Top five trends influencing e-commerce fulfillment
As e-commerce evolves, customer expectations to get what they want — when, where, and how they want it — will only continue to intensify and further challenge organisations in 2020 and beyond.
The times when search and price were the only criteria for purchasing decisions are gone, and retailers today need airtight e-commerce strategies that promote and sustain domestic and international growth to drive positive results.
Part of the challenge is having effective processes in place to ensure products are seamlessly, quickly and accurately delivered after consumers click to purchase, and the value of order fulfilment optimisation has become one of the most important factors in achieving this. For those retailers that aren’t leveraging fulfilment as a competitive weapon and enhancing their workflows with automation technologies, the risk of losing out to the competition is a growing reality.
As companies continue to identify fulfilment operations as a differentiator to both the customer experience and the bottom line, here are the top five trends that retailers should keep front of mind to remain competitive:
1. The rise of marketplaces: The growth in e-commerce marketplace platforms has given way to new opportunities for both domestic as well as international sales, and more companies are looking to join in — with the overall market predicted to reach $40.1bn in revenue by 2022. The UK online marketplace alone is forecast to rise by €15.2bn over the next five years, with Amazon and eBay set to account for over 90% of these transactions. Collaboration between bricks and mortar retail outlets and online players for delivery collections and returns drop-offs directly at stores is the best approach.
2. Data, data, and more data: E-commerce ecosystems are complex, and with heightened consumer expectations around delivery options and experience, the interchange of data and the required connectivity is increasing exponentially between the different players involved, such as marketplaces, payments, logistics providers, and carriers. This has and will only continue to require more real-time data than ever before, including the analytics that can help companies make meaningful sense of the data and inform decision-making to drive ongoing success.
3. The opportunity for new technology like AR in warehouses: This isn’t just relevant for a marketplace front-end with image searches and virtual dressing and fitting rooms. In fact, augmented reality (AR) is growing in the warehouse and helping to support intra-logistics workflows and make work processes more productive and decision-making more intelligent. Examples of this include “cycle counting,” or finding bin-locations to count quicker and identify those that are in use, “put away” that helps determine empty bin-locations faster, and “picking” for visual guidance that reveals opportunities to reduce search times and improve accuracy for picking the right item in the warehouse.
4. Automation and robotics: While some may fear that automation and robotics will replace humans altogether, this is not the case — at least for the near future. Rather, the application of these types of technologies in the supply chain will increasingly help companies enhance synergies and improve productivity. Even at Amazon’s fulfilment centres where robots have been introduced, the technology is meant to assist associates, drive faster shipping times, and maximise available inventory – not completely eliminate the need for human effort. In fact, the company says that fully automated, “lights-out warehouses” are a decade away. While the upfront cost of some types of these technologies might deter early adoption, the potential cost savings can benefit the bottom line. This can also be treated as an incremental journey, starting with automating single processes like packing machines and conveyor belts, and gradually moving up to more automated picking process with robotics systems.
5. Rising costs: Between increased minimum wages for employees and rising shipping, carrier, property, and marketplace costs, the concern around margins will not disappear. Many will be hard-pressed to find ways to manage these expenses effectively and lower the risk of bleeding money. By focusing on two major fulfilment components — streamlining and improving logistics processes — e-commerce companies will be better positioned to mitigate extra spend. They may also find new opportunities to sell additional value-added services including more shipping options, such as time-specified or next-day delivery windows, additional set up service for bulky products, free shipping if a customer is willing to wait a few days longer, or an additional fee for two-day delivery. This cultivates greater competitive differentiation plus generates greater revenue down the line.
According to eMarketer, global e-commerce sales are projected to reach $6.5trn by 2023 and the potential for companies to capitalise on this burgeoning market is high. That said, it’s imperative that companies consider the trends that will continue to influence the industry and the technologies that will help address them. With the right technology and approach, retailers can stay ahead of the competition, win consumer loyalty, and drive ongoing business success in 2020 and in years to come.
By Johannes Panzer, Head of Industry Solutions, E-commerce, Descartes
NTT DATA Services, Remodelling Supply Chains for Resilience
Joey Dean, the man with the coolest name ever and Managing Director in the healthcare consulting practice for NTT DATA and is focused on delivering workplace transformation and enabling the future workforce for healthcare providers. Dean also leads client innovation programs to enhance service delivery and business outcomes for clients.
The pandemic has shifted priorities and created opportunities to do things differently, and companies are now looking to build more resilient supply chains, none needed more urgently than those within the healthcare system. Dean shares with us how he feels they can get there.
A Multi-Vendor Sourcing Approach
“Healthcare systems cannot afford delays in the supply chain when there are lives at stake. Healthcare procurement teams are looking at multi-vendor sourcing strategies, stockpiling more inventory, and ways to use data and AI to have a predictive view into the future and drive greater efficiency.
“The priority should be to shore up procurement channels and re-evaluate inventory management norms, i.e. stockpiling for assurance. Health systems should take the opportunity to renegotiate with their current vendors and broaden the supplier channel. Through those efforts, work with suppliers that have greater geographic diversity and transparency around manufacturing data, process, and continuity plans,” says Dean.
