Redesigning Fulfillment: A New Strategy for New Challenges

Do you have what it takes to act on new possibilities in evolving your supply chain forward?


Define the Vision—What does an ideal storage and distribution network look like for your business? Different industries have unique pressure points. What works for an apparel retailer might not work for a specialty food grocer. What works in one region for a national wholesale distributor might need to be tweaked for a different region. Keep in mind that you’re not quite working with a blank slate since you have an established business. But, given the new realities of the market, what do you need to do to compete? Dare to be bold in this step. Think about the biggest constraints holding you back from achieving your vision and seek out market leaders who can help you overcome them—including technology. So many technologies have matured in just the last couple years that you might be surprised at what is possible.

Implement Your Vision—What has to happen to actually implement your vision? This operational step also enables new decisions about where to put goods in the supply and distribution chain. Balancing facility, inventory and transportation costs is a daunting but necessary challenge in this new business environment. For example, smaller, more frequent store replenishment shipments can drive distribution center design requirements. Alternatively, more aggressive supplier collaboration combined with effective real-time systems can make cross dock operations a more effective alternative than in the past.

Inbound goods can be tracked with precision and pre-allocated for stores or customers. Inventory can be assessed more frequently and at a more granular level. Product/part replenishment can now be done more often or less often depending on your operational needs. Perhaps the whole supply chain can be consolidated closer to the point of consumption. This operational step drives new practices and policies that can be powered by technology.

Invest with Technology In Mind—The goal of an investment in technology is to get every person and item in your fulfillment process engaged in the same data-driven system. People continue to be critical assets in this new system. From the sales associate to the warehouse picker and onward back into the upstream supply chain—everyone should be working with, reading from and feeding into the same data set. While data mining might be part of your operation, this is not first and foremost a “big data” system. Big data, together with worker mobility, increases the smooth flow of information for people to take action at the point of work. In addition, mobility feeds big data sets regularly with more accurate, timely and validated information.

These real-time needs drive new types of technology choices. For instance, RFID—around for several years—tended to operate at the pallet level in the warehouse or for returnable transport items (RTIs) in manufacturing facilities. RFID scanners were geared toward scanning pallets, often as they passed a fixed reader. And now, RFID matured to the point where item-level tagging is possible and drives a granular view of the business operating in real-time, whether in the storefront or in the warehouse.

But item-level RFID isn’t for every application. Many businesses will see huge gains in productivity and efficiency by leveraging GS1 barcodes and advanced shipping notices (ASNs) at the inbound and outbound material handling points of their warehouses and distribution centers—which will require a different type of investment in technology. As more data becomes available in real time and is accessed on a broader set of mobile devices, wireless network infrastructure must be reviewed to ensure it has the capabilities and performance characteristics required to meet stringent business needs.

Collaborate the Right Way—Improving collaboration with suppliers and customers is more important than ever. It might seem to some that the collaboration step should come much earlier as it holds great potential for major reductions in friction throughout the supply and demand chain. However, I would caution against that approach for two basic reasons. First, by incorporating partners too early, you will raise the complexity of what you are doing exponentially and delay any implementation. Second, optimizing your own operation first gives you a credible and informed starting point in tackling the upstream challenges and downstream demands of your trading partners.

Should you defer making your own improvements until these collaboration efforts yield fruit? No. While in some cases( like the cross-dock example) co-development and co-planning with suppliers and customers is absolutely critical, it’s typically prudent to first focus on getting a good foundation in place with enhanced internal operational capabilities before launching into a comprehensive review with your primary trading partners.

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