Nowadays fast delivery is no longer considered as a pre-eminence feature, rather it has become an obligation. Hence, fast supply chain turnaround is crucial.
For supply chain leaders, Amazon Inc., has created the standard for next day or same day shipping, putting pressure on the rest of the industry to speed up delivery as if promising two-day delivery wasn’t enough, Amazon just raised the bar for retailers across the U.S. — chiefly Walmart and Target — to offer even faster and cheaper shipping for online purchases (CNBC, 2019). To compete, companies must evolve their logistic strategy to meet consumers expectations for fast, free shipping, particularly when it comes to retail. For organisations looking to increase delivery speeds, it is a delicate balance between improving supply chain turnaround and ensuring costs are controlled while remaining competitive from an efficiency standpoint.
Businesses need to have multiple remote warehouses to help fulfil orders quickly and successfully perform next day shipping window. As for smaller or mid-size companies, operating several locations to hit target markets presents challenges in the supply chain division.
Managing and planning inventory across many different nodes is obviously a complex logistic process. Thus, determining which inventory gets sent to which warehouse, and how much the quantity needs to be handled, requires a high level of sophisticated supply chain management. Logistics teams must analyse, plan, and manage more effectively to make purchasing decisions across several locations. A WMS system across these multiple locations is the key.
Furthermore, the capital requirements to operate a network of warehouses can be very high. When there is an increase in the number of warehouses, organisations will also need to invest in more inventory. For example, to increase from one warehouse to four, your organisation would need to double its capital investment in inventory stock to meet demands.
Strategy to be considered
To successfully meet consumer expectations and turnaround targets without overspending, supply chain leaders must carefully consider network design, optimisation opportunities, data collection, and potential technologies. When looking to ramp up supply chain turnaround, there are several areas that can be examined to increase efficiency, including:
Effective networks and WiFi
Your supply chain should be built to support the organisation’s turnaround goal. Increasing the number of warehouses presents new design considerations like how much safety stock will be needed at different locations? What is the right inventory level for each warehouse? Accounting for inventory requirements in different regions will guide how many nodes your network truly needs.
When expanding the number of warehouses in your network, the goal is to reach a higher percentage of the population using ground services, which is critical to offering faster shipping at a competitive rate. The ability to ship via ground transport enables businesses to meet the two-day shipping window at an economical cost, and an increase in nodes means that your organisation can provide two-day shipping to more consumers.
Within your network, it is pertinent to efficiently plan inventory across locations. Consumers in different regions will have diverse needs, which will mean that your warehouses have specific demands for inventory. Efficiently stocking each warehouse according to the demand in each area will allow your business to fulfil orders quickly without overspending on shipping costs. Given the large capital investment in inventory, ensuring the right warehouses are receiving the proper levels of inventory is critical to controlling purchasing costs. Inventory optimisation helps you to identify your holistic inventory strategy to determine the correct inventory levels for each warehouse, preventing stock-outs or over capacity. Consider areas that impact inventory like sourcing, production, warehousing, and transportation to gain a better understanding and choose the right safety stock targets.
Utilizing business data
Make sure to tap into the wealth of insights your internal information provides. Pulling data from several sources like parcel, transportation, warehouse, labour, and payroll departments creates a big data scenario, empowering you to get better information and make smarter decisions. Notably, integrating data from several sources provides a comprehensive view so you can more accurately plan inventory in your network. With business intelligence integrated into your planning, you can have more confidence that your network is not creating bottlenecks that slow down delivery and increase costs. Your WMS will supply you with a wealth of information.
Maximising labour management
Labour management is critical to operations, as it provides data on where time is being spent, allowing you to focus on removing non-productive time and instead increase operational utilisation/efficiency to reduce overall operating costs. Through an integrated labour management system (LMS) you have real-time associate and process performance visibility, enabling you to make proactive decisions to ensure you are meeting customer demands.
LMS provides associate and process performance feedback that is critical for coaching and continuous improvement. Specifically, worker efficiency data can be used to see if employees are picking and processing an order at a standard rate, providing information on whether employees need to improve their job performance to meet speed requirements.
With the unemployment rate on the downslope, it becomes more challenging to retain top talent. Therefore, it is important to have a performance-based incentive program allowing top performers an opportunity to earn more money while benefiting the company/customer, creating a “win-win” scenario.
Exploiting cutting edge technology solutions
Though integrating technology can be an attractive option for improving turnaround, you should evaluate solutions to make sure the investment makes sense long term. With technologies like automation and robotics, the more you focus on the efficiency of the solution, the more specific the application becomes. While technology can make an immediate impact on improving processes today, you must consider how your business and the industry will evolve. To avoid throwing away capital, you need an agile, flexible, and scalable solution that can change as your organisation’s objectives transform over time. With consumer expectations for speedy deliveries only growing, it is more important than ever to ensure your supply chain can meet the standards for turnaround. Outsourcing can make it easier to increase delivery speeds at a lower cost. 3PLs already have operating locations, eliminating the need to create and manage your own warehouse networks. An outsourced partner also has the business intelligence to leverage your data to make optimal inventory decisions and has experience with future-focused technology implementations. While the need for speed cannot be ignored, companies that take a calculated approach to faster turnaround times will find the most success without overextending their budgets.