“The retailers are going through these cross-channel fulfillment strategies right now,” said Forrest. “They’re trying to say, ‘People are buying differently now. How do we service everyone so that we don’t lose market share?’ And a lot of that tends to be looking at new distribution strategies. It’s causing more supply chain areas that they need to fix and focus on. Retailers are finding that they are able to maintain better margins by having these cross-channel fulfillments of shipping to different locations. So because we’re doing that in the CPG space, there is this increased focus on, ‘Let’s see what we can do here to maintain margin and reduce waste in the perishable space.’”
As consumer demand continues to drive the retail space, not just in food & beverage delivery models but also with other home goods delivery, companies and distributors alike must increase their focus on their changing operations to address such factors as big trucks in over-populated cities and globalization with cost-effective and efficient strategies.
Paragon Software Systems’ platform, for example, addresses companies’ general mapping problems and traffic challenges in delivering into urban areas at different times of day. In addition, the company helps providers implement a plan that makes the lead time for the customer as short as possible; that meets delivery time windows; and that takes account of all other delivery constraints. With its mapping capability, the company is able to exclude certain deliveries from certain areas at certain times of the day; and also apply directional rush-hour bans during the day.
One example of this was during the 2012 Olympic Games in London, during which Paragon had to help its customers work around road restrictions and during which various Olympic routes had to be adhered to.
“We produced a specific map for the period of the Olympics—a calendar based around the different events that would be taking place during the Olympics and we modeled how the congestion would look right across the period of the Olympics,” explained Salter. “And then all our customers that delivered into London then used that functionality to model how the Olympics would impact their distribution during that period.”
Identify your end goal
Regardless of the scenario—whether during a special event or on a typical day—companies (warehouse and DC’s included) have the opportunity to ask the right questions to address future complexities and plan their distribution models for the future today—and not 10 or 15 years from now.
“One of the things that we’re seeing the best companies do, is they are working with people who are experts in urban planning and development to try and understand, ‘How is the city going to grow and in what directions?’” said Autry. “They do that not only to locate stores—everybody does that—but they are also thinking about it in terms of locating distribution. The Department of Defense is also in front of this. They are the ones that are doing some asset replications. 9/11 shocked a lot of us for a lot of different reasons but one of the things it taught us is to have a back-up plan. So a lot of the lessons in contingency planning that come out of supply chain risk management are applicable here but people are not seeing it yet. The risks here are much longer term and they seem much more benign because there’s this notion of, ‘Well, we’ve got plenty of time to fix it.’ What we’re saying is, ‘Yes, you do but you have to actually go ahead and start planning in order to be able to do that—you’re not going to just be able to wake up in 2020 and fix it,’” concluded Autry.