In today’s fulfillment ecosystem, e-commerce is quickly changing the game. For those looking to take advantage of the post-COVID e-commerce boom, especially 3PLs, it is imperative to prepare while continuing to scale, remain nimble, and meet customer demands. And with peak shipping season right around the corner, now is the time to get started.
Continuous operational improvement is crucial to a warehouse’s success regardless of how long you have been in business. In some cases, older businesses may have outdated processes or technology that can hinder operations, while newer businesses may not have the expertise as to where and how to optimize. Wherever your business sits on the spectrum, the goal with e-commerce fulfillment is to streamline operations to measure key performance indicators (KPIs) for future improvement.
As a best practice, an audit of services and operations will help identify where processes may be lagging and which workflows are providing optimal performance.
Inbound and Outbound Workflows: Closely examine receiving, picking, and packing processes to understand the mechanics behind each workflow and output. Learn where you may have redundancies or where you can use technology to speed up or optimize order fulfillment processes.
Inventory Management: Use a warehouse management system (WMS) to confirm inventory counts and cycle times are accurate. Implement new processes or paperless methods like barcode scanning to remove manual entry and errors. Keep track of findings to learn where you can improve reduce future issues.
Warehouse Layouts: Use FAST principles to increase e-commerce efficiency. When looking to achieve optimal performance, 3PLs need to focus on warehouse flow, accessibility, space, and throughput to improve order efficiency.
Invest in Technology
Rapid e-commerce growth has spurred an excess of new technologies for the logistics and supply chain industry. And, last year’s increased online buying has sped up this evolving landscape. Technology innovations, automation, and integrations are the cost of e-commerce fulfillment to increase customer satisfaction and remain, or become, profitable. As reported in 3PL Central’s Third-Party Logistics Warehouse Benchmark Report, 3PLs in the highest growth brackets were 200% more likely to invest in system integrations with shopping carts and marketplaces and 50% more likely to invest in e-commerce.
Technology comes in all shapes and sizes these days, but when looking to optimize for ecommerce it is a best practice to focus on three main areas.
Innovation: For long-term fulfillment players, the biggest change is mov from on-premise solutions to the cloud. While SaaS-based technology has been a part of the logistics tech stack for a number of years, there are still businesses who are slow to adopt cloud-based technology. In fact, the on-premise WMS market growth is projected at only 13.1% CAGR from 2020 to 2025, whereas cloud-based WMS is expected to grow at 28.7% during the same period.
Automation: Process and workflow automation — from managing labor, inventory, receiving, picking and packing, to shipping — will offer the best opportunity for growth. Automation is also the best way to improve efficiency by removing manual entry and errors that can lead to mis-picks and chargebacks. Automation will also help tackle the management of all billable activities — helping warehouses get paid more and faster.
Integrations: Wherever your business sits in the supply chain, integrations are crucial to connecting multiple players and metrics. In most cases, the ability to connect with a 3PL’s WMS will allow for greater visibility, which will improve the customer experience. Whether you invest in custom EDI or API integrations, shopping carts, or Wi-Fi enabled devices, integrations are a requirement to meet increased e-commerce shipping demands.
Enhance the Customer Experience
The customer experience is at the heart of e-commerce fulfillment. Today’s e-commerce consumers expect nearly unlimited product choices, real-time visibility into inventory, multiple shipping methods with product tracking and delivery, perfectly branded orders, and hassle-free returns. With Gen Z buyers making up 40% of global consumers, a seamless shopping experience is must to remain competitive.
One of the best ways to enhance the customer experience is to build better relationships with everyone in the supply chain. Direct to consumer (DTC) manufacturers are now leaning on 3PL warehouses to help with innovation and growth, as 3PLs already have a history of customer satisfaction and key relationships with shippers. Whether you are a newcomer to e-commerce or you already have years of experience, when optimizing your operations for e-commerce, you must have a clear path to improve the customer experience using best practices.
Branding: Nothing is more important for an e-commerce business than their brand. The ability to meet expectations utilizing technology will ensure complete satisfaction. Today’s warehouses must be prepared to deliver a fully branded experience for each order — from the box, packaging materials, to the shipping and return labels. Not to mention meeting and exceeding consumer expectations on speed and cost of delivery. As far as the consumer is concerned, the 3PL is the same as the retailer.
Notifications: Sending automated notifications to supply chain customers for inventory updates, stock status reports, and OSD (overage, shortage, damage) reports will ensure satisfied customers and repeat business. Warehouses can also create billing notifications to save staff valuable time, which can be spent improving the customer experience in other areas of the business.
Visibility: Utilizing warehouse technology that allows customers to self-serve with real-time data is key for e-commerce. Retailers and sellers need to have 24/7 access to inventory levels to ensure they keep accurate levels available and maintain complete visibility throughout the supply chain. This is especially important during peak shipping seasons.
With the continued growth of e-commerce fulfillment, supply chain players must be prepared to work together to meet growing expectations. Today’s logistics professionals must be well versed in how to build and maintain key operational workflows, invest in the right technology, and create long-lasting relationships to improve the customer experience. Don’t wait until peak shipping season is here to optimize your operations for e-commerce — prepare now so your warehouse is ready to tackle one of the greatest game changers the logistics industry has seen in the past decade.
Chelsea Mori is Director of Marketing, 3PL Central. Visit www.3plcentral.com for more information.
This article originally appeared in the July/August 2021 issue of PARCEL.