Behind every successful e-commerce transaction is a detailed fulfillment process about which the typical consumer could care less. Really! What consumers do care about – care very deeply about – are on time deliveries and overall efficiency.
But the behind-the-scenes work that consumers take for granted, is a leading source of angst among retailers. That’s because the fundamental way in which products are bought and sold has undergone a dramatic transformation, and nowhere is this more evident than in the changing role of the warehouse. Whereas warehouses were traditionally used simply to store inventory, today they have essentially become fulfillment centers, performing many of the tasks previously designated to distribution centers.
McKinsey&Company reported in its “The future of retail supply chains” analysis that “many of today’s retail supply chains are simply not set up to handle this demand for speed and convenience in a cost-effective way.” The report notes that several established supply chains have “simply cracked” under the strain of the new multi-channel world, and suggests three key areas of deficiency:
- Not enough distribution centers to meet today’s demands for fast, low-cost shipping.
- Today’s supply chains are built for retail stores, and online is often “bolted on,” leading to poor cross-channel coordination across channel-specific inventory pools and fulfillment processes.
- Huge proliferation of online SKUs is creating new capacity and cost challenges, including demand for additional warehouse space and added picking expenses.
As McKinsey points out, “for most retailers, building a dozen more DCs to cover the United States is just out of the question.” Instead, businesses are taking a hard look at existing warehouse strategies and determining their best path forward. In many cases, this involves repurposing existing warehouses, or outsourcing to a qualified logistics provider.
A new white paper from Purolator International, “Today’s Changing Warehouse – Developing Your Ideal Strategy,” details the challenges of today’s omni-channel expectations, and identifies key solutions that are helping overcome these problems. Click here to download a complimentary copy of Purolator’s new white paper.