Though it has existed for at least twenty years by now, e-commerce continues to force innovation in the way manufacturers, wholesalers and retailers operate.

Some companies are just now starting to add e-commerce to their operations.

The unique characteristics of e-commerce, including distinct order profiles, broad SKU selection and fast delivery expectations, continue to reshape traditional distribution operations.

Fulfilling online orders is more complex than listing products on a website and asking the distribution center to pick, pack and as they come.

To grow – or even keep – your market share, your business needs to adapt its distribution infrastructure to become as agile in fulfilling online orders as you are in serving existing retail or wholesale customers.

We’ll go through the following:

Download the free eBook on how to integrate eCommerce Distribution into your existing operations.

How Will eCommerce Distribution Affect My Distribution?

Compared to wholesale and retail distribution, e-commerce has distinct operational needs and patterns.

Some differences include:

1. Shipment Profiles

2. Planning Order Fulfillment

3. Peak Periods

Seasons

Days/Hours

4. Returns

How Do I Adapt My Infrastructure to Reach Top Performance Levels Across All Channels?

Distribution infrastructure is the facilities, equipment and technology used to get products to customers. This infrastructure should be a cohesive and finely tuned ecosystem that enables you to be efficient, agile and profitable. Read more about infrastructure and how it affects the performance of your distribution operations in this eBook.

To tackle e-commerce, you need to think of infrastructure in new and different ways, determining how to maximize the utilization of your current people and assets while minimizing disruption to existing operations.

1. Define Your Customer

You need a clear understanding of who will order your goods online to make the appropriate decisions regarding the physical, technological and organizational aspects of your business.

Whether your web customers are, for example, mothers, young professionals, or multi-site businesses, they usually share the following characteristics:

A. They have mature online shopping habits and expect to have all the information about a product readily available to streamline their shopping process.

You will need to provide answers to questions such as:

TB. hey don’t need to touch and feel the product in order to decide if they will buy it, however they rely on reviews from their peers to choose where to shop and what to buy.

They want to know:

Decisions regarding how customers will shop drive the planning and execution of your process, layout and systems.

For instance:

You need a clear understanding of who will order your goods online to make the appropriate decisions regarding the physical, technological and organizational aspects of your business.

2. Set-up Order Management

Once you have a clear understanding of what your customers’ shopping experience should be like, you must define the order management process and system functionalities required to implement an efficient, error-free operation.

Every industry has specific needs but the following elements typically need to be defined for most businesses:

Why pick at the DC?

Why pick in stores?

Operating shifts and order cut-off times for same/next day shipping

WMS configuration

Packaging and product dimensions at the unit level

Training and quality control – if unit picking is not part of your existing retail distribution operation, you must define processes that:

Returns

Once you have a clear understanding of what your customers’ shopping experience should be like, you must define the order management process and system functionalities required to implement an efficient, error-free operation.

3. Design Your Distribution Infrastructure

With the order management processes defined, the next step is to implement infrastructure changes. The most important design considerations driving efficiency and asset utilization are:

Pick line configuration – while some instances may warrant picking web orders through a traditional retail or wholesale pick line, many factors support the need to isolate a B2C area with its own pick line.

To batch or not to batch, that is the question. When picking multiple orders simultaneously, dominant approaches are “batch pick and sort” and “pick to the shipping container”.

Ultimately, the design solution is a function of trade-offs among space, equipment, labour and capital, as well as WMS capabilities. Because B2C orders are different than store or wholesale orders, they warrant their own little world – it’s a question of how to make it fit within the existing space without having a negative impact on what is already working well.

4. Increase Departmental Collaboration

Parallel to engineering the infrastructure, you must develop adequate communication channels between operations and the rest of your organization to maximize both sales and customer satisfaction.

So who needs to talk to whom about what?

A. Marketing and Operations

Online buying habits are often influenced significantly by promotions. Before Marketing launches an initiative to increase sales on specific products or time periods, it must inform Operations with the details in order to proactively organize the pick line and workforce in preparation.

B. Customer Service and Operations

C. Information Technology and Operations

A close collaboration between these departments is critical to your success. Many aspects of the company’s application park are impacted by changes from adapting to e-commerce distribution. Whether it is the ERP, WMS, CRM or website – most likely all of them – compromises are required and it is important not to underestimate systems integration

D. Procurement and Merchandising

The company now supplies two distinct but interrelated operations and this impacts how certain products are bought (quantity and frequency).

Implementing Your eCommerce Fulfillment Infrastructure

The online shopping world is evolving quickly. Fewer and fewer companies can operate without having an e-commerce presence, and everyone must continue to adapt to increasingly sophisticated ways of selling online.

Given that the labor component represents a significant cost of distribution operations, it is paramount that you take the time to plan how your company adapts to these new ways of operating.

As you develop your e-commerce strategy, make sure that you do the following:

1. Define the needs and expectations of your customers

If this picture is clear, you have a much stronger base to understand how e-commerce affects your infrastructure and drives process and design decisions.

2. Plan, plan, plan, then invest

All aspects of your organization are affected by the introduction of e-commerce: people, systems, process, physical infrastructure. Your investments will dictate the success or failure of this initiative so sketch it out more than once and do not underestimate how different from your current practices e-commerce will be.

3. Coordinate with other departments

As an operations leader, you are best positioned to evaluate options and decide on the best logistics solution for the entire range of your company’s customers. However, you should collaborate with other departments so that each of them understands your needs and vice-versa.


About the Author

David Beaudet, Principal
David has worked on a wide range of logistics mandates across North America since 2004. He has been involved in network design, warehouse design and expansion, process re-engineering and the selection of warehouse management systems. His experience lies within all segments of the food industry, pharmaceuticals as well as industrial distribution. David holds a master’s degree in Logistics from HEC Montréal. 


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