The phenomenal growth of e-commerce has left fulfillment and parcel delivery operators struggling to adapt to emerging business challenges. This POV explores the challenges faced by them and suggests the solutions and the way forward for succeeding in the e-commerce era.
The e-commerce industry is rapidly expanding, driven by the emergence of new markets and transformational shifts in conventional retail models of developed markets. According to eMarketer’s latest forecasts, global e-commerce sales are expected to surpass two trillion dollars by 2016. While e-commerce companies have been successful in evolving their selling models, the fulfillment and delivery process needs to mature significantly. The fulfillment and parcel delivery operators are still struggling to adapt to emerging business challenges.
Challenges in the New Global Marketplace: Complexities in Delivery and Fulfillment
Ensuring on-time delivery of goods purchased online is fast emerging as a top priority for the e-commerce sector. However, fulfillment and delivery operators are faced with a slew of complexities as the e-commerce business model gains traction. Very few players currently offer the breadth of services required across the network, at competitive prices, as demanded by e-commerce players.
Crafting a Winning Strategy to Meet E-commerce Related Demands
Agility, operational excellence and innovative design of an extensive and high-density network of assets are going to be crucial for fulfillment and parcel delivery operators to meet the rising e-commerce delivery requirements. At a strategic level, it would require fulfillment & delivery operators to have an optimal asset base and a well-knit network of transport and warehousing capabilities.
We believe that to optimize delivery and fulfillment capabilities, operators need to consider two dimensions: intra-enterprise and inter-enterprise.
Strategies for the intra-enterprise level
Fulfillment and parcel delivery operators need to have comprehensive systems to integrate marketing, warehouse, inventory, analytics, financials, and other ERP functions. Speed and accuracy in stocking, warehousing, shipping, and return activities within the enterprise, are key factors in e-commerce fulfillment. Comprehensive process automation (in storage, picking, sorting, packaging, delivery or return, and reweighing and cubing of consignment) is one of the ways to boost efficiency.
For an omni-channel setup, adjustments need to be made in the layout and space of the facility to ensure efficient and error-free pick-up. Enablers such as cross-channel batch pick-and-sort and interface with pick-to-light or pick-to-voice solutions, will require a more sophisticated warehouse management system (WMS).
Strategies for the inter-enterprise level
A confluence of digital technologies such as mobility, RFID, analytics, cloud, and social media can be used to facilitate dynamic and real-time integration of operations to meet the visibility and optimization needs of an eCommerce delivery and fulfilment process. Real-time insights into the physical location of goods and asset tracking can be obtained through automatic data collection through mobile and wireless devices, RFID tags and scanners, and GPS. Integration of this information with supply chain systems (like warehouse management system, transport management system, and order management system) would enable greater efficiency through better visibility of orders, effective event handling, re-routing, rescheduling, and precise reporting. Relevant analytics pertaining to service inventory tradeoffs, stock-outs, cost-to-serve, on-time delivery, and number and causes of return can be leveraged to ensure effective fulfillment.