Companies must ensure that their business can evolve to meet new challenges and seize new market opportunities.
August 22, 2021Ed. Note: A version of this article was originally posted on Retail Contact Points.
It’s no secret that technology has drastically changed shopping behaviors for almost all consumers, making the migration to e-commerce essential for retailers who want to stay relevant and competitive in today’s economy. hui. First and foremost, they need to keep the customer experience in mind, and Amazon is the gold standard for customer experience and online shopping expectations. It was true before the pandemic, it is certainly true during this current health crisis and it will be true after the pandemic.
The warehouse operations of many retailers that traditionally focused on restocking inventory are developing direct to the consumer, forcing them to restructure to embrace single-order and single-item shipments. The increase in the volume of single item orders prompted them to introduce software tools such as a Warehouse Management System (WMS) to help meet demand while maintaining profitability. Another factor driving the adoption of WMS in e-commerce is the growing trend for retailers to offload online order fulfillment to channel partners.
These companies that cling to rudimentary paper-based processes and a belief system that “we’ve always been able to make money doing things this way, why do we need to change? Are easy to identify because these are the same companies that are being left behind. Inertia and not knowing where to start when it comes to implementing e-commerce into their warehouse operations is holding back many merchants. However, not having an ecommerce channel today will almost certainly guarantee a loss of market share and revenue. With that in mind, let’s explore the steps retailers should take to ensure e-commerce success in their warehouse operations.
A (tidy) path to success
The success of any retailer, especially those involved in running e-commerce, begins with what I often call “a good warehouse”. A good warehouse leads to better customer service through better inventory management, faster receiving, putting away, picking and shipping times, saving labor costs and reducing costly errors . Unfortunately, this is often a cultural challenge, and no fancy technology or software is going to make things better unless you get your warehouse in order first. Organizations can turn the tide with strong leadership and a warehouse champion (more on this role in a moment) who can rally everyone to embrace change and report on progress.
Next, take a close look at your processes: what are you doing now? What would you like to do? Do you know what to do next (and after)? Take the time to identify bottlenecks in warehouse operations or other issues that are slowing progress towards your fulfillment goals. It’s not uncommon for managers to think they have the best ideas for tackling these challenges. However, more often than not the best ideas come from warehouse workers and people who have been with your business for a long time. If you allow them to be heard and invite their ideas, you will get a better buy-in for this cultural shift and ultimately you will achieve greater success.
Timing is everything. Implementation is the key.
I don’t know of a single company that isn’t concerned with workflow interruptions, and rightly so. The most difficult question to answer when planning a transformative warehouse investment, such as a WMS, is “why now?” This can be a difficult question, especially when no one in your company has the answer. Every business has different requirements, so the process of implementing a WMS in your warehouse will vary depending on your needs, availability, and business size. Many traders have peak seasons that create spikes in demand, so the deployment of a WMS needs to be sequenced properly, which usually means activating the system in stages using a phased approach. Again, this is where everyone’s buy-in plays a big role.
Perhaps the most crucial role in the successful implementation of a WMS lies with the warehouse project manager or warehouse champion. The warehouse champion can be an IT manager or warehouse supervisor. She can be a CEO or an accountant. This could be an outside project management consultant or someone who has worked in the company for decades. They come from all corners of the business, have project management skills and must have the ability to objectively observe warehouse practices in order to improve them and, most importantly, to inspire change. Training these key players on how to use WMS prior to implementation makes the process much smoother.
New solutions for ecommerce execution (and returns)
The ROI of a WMS has traditionally been calculated based on cost reductions in areas such as inventory management, improving workforce productivity, reducing error rates in preparation and shipping, more efficient use of space, etc. When it comes to e-commerce, shipping and return costs are another area where a WMS can save valuable time and money. These systems can make your life easier by managing inbound transportation planning, manifesting small packages and bottom loads for outbound shipments, and reverse logistics to handle returns. These tools provide significant savings in shipping costs for retailers and their customers, increasing the overall system return on investment.
When preparing a batch of orders, for example, the pre-cartoning feature of the WMS will tell you exactly what size boxes to prepare and how many are needed. This allows your employees to choose directly from the box with pre-calculated dimensions and shipping weight. The system will also produce a packing list and shipping label that appear to come directly from the company receiving the customer’s order, be it Amazon, Lowe’s, Walmart, or another retailer.
With pre-manifestation, the system not only tells you what box type and number you need for a batch of orders, but it also produces the shipping label in advance. By allowing you to take the order directly from the conveyor of any shipper who picks it up, you can bypass many steps in this process and get a large volume of orders to the door quickly.
Finally, many large retailers have contract terms that allow them to return any inventory they haven’t sold or just don’t want to stock anymore. As a result, warehouse staff must sort the boxes of returned items to determine which ones can be resold, which items should be scrapped, etc. As you can imagine, it takes a tremendous amount of time. A WMS allows you to examine all of these random items, sort and identify them, and create a return in the system to get the proper credit and documentation for the customer.
Accept our new reality
If the pandemic has taught us anything, it’s that people are more comfortable than ever before doing business online. While this was done in the name of risk reduction, the convenience associated with shopping online has led to a paradigm shift and an explosion in e-commerce execution. This is the new reality of retail and it will be the model that everyone will be competing against. The only way to be successful is to make sure your business is ready to scale to meet these challenges and seize market opportunities.
Mark Van Leeuwen has worked at PathGuide Technologies for almost 10 years. He has over 20 years of experience building a strong customer base and ensuring customer success by working with distributors to understand and appreciate their unique business issues and opportunities.