Don't look now. The holiday season is here. Smooth supply chain management is always of critical concern to any retailer or manufacturer, but the second quarter is when you absolutely cannot afford major barriers to getting your merchandise and point of sale materials where it needs to go. But is your company ready to meet the rush? Specifically: is your retail fulfillment center prepared?
Cyber Monday > Black Friday?
E-commerce sales skyrocketed on Cyber Monday last year, up 18 percent (adjusted to exclude large auction and real estate purchases) from 2012. E-commerce sales were also up on Black Friday— a shopping day traditionally ruled by brick-and-mortar purchases— rising 15 percent over 2012.
As a percentage of total retail sales, e-commerce purchases have been rising steadily, up 0.6% in 2013 from the previous year, and projected to rise by another 0.6% or more in 2014. According to eMarketer.com, "ecommerce will continue to increase in the double digits year over year to bring its share of overall retail to almost 9%," barring major market shocks, in 2018. This comes even as the percentage of brick-and-mortar purchases relative to total retail sales is projected to fall 1.4% in 2014.
And these kinds of numbers show how critical retail fulfillment is for both ecommerce and brick-and-mortar stores—whether you need to get packages to the right place on time or the competitive edge of having marketing materials into storefronts early.
So how can you tell whether or not your fulfillment center is ready for the shopping frenzy?
You should be asking questions now. For one thing, you need to know whether your inventory tracking is synchronized in real-time across channels. Whether a sales team needs an updated planogram or an e-commerce customer needs their order filled, all products and materials need to be deducted from your total inventory right away, so that your manufacturing line or purchasing department knows how much stock needs to be replaced.
If your current retail fulfillment team is still relying on a paper-based system, or if your brick-and-mortar team isn't linked up automatically with your distribution team, you run a serious risk of missing requests or running out of stock when you need it most.
And holiday shoppers are notoriously intolerant of delays.
Predictive demand modeling isn't a luxury. It's a necessity.
You also need to be able to obtain trend metrics on the fly, so that your enterprise can make strong predictions about supply needs.
Tyler White, writing for Adobe Digital Index's marketing blog, noted that supply chain management is a delicately balanced function that depends on accurate predictive modeling of demand.
Shipping delays in 2013, for example, were likely created as m-commerce outpaced retailers' expectations— particularly on Thanksgiving weekend. That initial supply crunch had many retailers scrambling to keep up for the rest of the holiday season.
For some retailers, that translated into a disappointing year, even as sales were strongly up in the aggregate. Why? Because their brands were damaged. Late shipments result in profit-killing after-Christmas returns and the loss of repeat business.
"Any outage that results in a gift not arriving on time could cause consumers to lose the trust built in online shopping over the past 7 years," White asserted. To build momentum, your e-commerce team needs to deliver on time, every time— there’s no product layout or point-of-sale materials in the world that can help when a customer loses faith in a brand.
You need to be able not only to fill orders on time, but fill them accurately.
Unless your fulfillment center is using an integrated Warehouse Management System (WMS) to coordinate pickers' workflows and ensure that the items they pull are the right items, on-time delivery won't make a lick of difference. There's nothing worse, to a shopper, than getting an anticipated package and opening it to find the wrong item— even relatively easy return and refill situations are perceived by consumers to be a gigantic hassle.
You need to make sure that your retail fulfillment team has a process in place to check every order for accuracy after it is picked and before it goes out the door. Employing an integrated WMS, which can map out the most efficient routes for pickers in the warehouse and track multiple channel inventory levels, will help. Your fulfillment team should also have a last-minute accuracy check procedure, so that pick errors can be corrected prior to packing and shipping.
If your fulfillment center can't take the Yuletide heat, find a provider that can.
There are options available for your company's holiday fulfillment needs, and it's not yet too late to find a better solution. Subcontracting increased holiday delivery needs to a third-party fulfillment center with a well-positioned geographic location, state-of-the-art inventory management system, and full pack-and-ship capabilities could take the heat off your distribution team and help you to maximize your profits this shopping season.
Smooth holiday supply chain management doesn't have to be an elusive goal. Start asking the right questions of your fulfillment team today. And if you're not well-positioned for the second quarter rush, opt quickly for a proven third-party fulfillment Plan B.