While the Internet has made it easy for merchants to expand their reach and sell to anywhere consumers, geographic constraints on the logistics and supply chain have started becoming visible too.
Having an optimal supply chain that can meet a company’s expected growth rates is a challenging task, especially for Indian retailers due to increasing product demand and poor infrastructure of the country.
Even for a retailer who has distribution centers across the country, supply can still be a challenging task because of the costs that come with buying and holding inventory—not to mention building and maintaining these facilities. That’s where something called ‘no-inventory’ or ‘dropship model’ come into action for online retailers to fulfill customer demands.
Moreover the exponential growth of Indian eCommerce industry and increasing competition to provide the best possible experience to a consumer has forced many retailers to establish omni-channel operations. Where it helped companies to position themselves better on a customer side, they started facing plethora of other supply chain woes that prevented them from having efficient order fulfillment.
The process of effective supply chain depends on various factors. For small and medium size retailers to remain relevant, the flow of inventory needs to change from predictive to reactive supply chain. That means instead of making educated guesses as to what consumers want and adjusting supply accordingly, wait and respond to the demand. Being a supply-chain focused retailer requires strong commitment to managing logistics and investing in technology, but the end result provides much sweeter result to the retailer in terms of generating sales that actually reduces inventory risk.
According to Gaurav Vora, Co-founder and Director at Dynaflex, most companies think they are saving on the packaging per piece but don’t calculate the total cost. “The total cost of packaging for eCommerce depends on various factors including packaging design, sizing, weight , primary packaging, shipping method, shipping time, packaging design and much more. One wrong decision can the increase the cost of overall shipping, storage and even inventory” he added.
‘Ship from store’ – a new trend in the world of omni channel retail
In order to overcome supply chain and order fulfilment problems supply-side innovation is the key to winning—that’s what makes Amazon and Walmart the supreme leaders in the world of retailing. According to a recent report, some of the world’s largest retailers including Walmart, Best Buy and Gap are turning their stores to mini distribution hubs. This helps companies to fulfill web orders from a store nearby rather than routing them from warehouses hundreds of miles away-and save significant delivery costs. The trend, known as Ship from Store, saves money and more importantly, it speeds deliveries, and increases customer satisfaction.
This strategy, however, demands intelligent allocation of inventory from stores and requires retailers to implement a technology platform known as distributed order management (DOM).
Walmart- in order to achieve that-is investing USD 430 million in what they call its “global-technology platform.” There are commercially available DOM solutions available from companies like Manhattan Associates, Oracle, and IBM (Manhattan Associates and Oracle are ARC customers).
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