Inoculating 2021 E-Commerce with Fulfillment Best Practices
All around, 2020 lessons learned are fueling improvements in this new year. Record-setting speed of medical innovation delivered multiple COVID-19 vaccines in less than a year. Schools that sat dormant for nine-months are better equipped to safely welcome students back for in-person learning. Fulfillment professionals also made great strides in 2020, driven by necessity, and many lessons can be applied in the year ahead to keep customers happy and operations on track.
Whether shipping COVID-19 vaccines, test kits or ventilators; office supplies; clothing; or groceries, some shippers rode thorough preparedness to a competitive advantage in 2020. Others adjusted throughout the year to improve or struggled mightily to the end.
Fundamental shifts of e-commerce and consumer behavior took shape in 2020 and presented new and unprecedented challenges. Parcel shipping volume skyrocketed. Retailers, manufacturers and others welcomed new e-commerce customers, sold new types of products, and fulfilled more direct and online orders. These shifts led more fulfillment teams to identify and embrace emerging best practices as part of their 2021 planning. The savviest even used Q2 2020 to fine-tune or overhaul processes ahead of a peak season unlike any other. They prioritized e-commerce customer service and satisfaction. They studied the value of getting inventory closer to customers. They diversified fulfillment procedures to deconsolidate risk. Those with competitive advantages embraced them more than ever.
Visible symptoms of a stressed supply chain
Symptoms of a stressed supply chain persist. Carrier rates are up and climbing, even at the USPS, and carrier capacity limitations crippled some of the largest merchants who did not prepare for them. Critical cargo to treat COVID-19 rightfully gets prioritized by carriers, with vaccines, treatments and equipment saturating carrier capacity in the United States and abroad. With e-commerce soaring, retailers are moving and processing what many project will be a record-breaking volume of returns.
Leveraging every competitive strength remains critical in 2021, when any one of these trends can wreak havoc on an unprepared shipper.
Fulfillment best practices treat the symptoms
Most shippers do not have the luxury of launching their own fulfillment fleet to offset the rising prices and shrinking available capacity of carriers as Amazon has done. Scaling existing fulfillment processes by investing in personnel and other resources generally proves to be costly and less effective than embracing new and smarter fulfillment processes to boost customer satisfaction, extract cost-saving insights from fulfillment data and improve partner relationships.
Keeping customers satisfied keeps them customers, and shippers who commit to a meaningful baseline of transparency greatly improve their odds of satisfying customers. Those not already doing so should provide their own tracking and tracing capabilities on every order to monitor and respond to the on-time delivery performance of every carrier service and reward the best partners with more business.
Shippers should also audit their own fulfillment data with business intelligence tools to discover how making changes to processes, physical operations or retail footprint can better serve customers. Could adding distribution centers or modifying a retail footprint reduce costs and delivery times? What can be gained by partnering with other 3PLs or local warehouses in priority markets? How can creative solutions like localized manufacturing (3D printing) and omnichannel fulfillment (BOPIS, curbside pickup, ship from store, etc.) make service departments more profitable and radically improve the way a shipper fulfills e-commerce orders? Business intelligence applied to a shipper's own data can answer these questions and more.
At the very least, shippers relying on an exclusive carrier relationship must adopt a multi-carrier approach immediately. For many, multi-carrier rate shopping provides the single-most-effective way to safeguard against rising carrier rates and reduced capacity. As carriers' average rates rise, shippers should pinpoint competitively priced services, keep using those and turn to alternative carrier services that offer the same service levels at reduced costs.
With explosive e-commerce growth underpinning all or most of these challenges, carriers scrambled to build out their fleets to better meet the rising demand for shipping capacity, close the gap and restore some normalcy, but proactive shippers sought solutions rather than waiting for carriers to solve their problems. They spent much of 2020 taking steps to address the parcel shipping capacity shortage and rising e-commerce volume, and other shippers should consider some of the recent developments and innovations their proactive brethren have successfully adopted.
Innovations target the root cause
Many shippers increased their use of LaserShip, OnTrac, Speedee Delivery, and other last-mile and regional carriers in 2020. In doing so, they not only addressed problems related to parcel shipping capacity and rising rates; they also drove growth in this sector. Demand for these last-mile and regional carriers spurs increased investment in the sector, and as these carriers respond to increased demand by growing their fleets, they become ever more viable options for shippers.
Localized or on-demand manufacturing via 3D printing, combined with multi-carrier parcel shipping, reduced dependence on carriers in 2020 and is sure to pay dividends for other shippers in this new year. While on-demand manufacturing also reduces waste, manufacturing costs and inventory management costs, the benefit of reduced dependence on carriers alone typically justifies the investment for the right type of shipper.
Business intelligence has long been able to help shippers answer questions like "how can we benefit from local, on-demand manufacturing?" and many others. In 2021, look for shippers to incorporate external data sources to get even more out of their business intelligence efforts. Data feeds focused on weather conditions or Twitter sentiments, for example, help innovative shippers make more careful carrier service selections and avoid unnecessary disruptions that may otherwise damage customer relationships.
Challenges persist, but so should optimism
We will undoubtedly see 2020's fingerprints all over 2021, but shippers have options for controlling their own destinies throughout this new year. Catching up with accomplished competitors who have proven the value of best practices during this pandemic or pressing on even further to adopt the new innovations available to fulfillment teams offer many reasons to be optimistic about the year that lies ahead.
Ken Fleming is president of Logistyx Technologies, the leader in Transportation Management for parcel shipping. Since the mid-1990s, Ken has led successful launches of many new technologies and services, including supply chain management, e-commerce, SaaS, and enterprise software and systems integration solutions. Ken can be reached at ken.fleming@logistyx.com.
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