Any 3PL and fulfillment services operator worth its salt is always transitioning and evolving to meet the changing needs of commerce and market conditions. From supply chain unpredictability to labor crunches, this is what 3PLs will have to navigate in 2022.
The unabated growth of e-commerce is driving innovation across the supply chain, which is obviously a good thing. Nevertheless, along with that innovation comes failure, as many of the new start-up supply chain solutions will flounder or fail.
However, you can’t have innovation without failure, so we are experiencing a natural course of events, with both successes and business failures. Some of the differences today versus legacy trends in supply chain innovation are the roles of the following 3 dominating and influencing forces:
E-commerce merchants in search of fulfillment vendors, do not necessarily look at a fulfillment solution in the context of both the pick & pack process and delivery solution. Sometimes, the solution is integrated and covers both primary functions of the fulfillment process. Other times, the merchant can be left to determine on their own, how they choose to distribute their product and which carriers and services to use once the products are picked and packed.
The demise of the retail store model is being overplayed and over exaggerated. The argument can be made that 15 years of store and retail chain closings is not just about consumers migrating in mass over to the e-commerce sales channel. It can also be argued that many legacy model retail stores are failing because they deserved to fail by not responding to change in the retail marketplace and adjusting to different consumer buying habits. It was inevitable that retail had to shrink, but retail is not going away, and nor is the fulfillment model that supports the retail store.
If you are a parcel shipping or e-commerce fulfillment service provider, you are already executing your plans for managing the busy holiday-shipping-season. This year, the parcel carriers and 3PL fulfillment service providers must also plan for product supply disruptions due to the current supply chain crisis.
Here’s a quote frequently tied to Jeff Bezos with respect to focusing on the customer relationship:
“If there’s one reason we have done better than that of our peers in the Internet space over the last six years, it is because we have focused like a laser on the customer experience, and that really does matter, I think, in any business. It certainly matters online, where word-of-mouth is so very, very powerful.”
The Amazon founder’s commitment to the customer experience grew partially from a disastrous 2013 holiday shipping season Read More
The growth of e-commerce has driven major change in the fulfillment center (FC) landscape with faster item-processing speeds and improved speed-to-market (delivery). Additionally, enhanced electronic communication and notifications originating at the FC level are benefiting the merchant, carrier, and customer. However, it is still a challenge to find the FC that best serves a merchant’s unique requirements as one size does not fit all.
The decision to outsource order fulfillment is a critical one for many growing e-commerce operations. Businesses have many order fulfillment service provider (SP) options. Each SP has a unique service offering and ways of conducting business. The steps below will help guide your decision-making process so your ecommerce company can outsource order fulfillment profitably and in line with customer needs and expectations.
Intelligent Fulfillment (IF) is the use of various integrated technologies and best-in-class processes to perform product fulfillment in the most cost-efficient manner possible in line with clients’ needs and expectations. It is one of the earmarks of a modern, tech-empowered 3PL. Ideally, an order fulfillment service provider implements intelligent fulfillment practices to differentiate their service offering from their competitors and better position their organization to retain and gain new business by offering a superior client experience.
Implementing and integrating advanced technology can cost a lot of money and smaller fulfillment service providers may believe that intelligent fulfillment solutions are not within their budgetary reach. However, there are lower-cost component parts of an IF solution that can serve as a starting point for small organizations to slowly move forward towards embracing intelligent fulfillment with the goal of protecting their competitive standing.
10 Intelligent Fulfillment Goals and Opportunities for 3PL Companies
- Integrate existing technology platforms to drive a better synchronized fulfillment experience for the organization and client.
- Implement new technology that extends real-time inventory views to the client and results in an overall, improved inventory management experience for both the fulfillment service provider and the client.
- Embrace technology upgrades that support omni-channel marketing/fulfillment solutions to best support clients operating across various marketplace platforms.
- Focus on improving order management technology first, and ensure that new technology supports various customer delivery, store pickup or carrier access point delivery options.
- Work towards identifying all fulfillment related costs and embrace technology platforms that support management of those identified costs.
- Constantly work with your management team on long-term planning and identifying process optimization/best practices. Implement those practices across the workforce and seek out technology solutions that support and measure the results of newly implemented best practices.
- Seek out the best professional talent possible, and understand that retaining legacy employees in key positions that lack the necessary skillset are detrimental to the long-term success of the organization.
- Understand that the up-front cost for implementing new technology should result in lower unit processing cost down the line. It is all about leveraging those up-front costs against future operating cost reductions.
- Engage in demand forecasting and link projected increases/changes in business to proactive capacity improvements, ahead of actual volume increases. AI based technology can support this function but can also be costly.
- Do not resist up-front investments in technology designed to protect the long-term competitive positioning of the organization or to survive in an increasingly competitive environment.
The continued growth of e-commerce presents a tremendous opportunity for 3rd party order fulfillment service providers to prosper. However, the competitive environment is intense and failure to embrace Intelligent Fulfillment goals and objectives could lead to organizational failure, even in the midst of amazing e-commerce growth. Finally, if you can’t measure the results of change, don’t implement change, just for the sake of change.
It has been a bit scary to watch the decline in business activity in our cities this past year, due to pandemic driven restrictions. The good news is, restrictions on business operations are being lifted, COVID 19 infection rates are declining and maybe, “normal” is just around the corner.
Unfortunately, part of that “normal” will be the return of traffic congestion and the challenge to find curb-space to legally park cars and service vehicles, as we rush to visit our favorite restaurants and shops in urban centers.