Ecommerce supply chains must be dynamic, evolving to continually meet the various challenges and opportunities involving transportation costs, labor, management expectations, financial goals and customer demands. However, many fulfillment centers spend much of their time implementing reactive tactics without ever thinking through the strategy of what they are trying to achieve. The terms tactic and strategy are often confused and incorrectly used interchangeably.
In short, effective supply chain management strategies are the destination you’re trying to reach. Tactics are the activities that you need to do to get there. No two companies will have the same supply chain strategies and tactics. We recommend performing a strategic assessment of your ecommerce supply chain and then identify customized tactics to fit your business objectives.
Defining your strategies starts with an assessment of your business operations within your supply chain and fulfillment centers. This warehouse assessment should include an in-depth audit of your entire operations, use of labor, fulfillment processes, distribution sites including the design, and management systems being utilized.
These operational assessments will help you determine if your operations are as efficient as possible. The goal is to identify ways in which you can improve customer service while driving down costs.
First, assess your processes and costs, then answer these questions:
These questions address universal challenges faced by all ecommerce supply chains.
Each company’s Supply Chain and challenges are different, so strategies are not a one-size-fits-all game. Here are 10 major strategies we are consulting on with multichannel ecommerce, wholesalers, and distributors.
One of the major challenges ecommerce businesses face is getting inbound products on-time and processed efficiently. Your objective should be to receive the product so that it can flow through to put away or be cross docked to fill your customers orders.
Your customers expect you to compete with major retailers and the Amazon’s of the world. This means faster order fulfillment and reduced freight time in transit. Be responsive by measuring and assessing the current service level, as well as negotiating stronger freight rates and options. Continually perform a freight audit to ensure there are not missed opportunities. This is especially true for companies that utilize the USPS for final mile delivery.
Investigate if your e-commerce supply chain would benefit from multi distribution center operations. Make sure to take into account costs to set up the operation in terms of additional facilities, staffing, and management.
Moving to a new center is not always the best option for many companies. Performing a warehouse assessment will help to identify areas that could be improved. Look for areas where the racking or shelving is underutilized, and space is lost or wasted. Changes to storage methods can improve the utilization and capacity.
Also consider how the existing layout affects the overall flow and use of space in the distribution center. Assess the overall layout, product flow, labor efficiency, storage and material handling equipment used. Do not forget to consider worker safety or warehousing system utilized.
Without an efficient layout and design in your distribution center you can’t address the bottlenecks and inefficiencies that drive up labor costs. By addressing some basic principles, your company can delay a move to a new facility. Follow these layout and design principles to increase efficiency and productivity.
It should be no surprise that paperwork in a warehouse is inefficient and fraught with problems. Ecommerce supply chains feed of real time data and information. Select and implement a more robust order management system, inventory management system, or warehouse management system.
The use of barcode technologies will eliminate paper throughout the operations and allow for tighter inventory tracking of raw materials and finished goods. These systems will allow you to easily track and understand the “what,” “who,” and “when” for all activities.
Barcode and scanning technologies can be implemented in most all areas such as receiving, put away, replenishment, picking, packing, shipping/manifesting, returns and reverse logistics, cycle counts, value-add functions, and labor tracking.
Most fulfillment centers and warehouses rely on manual labor, which is not cheap. The cost of automation and robotics for distribution centers has come down. Many ecommerce supply chains can afford to implement automated solutions for various parts of the fulfillment operations.
If you can’t achieve a favorable return on investment in applying automation, managing labor more effectively should be a major strategic goal for your fulfillment center. Consider how changes in labor can lower your cost per unit, line, order and carton shipped.
Order picking is one of the most important functions in your ecommerce operations. Order accuracy and timely order fulfillment are keys to a successful customer experience. Picking and packing are generally the two areas where companies can also gain the most significant labor cost savings.
For many ecommerce distribution centers, automated solutions to support picking often include:
These automated solutions often provide a favorable return on investment. To take advantage of these solutions, they must be designed to your facility, products and processes.
Ecommerce 3PLs have become more flexible and sophisticated of the years. Often implementing more robust systems and automation than what individual companies could invest. This is a significant benefit to companies that are up against making similar decisions.
Many ecommerce companies are facing questions, such as: