We have heard all about it – how e-commerce is changing the face of retail. As online shopping takes off, shops are emptying out and malls are experiencing lighter footfalls.
In this altered retail landscape, the distribution centres (DCs) are providing much of the customer experience. Get it right and customer satisfaction gains a few notches but the very opposite happens when e-tailer get it wrong. As customer experience can make or break an e-tailer, simply delivering the goods does not cut it. Customer satisfaction has to be a critical priority for the DC.
How should DCs respond to this challenge to ensure greater reliability and higher efficiency for improved customer experience?
As online purchases usual involve small quantities delivered within ever tighter timelines, it has massive implications on everything from warehouse location to picking, packing and shipping.
Location, Location, Location
Geographical location is integral in companies push to slice off hours from the receipt of customer orders to product delivery. As same day delivery is increasingly becoming the new normal, we are seeing the advent of smaller urban warehouses to address challenges posed by last mile delivery. As getting suitable land for construction may be difficult in build up areas, companies are re-purposing former manufacturing plants, big-box retail stores and even obsolete office buildings to close the last-mile gap. Some are also entering into short term leases for DCs in proximity to potential customers to accommodate order surge during special promotions and holiday sales.
Keeping Track of Management
Good inventory management must be a top priority for any e-tailer. Having too much inventory will tie up unnecessary capital but having insufficient will result in a stock out situation, lost sales and disappointed customers. Nothing is more frustrating to a customer than being told you cannot ship what he has already paid for because the item is not available.
Social media has given customers an avenue to share their experience and many have taken to Facebook and Twitter to post their bad customer experience. Surveys have shown that customers are more likely to share their bad experience than good ones.
So it is necessary for all e-tailer to have stock information consistency across physical locations. There are tons of software available which can help you to keep current on inventory levels across the different locations for informed decision making.
We are all fully aware that mis-picks are costly, as expenses are incurred in shipping the item back, processing it upon receipt and returning it to stock. And you have to deal with an unhappy customer.
With spiraling e-commerce sales, which can balloon 10 to 20 times of normal order volume during specials like Black Friday, Cyber Monday and Singles Day, the DC will be severely stretched. All of a sudden, what you usually do in a week or two is squeezed into two to three days, and trying to meet these online orders with spot-on accuracy even with an army of order pickers is going to be impossible without some kind of automation.
There is a wide range of systems available at different price points that companies can tap to expedite the picking process. For example, an order picker walking around the warehouse looking for picks can do possibly 60 to 80 picks an hour, but with goods-to-man picking, supported by miniloads, carousels, shuttles or automated guided vehicles can raise the pick rate up to 1,000 pick rates per hr. With an A-frame, the pick rate of the top of the range model is in excess of 50,000 items per hour, with high quality and reliability even at peak loads.
Managing e-retail is challenging especially in today’s competitive landscape. But as the likes of China’s Taobao, India’s Flipkart and Japan’s Rakuten have shown, managing the operation well can be very rewarding.