Aug 22, 2021Ed. Note: A version of this article originally appeared at Retail TouchPoints.
It's no secret that technology has radically changed buying behaviors for nearly every consumer out there, making the migration to ecommerce critical for retailers that want to remain relevant and competitive in today's economy. Above all, they must keep the customer experience top of mind, and Amazon sets the benchmark for customer experience and expectations when it comes to online shopping. That was true before the pandemic, it's certainly true during this current health crisis and it will be true post-pandemic.
Many retailers' warehouse operations that traditionally focused on stock replenishment are expanding into direct-to-consumer, requiring them to restructure to embrace single-order, single-item shipments. The increased volume of single-item orders has pushed them to introduce software tools such as a warehouse management system (WMS) to help satisfy demand while maintaining profitability. Another factor driving the adoption of WMS in ecommerce is the growing trend for retailers to offload online order fulfillment to distribution partners.
Those businesses clinging to rudimentary paper-based processes and a belief system that "we've always been able to make money doing things this way, why do we need to change?" are easy to identify because they are the same companies being left behind. Inertia and not knowing where to start when it comes to implementing ecommerce into their warehouse operations are holding back many merchants. However, not having an ecommerce channel today will almost certainly guarantee losing market share and revenue. With this in mind, let's explore the steps retailers should take to ensure ecommerce success in their warehouse operations.
A (Tidy) Path to Success
Success for any retailer—especially those involved in ecommerce fulfillment—begins with what I often refer to as "good warehousekeeping." Good warehousekeeping leads to better customer service through improved inventory management, faster receiving, put-away, picking and shipping times, savings in labor costs and reducing expensive errors. Unfortunately, this is often a cultural challenge, and no amount of technology or sophisticated software will improve matters unless you get your warehouse in order first. Organizations can turn this around with strong management and a warehouse champion (more on this role in a moment) who can rally everyone to welcome change and report on progress.
Next, take a hard look at your processes: What are you currently doing today? What would you like to do? Do you know what you need to do next (and after that)? Take time to identify the bottlenecks in warehouse operations or other problem areas that slow progress toward your order fulfillment goals. It's not uncommon for managers to think they have the best ideas to address these challenges. However, it is more often the case that the best ideas come from the employees in the warehouse and the people who have been with your company for a long time. If you allow them to be heard and invite their ideas, you'll get better buy-in for this cultural change and, ultimately, enjoy greater success.
Timing Is Everything. Implementation Is Key.
I'm not aware of a single business that isn't concerned about workflow disruptions, and rightfully so. The most difficult question to answer when planning around a transformative investment in the warehouse, like a WMS, is, "why now?" That can be a difficult question, especially when no one within your company has the answer. Every business has different requirements, so the process of implementing a WMS in your warehouse will vary based on your needs, availability and business size. Many merchants have peak seasons that create spikes in demand, so rolling out a WMS should be sequenced correctly, which usually means turning on the system in stages by using a phased approach. Again, this is where buy-in from everyone plays an important role.
Perhaps the most crucial role in the successful implementation of a WMS belongs to the warehouse project manager, or warehouse champion. The warehouse champion can be an IT manager or a warehouse floor supervisor. She can be the CEO or an accountant. He can be an outside project management consultant or someone who has been with the company for decades. They come from all corners of the business, have some project management skills and should have the ability to objectively observe warehouse practices in order to improve them—and most importantly, inspire change. Training these key players on how to use the WMS prior to implementation makes the process much smoother.
New Solutions for Ecommerce Fulfillment (and Returns)
The return on investment for a WMS was traditionally calculated based on cost reductions in areas such as inventory management, improvements in workforce productivity, reduced error rates in picking and shipping, more efficient use of space and so on. When it comes to ecommerce, the cost of shipping and returns is another area where a WMS can deliver valuable savings in time and money. These systems can make life easier by handling inbound transportation scheduling, manifesting small parcel and less-than-load for outbound shipments and reverse logistics to manage returns. These tools help achieve significant shipping cost savings for retailers and their customers, adding to the overall ROI of the system.
When picking a batch of orders, for example, the WMS's pre-cartonization functionality will tell you exactly what size boxes to prepare and how many are needed. This allows your employees to pick directly into the box with pre-calculated dimensions and shipping weight. The system also will produce a packing list and shipping label that appears to come directly from the company receiving the customer order, whether that is Amazon, Lowe's, Walmart or some other retailer.
With pre-manifesting, the system not only tells you what kind of box and how many you need for a batch of orders, it also produces the shipping label upfront. By allowing you to take the order directly to the conveyor of whichever shipper is picking it up, you can bypass numerous steps in this process and quickly get a large volume of orders out the door.
Lastly, many large retailers have contract language allowing them to return any inventory they did not sell or simply no longer want to stock. As a result, warehouse staff must sort through boxes of returned items to determine which can be resold, which items must be scrapped and so on. As you might imagine, this is incredibly time consuming. A WMS allows you to review all of those random items, sort through and identify them, and create a return in the system in order to get the appropriate credit and documentation out to the customer.
Accepting Our New Reality
If the pandemic has taught us anything, it's that people are more comfortable than ever before conducting business online. While this has been done in the name of reducing risk, the convenience associated with shopping online has resulted in a paradigm shift and an explosion in ecommerce fulfillment. This is the new reality for retail and will be the model everyone competes against. The only way to succeed is to make sure your business is prepared to evolve to meet these challenges and seize market opportunity.
Mark Van Leeuwen has been with PathGuide Technologies for nearly 10 years. He has over 20 years' experience building a strong clientele and ensuring customer success by working with distributors to understand and appreciate their unique business issues and opportunities.
