Warehousing and fulfillment are undergoing changes as
companies incorporate ecommerce into their overall strategy. Decisions such as
physical locations of warehousing and whether to fulfill ecommerce orders from
separate facilities, in-store, from existing warehouses or a combination of all
three are among the strategies brick and mortar companies are facing as they
compete against the likes of Amazon, eBay and Newegg.
While much of this change differs from one company to the
next, speed to fulfill and options in the final delivery location are similar
for most companies. Not only that but the need for visibility over the entire
process is in demand as companies’ supply chain is further complicated.
The higher volume of ecommerce orders is affecting this need
for speed to fulfill. On average, the layout of warehouses is important. For
some companies, the use of high-bay racking, product placement and an effective
alignment of rack storage are necessary. Also, there is an increasing use of
automation within such facilities. Robotics is on the increase as noted by the
acquisition of Kiva Systems by Amazon. The acquisition was questioned by some
but physical order fulfillment reportedly costs the company nearly 9% of its global
revenues, thus, reducing this cost will likely improve Amazon’s profits.
Managing the delivery process is also an increasingly
difficult task as delivery locations from warehousing/fulfillment centers are no
longer confined to physical stores. Now, these facilities are shipping either directly
to the customer, a neutral site (such as a lockbox location, FedEx/UPS store or
other retailer) or to the physical store for pickup. As such, IT companies such
as High Jump, Red Prairie, Oracle and others have expanded their traditional
warehouse management systems (WMS), transportation management systems (TMS) and
other IT solutions to meet this need for flexibility for not only changing
transportation needs but also for order/inventory management and visibility.
As IT providers offer more innovative solutions for brick
and mortar companies to compete with dotcoms, inventive startups are springing
up. For example, Shipwire offers global order fulfillment capabilities and
warehouse network via its cloud logistics network. According to the company,
customers are able to outsource its entire global fulfillment, warehousing and
shipping needs to Shipwire. Although not a startup, but just as inventive,
Amazon also offers fulfillment services for customers. The company’s
Fulfillment by Amazon ships goods from its own warehouses on behalf of its
marketplace sellers.
Ecommerce
has spurred not only new concepts and ideas within the supply chain but also
new companies are popping up to address logistical challenges resulting from
the rise of ecommerce. Next month, Transport Intelligence will launch the first
report in its eCommerce series, North America Ecommerce Logistics, that
will look at these challenges as well as new companies and how traditional
logistics providers such as UPS, FedEx, DHL and others are responding to these
changes. Europe Ecommerce Logistics, Asia Ecommerce Logistics and
a Global eCommerce Logistics Whitepaper will follow in first quarter
2013. For more information, please contact Cathy Roberson at
croberson@transportintelligence.com
