Creating a customer-centric supply chain for e-commerce
January 11, 2017
E-commerce is changing the landscape of the retail supply chain. Current consumer demands are driving retailers to develop omnichannel capabilities — for both fast order fulfillment and fiscally rational returns. To adapt to the new paradigm, retailers and logistics providers alike are trying to create a more customer-centric supply chain, catalyzing change across their logistics network.
Paradoxical shifts in the retail supply chain
Some of the changes manifest in the physical size and location of distribution centers (DCs). Greater order complexity, proliferating numbers of stock-keeping units (SKUs) and increases in order throughput are creating a need for greater DC capacity across the supply chain. In addition, many retailers are pulling inventory carrying costs and e-commerce fulfillment away from storefronts and upstream to their network of DCs, adding to the need for larger aggregate capacity.
Concurrently, the need to deliver a great customer experience — through speedy delivery times and free returns — is causing retailers to build out networks of smaller and more regionalized DCs. Retail supply chains, in turn, have started to comprise greater numbers of smaller DCs, all within close proximity to major population centers for quicker deliveries and lower transportation costs.
These trends create an inventory balancing paradox. While retailers are working to pull inventory upstream to DCs and reduce total inventory levels, they need to make sure they can still fulfill demand at the store level. That strategy becomes even more complicated during the holiday season, when sales and marketing efforts reach their annual peak.
Gather insight by refining inventory visibility
By no means is there a cure-all for balancing inventory, but refining visibility into inventory can help. That starts with integrating sales-channel analytics back to your warehouse management system (WMS) to help inform your demand planning process. With better predictive analytics about demand, you can optimize inventory replenishment— through cross-docking and consolidating shipments — to enable lower inventory levels at brick-and-mortar locations while still satisfying customer demand.
Creating a customer-centric supply chain
Retailers are still trying to find ways to profitably create a more customer-centric supply chain — one that enables fast delivery times and free returns, without breaking the bank. One strategy is to reduce the amount of capital tied up in inventory by lowering aggregate levels throughout the logistics network. While challenging, this approach is feasible with the right people, technology and processes in place.
Turning to a third-party logistics provider (3PL), like FedEx Supply Chain, can provide you with the flexibility, efficiency and cost-effectiveness required to excel in today’s ever-evolving retail environment. By focusing less on logistics, you can focus more on future growth opportunities.