Planning your Fulfilment and Supply Chain Process

By Lara McPherson | 15 Jun 2010

Order fulfilment and logistics may garner less attention than glamorous big brothers marketing and site design when it comes to eCommerce setup, but they are, nonetheless, integral to any retail business. Industry experts know that a one-size-fits-all approach does not work when it comes to logistics and supply chain management. There are solutions for all […]

Order fulfilment and logistics may garner less attention than glamorous big brothers marketing and site design when it comes to eCommerce setup, but they are, nonetheless, integral to any retail business. Industry experts know that a one-size-fits-all approach does not work when it comes to logistics and supply chain management. There are solutions for all types of eCommerce businesses, the trouble is finding the right one to suit you. By addressing key questions, closely examining your business model and thinking outside the box you can tailor a logistics model to your own business needs.

Forming a plan

For many eRetailers, the process of establishing a logistics model can be overwhelming, but it is impossible to develop a comprehensive plan for an eCommerce business without considering the role of supply chain within the total business strategy. Carl Hartmann, Managing Director of Temando Systems, says “The amount of online retailers that I have come across that have just finished building a $30,000 website that have given no thought to fulfilment is quite significant.” By taking into account how your warehousing and fulfilment strategies will impact the rest of the business at the beginning, things should be well positioned for efficient time, cost and growth management. “A good logistical model should not only consider the physical movements of goods, but also the strategic elements such as the pricing, scalability and technology.” says Carl. Look at the big picture.

Do you need more than one carrier?

Your supply chain strategy can ultimately impact on your offer so getting the balance right is critical. Instead of sacrificing margin points by offering free shipping, there are opportunities for retailers to personalise their delivery services. Personalising the fulfilment process has benefits at both ends. Allowing customers to specify what they want in delivery of their goods, but also enabling businesses to gather valuable information about delivery preferences of their customers. Carl insists, “An early stage retailer is much better off implementing a dynamic pricing strategy with a range of fulfilment options at checkout, and sell on service rather than price, as they often achieve the same conversion levels as with a free shipping model, if not more!” This will often necessitate multiple carriers, which also has its own benefits. Depending on the product range of your business, it is likely that one carrier cannot meet all your needs. This means your selected carriers can transport items of the size, weight, specifications, etc, that they are best suited to which often results in a much more cost effective arrangement. Using multiple carriers also means your customers can receive their products in the way that suits them.

FutureProofing – Integration, Automation and Transparency

When developing your logistics process it is important to consider the future direction of the business and how your supply chain needs may be affected. Managing growth of scale is key for new and existing eCommerce businesses. Integrated use of automated technologies can go a long way in assisting with growth. According to Carl, “there are some great CMS modules out there that will give you scalability to connect to a range of carriers and systems as your needs change but what systems you implement really depends on the level of complexity of the logistical model you have coupled with the size of your business, but in order to get all the systems working harmoniously, it’s good to consider some cloud based connectivity.” By using integrated technology systems and automating every step of the fulfilment process, there is also the potential to make every stage of the process visible to different areas of the company. A well considered strategy can and should enhance the consumer experience. Limited visibility can be given to customers, keeping them informed and involved in the delivery of their goods.

There are opportunities to integrate a comprehensive tracking method when updating from a basic to a more sophisticated model. Online retailers, particularly in Australia, are at widely varying stages of advancement when it comes to customer enabled tracking and carrier accountability. Investing in this additional service when developing a new supply chain process comes at a significant cost, but it also has many benefits in terms of customer service, retention and indeed revenue. Hence, some of the biggest players in the global eCommerce market are streets ahead with their tracking systems. Apple provides a great example of best practice when it comes to this, with their highly advanced tracking system. This, again, enhances the customer experience and replicates an already impressive instore customer service model, and gives yet another reason for customer loyalty and repeat purchases. In addition to the benefits to the customer, a transparent system makes your delivery process, and your carriers, accountable.

If juggling multiple carriers seems too complicated for your business it may be worthwhile considering using an aggregator. As Carl says, “it gives online retailers complete control on what carriers, warehouse providers and systems they use, and changing one or any element of their logistical mix becomes as simple as changing some settings and clicking some buttons.” Not a bad option if you are like most online retailers and have other things like growing the business and new initiatives to worry about rather than spending time consumed by whether or not you’re getting the best bang for your buck with your long distance carrier.

On the Horizon…

So what technologies should you be implementing now to be ahead of the curve? According to Carl, customer service will have renewed focus in the coming months. “I think there has been too much focus on cost and not enough on service in e-fulfilment. I think the biggest trend at the moment is having dynamic fulfilment options at checkouts, facilitated by cloud based logistics. Consumer psychology dictates that every customer will have different expectations and value drivers, so given this, an online retailer is much better displaying a limited range of relevant options – imagine instead of just seeing free shipping, having the ability to opt in for a two-man white glove service, where not only will the carry it inside for you, but they’ll even unpack it and take away the rubbish. Or with smaller items, having the ability to pay more and have a guaranteed delivery before 9:00 am. The other good thing about this, is not only do you increase sales conversions and customer satisfaction, but you also recover close to 100% of your delivery costs – which can greatly improve business profitability.” Keeping the money you earn, instead of buying sales? That sounds like something to keep an eye out for.

1 Comment

One thought on “Planning your Fulfilment and Supply Chain Process”

  1. Power Retail says:

    Planning your Fulfilment and Supply Chain Process #powerretail

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