Supply chains fit for e-commerce growth

The rise of multichannel selling is also placing new demands on retail supply chains, according to supply chain specialist Markus Schmücker

Markus Schmücker, managing director of supply chain solutions at supply chain outsourcing partner arvato UK & Ireland, explores the sophisticated techniques retailers are employing to meet raised customer expectations.

“The option of hopping between multiple web shops and ordering on the go from a mobile phone has made online shopping effortless,” he said.

“Consumers want the same flexibility and immediacy they experience when they shop to follow through to delivery. The upshot is this has dramatically raised expectations for fulfilment and placed unprecedented pressure on the supply chain.”

Sophisticated supply chain demand

What this means for retailers is the need to establish a joined-up and very responsive supply chain that can account for individual preferences and offers right first time delivery.

Schmücker explained: “Choice has become king. Providing a broad range of delivery options – including instore pick up and city centre collection points as well as traditional home delivery – is becoming standard. To be effective this needs to be backed by efficient order tracking and clear communications. That’s why we’re seeing more and more retailers form partnerships with distributors who have links to a wide range of carriers.”

He said heightened consumer expectations are undeniably having an impact in the warehouse too, pointing out that, with a large numbers of disparate orders to deal with, end-to-end visibility of the inventory has become key.

“The trend now is for retailers to hold larger pools of centralised stock – rather than multiple, smaller locations - and to integrate all warehouse management processes through a single inventory,” Schmücker said. “When used with innovative IT, such as voice picking technology, which calculates the best route for the picker and confirms if the items were selected correctly, this is helping to streamline the whole order to invoice process, through to pick, pack and despatch. The result is quicker turnaround times, immediate quality checks, increased accuracy and ultimately better customer service.”

But delivery is only half the battle in trading online. The supply chain expert warned that the same pressures exist with reverse logistics.

Streamlining returns processes

“With returns there’s a similar story, due a greater number of channels and wider regional and geographical distribution,” he said. “Again, intelligent infrastructure that unifies the process will help better manage returns.

“What we’re seeing from forward-thinking suppliers is the introduction of technology to all carriers that can scan the product code to bring up a picture of the item and corresponding instructions to determine subsequent handling. Depending on their condition, products can then be returned to sale stock, refurbished and transferred to online outlet sales, or returned to the manufacturer, and refunds can be made to the customer in a timely and accurate manner.”

Schmücker believes that where many retailers are failing is in not making the most of the valuable data generated at the point of return.

“Data gathered from returns presents a major opportunity to better inform distribution decisions,” he concluded. “Capturing intelligence from returns slips or online questionnaires enables processing errors to be quickly identified and corrected, and decisions to be taken as to whether different delivery services might be more appropriate, to encourage repeat sales.”