But here ensues the never-ending battle of domestic vs global supply chains. As I see it, domestic sourcing limits the high-risk exposure related to offshore sourcing— Canada’s issue with importing the vaccine is a good example of that. So, of course, I had to ask, for lifesaving products, is building domestic capabilities an option that is being considered?
“Domestic supply chains are sparse or have a high dependence on overseas centres for parts and raw materials. There are measures being discussed from a legislative perspective to drive more domestic sourcing, and there will need to be a concerted effort by Western countries through a mix of investments and financial incentives,” Dean explains.
Wielding Big Tech for Better Outcomes
So, that’s a long way off. In the meantime, leveraging technology is another way to mitigate the risks that lie within global supply chains while decreasing costs and improving quality. Dean expands on the potential of blockchain and AI in the industry.
“Blockchain is particularly interesting in creating more transparency and visibility across all supply chain activities. Organisations can create a decentralised record of all transactions to track assets from production to delivery or use by end-user. This increased supply chain transparency provides more visibility to both buyers and suppliers to resolve disputes and build more trusting relationships. Another benefit is that the validation of data is more efficient to prioritise time on the delivery of goods and services to reduce cost and improve quality.
“Artificial Intelligence and Machine Learning (AI/ML) is another area where there’s incredible value in processing massive amounts of data to aggregate and normalise the data to produce proactive recommendations on actions to improve the speed and cost-efficiency of the supply chain.”
Evolving Procurement Models
From asking more of suppliers to beefing up stocks, Dean believes procurement models should be remodelled to favour resilience, mitigate risk and ensure the needs of the customer are kept in view.
“The bottom line is that healthcare systems are expecting more from their suppliers. While transactional approaches focused solely on price and transactions have been the norm, collaborative relationships, where the buyer and supplier establish mutual objectives and outcomes, drives a trusting and transparent relationship. Healthcare systems are also looking to multi-vendor strategies to mitigate risk, so it is imperative for suppliers to stand out and embrace evolving procurement models.
“Healthcare systems are looking at partners that can establish domestic centres for supplies to mitigate the risks of having ‘all of their eggs’ in overseas locations. Suppliers should look to perform a strategic evaluation review that includes a distribution network analysis and distribution footprint review to understand cost, service, flexibility, and risks. Included in that strategy should be a “voice of the customer” assessment to understand current pain points and needs of customers.”
“Healthcare supply chain leaders are re-evaluating the Just In Time (JIT) model with supplies delivered on a regular basis. The approach does not require an investment in infrastructure but leaves organisations open to risk of disruption. Having domestic centres and warehousing from suppliers gives healthcare systems the ability to have inventory on hand without having to invest in their own infrastructure. Also, in the spirit of transparency, having predictive views into inventory levels can help enable better decision making from both sides.”
But, again, I had to ask, what about the risks and associated costs that come with higher inventory levels, such as expired product if there isn’t fast enough turnover, tying up cash flow, warehousing and inventory management costs?
“In the current supply chain environment, it is advisable for buyers to carry an in-house inventory on a just-in-time basis, while suppliers take a just-in-case approach, preserving capacity for surges, retaining safety stock, and building rapid replenishment channels for restock. But the risk of expired product is very real. This could be curbed with better data intelligence and improved technology that could forecast surges and predictively automate future supply needs. In this way, ordering would be more data-driven and rationalised to align with anticipated surges. Further adoption of data and intelligence and will be crucial for modernised buying in the new normal.
These are tough tasks, so I asked Dean to speak to some of the challenges. Luckily, he’s a patient guy with a lot to say.
On managing stakeholders and ensuring alignment on priorities and objectives, Dean says, “In order for managing stakeholders to stay aligned on priorities, they’ll need more transparency and collaborative win-win business relationships in which both healthcare systems and medical device manufacturers are equally committed to each other’s success. On the healthcare side, they need to understand where parts and products are manufactured to perform more predictive data and analytics for forecasting and planning efforts. And the manufacturers should offer more data transparency which will result in better planning and forecasting to navigate the ebbs and flows and enable better decision-making by healthcare systems.
Due to the sensitive nature of the information being requested, the effort to increase visibility is typically met with a lot of reluctance and push back. Dean essentially puts the onus back on suppliers to get with the times. “Traditionally, the relationships between buyers and suppliers are transactional, based only on the transaction between the two parties: what is the supplier providing, at what cost, and for what length of time. The relationship begins and ends there. The tide is shifting, and buyers expect more from their suppliers, especially given what the pandemic exposed around the fragility of the supply chain. The suppliers that get ahead of this will not only reap the benefits of improved relationships, but they will be able to take action on insights derived from greater visibility to manage risks more effectively.”
He offers a final tip. “A first step in enabling a supply chain data exchange is to make sure partners and buyers are aware of the conditions throughout the supply chain based on real-time data to enable predictive views into delays and disruptions. With well understand data sets, both parties can respond more effectively and work together when disruptions occur.”
As for where supply chain is heading, Dean says, “Moving forward, we’ll continue to see a shift toward Robotic Process Automation (RPA), Artificial Intelligence (AI), and advanced analytics to optimise the supply chain. The pandemic, as it has done in many other industries, will accelerate the move to digital, with the benefits of improving efficiency, visibility, and error rate. AI can consume enormous amounts of data to drive real-time pattern detection and mitigate risk from global disruptive events.”