The world of selling has changed! First there were convenience stores and now we shop from the comfort of our couch or while waiting in line. But have we considered what warehousing and delivery and logistics have to do to keep up with the rapid pace at which consumer habits are changing?
This is an important question, because your selling is only as good as your distribution.
No one can afford to ignore e-commerce and traditional retailers with brick and mortar stores have to add another channel of commerce and distribution. This multi-channel selling demands traditional retailers to manage both in-store and online inventories, to receive and warehouse deliveries and to arrange shipments at a pace and price that will make them competitive. This added complexity demands more flexibility and efficiency in order to comply with customer expectations. At the same time, while focusing on establishing their e-commerce infrastructure and new distribution, they can’t afford to loose track of what happens in the actual store.
Distribution for e-commerce deals with direct orders and requires immediate response and up to three times as many employees as traditional warehousing. The impact on cost structures is clear.
E-commerce is a result of technology and as technology spreads globally, products become available to a wider audience in both new markets and developing countries. As consumers are increasingly spending their money online, the challenge is now for logistics to get the shopping to consumers and while there are a few market leaders, many retailers are still establishing infrastructure.
Successful domestic shipping demand the service of high volumes at a quick turn-around time and at reasonable cost, something that is particularly difficult in a long-haul country like South Africa. Outsourcing to express shippers is expensive, but establishing an own distribution network can be even more so!
What is the solution?
On cerasis.com, Jack Rheude suggests an interesting way forward for distribution:
- There are several new technologies that have either already impacted distribution or will soon do so. The new, powerful and highly profitable companies active in the distribution space have strong incentives to introduce new technologies, both to further increase profitability and to consolidate their power. RFID tags (radio frequency identification tags) are already in use and will become a much more disruptive influence.
- The use of drones, driverless trucks and automated warehouses has been tested and is likely to shortly become common.
- Very short delivery times where orders from companies such as Amazon are delivered within the hour are probably possible but not commercially viable on a broad scale just yet.
- The Synchronized Supply Chain – When a single company controls the entire supply chain, such as Walmart, Apple and Amazon do to varying degrees, it can impose procedures that greatly simplify and speed up distribution. Ideally there is a small and relatively constant number of particular products in the chain and, as a customer buys one, an additional one is placed on order from the factory. The key is to coordinate so only the number of products actually sold is produced. To achieve a synchronized supply chain, companies have to know where each product is at all times. The technology that facilitates this is the RFID tag – a whole new take on the barcode!
- Automated Warehouses – When new automation technology is combined with RFID tags, warehouses can be completely automated. There is no need for inventory because businesses know in real time what is in their warehouse. Stacking and storing on shelves is relatively easy to automate, but the challenge lies in reliably retrieving a specific product. So-called picking robots can distinguish items of different shapes and sizes and pick up the one to be shipped. The problem is that picking robots are still much slower and less accurate than human workers.
- Delivery Drones – Companies already know that drones can deliver packages – the difficulty is designing a system that makes commercial sense and doesn’t break regulations in place for unmanned aerial vehicles. Once the regulations are clear, the economics have to work. Trucks are still much cheaper for large, heavy loads or items that have to be transported for over 50 miles. For light loads and short distances, delivery drones may turn out to be less expensive.
- Driverless Trucks Can Speed Deliveries – Where driverless cars have to deal with many unexpected conditions and complex trip end-points, driverless trucks can move between specially designed, truck-friendly staging areas along major highways. This means such trucks are much easier to introduce than cars that have to navigate narrow roads and driveways. Combined with other new technologies, autonomous trucks can work with automated warehouses to close the loop on a fully automatic supply chain. Products would move continuously 24/7 through a fully automated system that picks up items at the factory and delivers them to local delivery points. If the customer is located near the local warehouse or store, even the last few miles of the delivery path can be left to automated delivery drones.