Distribution companies need to look to technology solutions as customers begin to require faster delivery.
According to a recent post on the DC Velocity blog, many customers already expect same-day delivery, which is sending jitters throughout the supply chain industry. In fact, three out of four wholesale and retail distribution companies responding to a survey say their customers demand same-day delivery, with nine out of 10 saying the trend “is creating significant challenges for their businesses.”
“There is a growing consensus that almost everyone will soon expect — and companies will soon need to provide — same-day delivery as a standard offering,” the post says.
The demand for same-day delivery will put a lot of pressure on organizations that currently do not have efficient fulfillment processes. It will force same-hour order fulfillment, and the entire order-to-shipment process will need to be optimized to a very high degree.
These changes will necessitate real-time data. The importance of real-time data is twofold: The customer should have real-time information as to what’s in stock when placing an order to ensure that the customers’ expectation are properly set and the organization should have real-time updates of orders in the back-office fulfillment center to ensure that customer service levels are met.
The current processes followed by many organizations will have to be completely revamped, replacing manual batch processes with automated, scheduled processes constantly running in the background. Companies wanting to meet these needs will need to take advantage of Supply Chain 2.0 technologies.
Organizations will also need to control their costs. Many companies use the shipping and handling fee as a way to remain profitable. However, with Amazon offering flat-fee or free delivery for prime members, other companies will need to follow suit.
To remain profitable, organizations will need to look at boosting efficiency efforts. Those efforts should include reducing the cost of fulfillment through automation, better product sourcing and inventory management, and considering a move to a virtual model where products are shipped straight from the manufacturer to the end consumer.
Source: DC Velocity, June 2013
