Small E-Commerce Companies Learning to Cope with Supply Chain Complexity
Supply Chain Brain has noted that the consumer products industry has undergone radical change over the past several years, rendering older methods for matching supply to demand ineffective. Consider some of the upheavals facing consumer products manufacturers today.
Shoppers have many ways to access, research, and purchase products. They can visit traditional brick-and-mortar stores, club stores and “big-box” locations. They can buy on the web and use their smartphones and tablets. They still listen to radio, watch ads, and even frequent dedicated shopping networks on TV. Homes, phones, and even cars are now virtual department stores. This makes tracking demand and preferences extremely complex for consumer product companies, and increases their channels for fulfillment.
Innovation is the mantra today for consumer products manufacturers. Product lifecycles have shrunk drastically. Consumers demand an unprecedented degree of choice. SKU proliferation is rampant, as retailers struggle to satisfy consumers’ appetite for customization and additional colors, sizes, flavors, and other features. Consumer products companies must innovate to meet and drive the new buying patterns, but must also manage cost and quality.
We know that consumers are now more demanding and less patient. The vast majority of e-commerce companies generate more than $10M in annual revenue and have customers who insist on more choice, with accurate, rapid, and dependable delivery. Since consumers instantly express both satisfaction and dissatisfaction digitally this can spell the death of a small start-up e-commerce firm if the customer is not thrilled and delighted. A bad social media review can significantly impact a new company’s sales.
It is clear that new e-commerce start-ups or fast-growing e-commerce operations must respect the relationship with customers by ensuring they receive what they ordered and when it was promised. There won’t be a second order if there was a mistake in the initial order.
A fulfillment center needs a great inventory management system which can cut down on out-of-stocks by providing immediate system updates. It must track sales trends to indicate reordering without having to be overstocked. It needs to track inventory changes in near real-time across multiple sales channels, including a bricks and mortar store, Amazon Seller Central account, a standalone ecommerce store (Magento, Shopify, etc.), a Paypal store, wholesale and others channels.
A good tablet-based inventory management system maps out the most efficient order picking processes and ensures orders go out faster. It helps to reduce mispicks by ensuring proper identification of similar-looking items through the use of tablets and scanners.
What’s more, inventory management systems can identify the best employees — ones who are most efficient and productive. Efficiency is crucial to online order fulfillment. Anyone can send a customer an item eventually, but getting the right item out the door right away is what will set you apart in the customer’s’ eyes.
Mispicks in 2016 will cost individual warehouses more than $500,000. But losing customers costs more, so an investment in this part of the warehouse process can have a high ROI.