via automated drone, things are not going to get any easier or simpler for retailers.
Today’s consumers have instant access to more information than ever before, and loyalty has never been lower. As a result, customers demand an easy buying experience with multiple options for placing/receiving orders and making payment, access to real-time information for order and shipping status, lightning-quick fulfillment (preferably from a nearby DC), 24/7 customer support, and a painless returns process. Of course, retailers need to provide all of this while still offering the lowest overall price, including shipping. Oh, and if you can’t do all of the above, your competitors can, and they’re lining up to take that customer away from you.
So how does any retailer go about meeting the relentless pressure of a constantly raising bar, and provide the shopping experience that your customers demand, all while controlling costs? It begins with your Supply Chain, and the type of information that you have available to provide to your customers and/or make decisions with. Below are five points that every retailer needs to think about:
Demand Planning/Visibility: Whether you have a “push” or “pull” methodology for getting merchandise to your store locations, having the appropriate information and tools to place accurate and timely orders, manage inbound shipments and make good decisions as shipments arrive to your DC locations is critical.
Network Optimization: Having the right balance of distribution locations with the right mix of inventory in each is crucial to customer service. Optimizing your network is all about balancing hard costs such as operating costs, infrastructure, labor, carrying costs and transportation costs with soft costs such as time in transit for shipments to your store locations or directly to your customers and more options for fulfilling orders or receiving returns.
Supply Chain Balance: A huge advantage that retailers often overlook is the fact that your DC’s and the locations of the majority of outbound shipments coming from those DC’s are on the same team. In other words, you’re shipping to yourself and, unlike most other Supply Chain scenarios, you can choose to create efficiencies anywhere in the process. It’s quite common for Retail DC locations to spend extra time, effort and DC labor generating “store friendly” shipments, with inventory split up by department or even store aisle. While store labor cost is typically lower than labor cost at the DC, employee turnover at the store locations may be higher, and you may determine that the store labor is better spent interacting with customers rather than stocking shelves with inbound product.
Omni-Channel/Leveraging store locations: The term “omni-channel” has become an industry buzzword that can mean many different things. A basic definition for omni-channel would be the ability to use real-time information to provide yourself and your customers with multiple options for fulfillment.
e-Fulfillment/Reverse Logistics: Every retailer is seeing a sharp spike in e-Fulfillment or product shipped directly to consumers from their DC. This presents a huge challenge in terms of being able to fulfill one or two-line orders while keeping your cost per unit of throughput reasonable. This trend is only going to increase, so you can’t fulfill these orders as an “afterthought” forever. You’ll need to look at automation and setting up a part of your operation geared to efficiently picking and shipping smaller orders. The first step will be to do the analysis to determine at what point (typically volume) this investment will make sense.
The demand on every retailer’s Supply Chain is only going to increase. Whether you want to thrive or simply survive, your Supply Chain will need to evolve so that you can stay competitive.
The full White Paper can be downloaded by clicking HERE.