Exponential growth in online sales is forcing retailers and their suppliers to employ strategies that will eventually help them take full advantage of the trend.
E-commerce has been the fastest growing trade sector and has outpaced every other trade and manufacturing sector in the U.S. since 1999, when the U.S. Census Bureau started collecting and publishing data on e-commerce. The sector's retail revenue currently is about $165 billion, according to the Council of Supply Chain Management Professionals. Worldwide, 2015 retail e-commerce sales totaled $342.96 billion from nearly 200 million online consumers. These sales are projected to surpass $600 billion in 2019, according to statistics aggregator Statista.com.
With huge profits at stake, retail companies are working to deploy network and operations solutions to solve omni-channel distribution challenges so they can grow as e-commerce grows. This means having the speed and flexibility to meet changing consumer expectations for faster deliveries and high product availability at the lowest price.
To weather this supply chain disruption and meet goals, retailers are using several innovative strategies. They understand that first and foremost, it is necessary to have end-to-end visibility of their supply chain, so they know where products are at every step in the distribution process. This transparency begins with having the right technology to view all of their shipments at any point in their journey.
They also implement a LEAN culture of continuous improvement in their warehouses to eliminate waste and drive inefficiencies out of their supply chain processes. In the LEAN process, each step in the continuum of getting a product to market is scrutinized - and if any don't add value to the process, they are eliminated.
Another way retailers are working through distribution challenges is by using cross-docks. Cross-docking is not a new concept, however they are being considered more and more to provide speed, reliability, flexibility, and cost reduction for retailers and their customers. Cross-docking is a practice that involves unloading materials from incoming trucks, trailers or railroad cars, and loading these materials directly into outbound trucks, trailers, or rail cars, with little or no storage in between.
To address the challenge presented by talent shortages occurring even as the demand for deliveries increases, retailers often partner with a third party logistics provider (3PL) that offers a comprehensive dedicated transportation solution. This is essentially their own private fleet that they don't have to manage. The solution allows them the flexibility to meet fluctuating demand by providing trucks and drivers at the required levels, and at the same time address the issue of complex routing.
Although the challenge of speed to market in retail e-commerce may appear daunting, there are many strategies that can be used to turn disruption into growth. They need to be both innovative and customized specifically for the business employing them to be effective.
About the Author
Tom Kretschmer is Vice President and General Manager of Retail and Consumer Brands at Ryder Integrated Logistics. He has experience managing, executing, and creating value for customers across multiple industry groups in the following services: Distribution Management, Transportation Operations, Logistics Engineering, Transportation Procurement, Freight Bill Audit and Payment, Cross-Border Transportation and both Domestic and International Shipment Planning & Execution. Tom earned his MBA from Walsh College and his BA from Wayne State University.
