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Utilizing Omni-channel Fulfillment Distribution Networks to Build Customer Relationships

How a multi-node network, paired with powerful technology, can help tackle the biggest transportation, e-commerce, and omni-channel challenges that shippers are facing in the current market.

Sustaining Multiple Sales Channels

As e-commerce sales continue to explode, growing and sustaining multiple sales channels can be overwhelming for shippers.

Their customers expect a seamless experience - whether they’re shopping via the web, mobile, marketplaces, social or traditional bricks-and-mortar.

Faced with rapidly growing sales volume, shippers encounter numerous hurdles in their quest to keep omni-channel customers happy while still maintaining profitability.

Transportation, warehouse space, labor, and technology are a few of the most common pain points.

Heightened customer expectations for fast, free shipping can be difficult to deliver on in today's transportation market. Fluctuating fuel costs and tight carrier capacity pose major challenges.

Capacity issues can get particularly onerous during peak shipping seasons when even companies like UPS and FedEx scramble to figure out how to secure and pay for the infrastructure necessary to service their customers.

Space and staffing issues compound shippers’ problems. Labor can be hard to find with national unemployment hovering at a historically low rate. Industrial real estate is also in short supply and increasingly expensive.

Steve Congro, Saddle Creek Logistics Services’ director of omni-channel fulfillment technology:

“The cost of moving products is only going to go up. That’s the reality of it, and it isn’t going to change anytime soon. If your business is growing rapidly and you need to accommodate multiple channels, the best solution is to rethink how you move your products.”

Effective distribution requires a critical understanding of your network, high levels of supply chain visibility, and a focus on planning well in advance for the peaks. Congro recommends utilizing a multi-node network that allows you to get as close to customers as possible and minimizes any “last-mile” gaps that keep customers from getting their goods on time.

Steve Congro:

“If you’re a seasonal retailer who does a lot of business on Black Friday, Cyber Monday, and throughout the holiday season, you really have to understand your network and how to plan for those peaks. If a customer can’t find a Halloween costume in a bricksand-mortar store on October 20th, and if the retailer can’t get it to that customer until November 5th, that’s a lost sale.”

Fast, free shipping Amazon is another powerful force that’s pushing shippers across most business-to-consumer (B2C) and business-to-business (B2B) channels to rethink their distribution networks.

Steve Congro:

“Amazon makes up about 45% of the $450 billion e-commerce market, and it has created a mindset around free, fast shipping - it’s really driving that charge.”

Even though the e-tailer lost over $7 billion on shipping in 2016, it continues to push the envelope on free shipping (for the 2018 holiday season, for example, it expanded the benefit to all shoppers - even non-Prime members).

The average retailer, distributor, or merchant simply can’t afford to lose all that money in shipping, Congro says. Instead, they must focus on how to meet their customers’ demands by offering either free or reduced shipping within a reasonable timeframe. To achieve this goal, many are working with third-party logistics providers (3PLs) like Saddle Creek to develop multi-node networks that position products as close to the customer as possible for faster, more economical deliveries.

The multi-node approach is new for shippers who initially viewed their e-commerce operations as being “separate” from their traditional business activities with separate inventory. As e-commerce grows by leaps and bounds - consumers spent more than $453 billion on the web for retail purchases in 2017, a 16% increase over 2016 - companies are realizing that they simply can’t survive on bricks-and-mortar shopping alone.

Steve Congro:

“Right now, everyone is looking for a single, unified commerce solution that helps them optimize their buying and merchandising.”

And as those stores move their products closer to the end consumer, they also need high levels of visibility enabled by robust warehouse management systems (WMS), transportation management systems (TMS), and order management systems (OMS) like those that Saddle Creek provides to shippers.

These solutions provide visibility into what’s moving through bricks-and-mortar, what orders are being placed online and more. With that real-time data in hand, shippers can determine the best logistics approach for each order (i.e., which fulfillment source is the fastest, most cost-effective to ship from).

A 3PL can also help shippers broaden their network without having to invest in more real estate. With more than 40 locations situated across the U.S., for example, Saddle Creek helps clients of all sizes get closer to their customers and also supports those companies with a robust technology infrastructure that they use to run their supply chains.

“If you want to be near a certain population base, we probably have a location nearby,” says Congro, who sees speed-to-market as a key reason to work with a 3PL to establish a multi-node network in today’s business environment.

Steve Congro:

“A lot of companies are still using enterprise resource planning (ERP) systems combined with physical real estate to try to tackle the challenges of e-commerce and omni-channel, but this approach just isn’t agile enough for today’s market.

Shippers need to be able to spin up new locations rapidly and then tie the whole system together with first-class technology systems that support a profitable business model.”

Where’s my inventory?

The cost of shipping continues to rise in an era where competition for customers is fiercer than ever. Labor costs are also taking a toll on shippers’ bottom lines, and pushing them to find alternatives to their age-old shipping approaches.

For example, utilizing a third-party’s flexible space and staffing can be more cost-effective than investing in permanent overhead.

And working with an experienced 3PL to set up and orchestrate a multi-node supply chain network is another key strategy to minimize freight and labor costs and improve profitability.

Using a multi-node network with sophisticated technology, shippers can quickly and confidently answer the most important questions that companies are asking themselves right now, which are: “Where’s my inventory located and what’s the fastest, cheapest way to get it to my customer?”

By combining good supply chain visibility with a logistics partner that understands the “ins and outs” of today’s market, shippers can get the answers they need and make good decisions based on that intelligence.

Congro advises:

“Simply spinning up warehouses around the country that don’t talk to one other and hoping that the strategy pays off simply doesn’t cut it in our current business environment. However, by developing a multi-node network where you can view all of your inventory and see all of your orders at any given time - essentially gaining ‘one view’ of your entire enterprise - you can achieve the nirvana that everyone is desperately searching for right now.”

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Demystifying an Omni-channel World
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Article Topics
Best Practices   Transportation   Third Party Logistics   Distribution Network Optimization   Ecommerce   Inventory Management   Omnichannel   Order Management System   All topics


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About the Author
Bridget McCrea, Editor
Bridget McCrea is a Contributing Editor for Logistics Management based in Clearwater, Fla. She has covered the transportation and supply chain space since 1996 and has covered all aspects of the industry for Logistics Management and Supply Chain Management Review. She can be reached at [email protected], or on Twitter @BridgetMcCrea
 
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