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Retailers: 2015 Will be a Pivotal Year in E-Commerce Fulfillment

Posted on 9.14.2014

Has your company realized the maximum value from its supply chain?

This is Chainalytics core purpose, which is one reason 18 of Gartner's top 25 Supply Chain companies count on it to accelerate the transformation of their supply chains. Its focus, according to Irv Grossman, Chainalytics' vice president of supply chain operations, includes supply chain design, integrated supply demand planning, transportation, packaging optimization and more. Website Magazine caught up with Grossman to discuss ways to reduce logistic costs, plan for the holidays and what the future has in store for the supply chain industry.

Are there any steps that manufacturers can take now to optimize distribution of their products before the holidays?

Grossman, Chainalytics: Take the air out of the package--Now is the perfect time for shippers to begin preparing for the biggest rate change parcel carriers have implemented since 1995. In an effort to tide inefficient packaging practices that are costing carriers money, both UPS and FedEx are instituting dimensional weight shipping early next year. This means that small packages below certain weight parameters will be assessed shipping rates based on both weight and size instead of weight alone. The goal of this change is to force packaging efficiency and allow the carriers to move more products and less boxed air. 

The holiday season may seem like a scary time to try new shipping strategies, but it’s an ideal opportunity to get kinks worked out quickly and streamline the process so fewer mistakes are made after dimensional weight shipping rates have been implemented. Shippers should be thinking about the best ways to right size packaging, tactics for negotiating shipping rates, and which carriers to consider partnering with now to get plans into place and avoid costly mistakes later.  

What are some common questions that e-commerce retailers should be asking themselves in terms of pinpointing where there may be unoptimized logistical procedures?

Grossman: 2015 is going to prove to be a pivotal year in e-commerce fulfillment where failures go beyond the current order, but may cost company reputation affecting the entire life of a customer relationship. As sophisticated retailers hone their strategies further and the majority of spending power shifts to a generation that grew up online with extremely high expectations on their purchases, any online merchant that phones in a shipping strategy is going to fail. Full omnichannel fulfillment is going to reach critical mass and a massive same day delivery experiment is about to be launched.

While some cautious retailers may feel inclined to watch how this all shakes out, the consequences of not succeeding with the first try are far less severe than remaining stagnant. This is all happening extremely quickly and optimized placement of fulfillment centers is vital. With the correct systems in place, any retailer can successfully participate in omnichannel fulfillment from any location where a physical store is located. Some large retailers are also abandoning the idea of warehousing and setting up shipping locations in some, or all of their stores. 

Retailers should ask themselves some of these questions:

Are my fulfillment centers located in positions to reach as many customers as quickly as possible (or consistent with their preferences)?

Do all of my shipping relationships consider the dynamic nature of the market and do I have trusted core carriers or back-up plans for when conditions shift?

Does the package reflect a “out of the box” experience while effectively balancing cost and product protection needs?

Have I properly stratified segments for each channel, product, and customer and reached an ideal service level goal for each? 

Do I have a well thought out reverse logistics strategy that guides fulfillment policies?

Do all of my sales channels have access to the same inventory with data that is updated in real-time?

What are some of the top ways that Chainalytics can help companies reduce logistic costs?

Grossman: 

Specialized Knowledge “Bright Minds”

Our team of specialists provide a powerful combination of supply chain expertise derived from hands-on experience, industry research, and top consulting methods. This enable us to achieve superior results, with fewer people, in less time. 

Proprietary Content & Methodologies “Better Methods”

Our proven methods have been developed and institutionalized over the hundreds of engagements our experts have delivered. In addition to our rigorous frameworks, we have developed a comprehensive set of supply chain cost and service drivers that are augmented with our compilation of fact-based industry-specific best practices.

Powerful Technologies “Best Outcome”

We employ the most advanced analytical tools and technologies to assess impacts and better predict outcomes across a wide range of strategic, tactical, and operational supply chain scenarios.

Anything else you’d like to add about Chainalytics or supply chain analytics?

Grossman: The complexity of supply chains is going to increase exponentially in the near future, and the level of sophistication required to understand the data that drives market behavior is going to increase along with it. We believe that model-based analytics make the most sense for companies to plan for the future because they are scenario based and allow managers to ask “what if” questions and forecast results for possible market conditions. This gives them the knowledge they need to create plans that make the most sense for them and make provisional plans for when the market behaves in unanticipated ways. 

Nobody can predict the future entirely. There will always be surprise winter storms, labor strikes, and fuel price uncertainty. Robust supply chain analytics don’t change that, but they do enable businesses to understand how to re-balance their resources and efforts to quickly account for disruptions and minimize their impact, while also taking advantage of beneficial market forces when they occur. 


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