It’s no secret that technology has radically changed buying behaviors for nearly every consumer out there, making the migration to e-Commerce critical for distributors wanting to remain relevant and competitive in today’s economy. Above all, distributors must keep the customer experience top of mind, and Amazon is a benchmark for customer experience and expectations. That was true before the pandemic, it’s certainly true during this current health crisis, and will be true post-pandemic.
Many distributors that traditionally focused on stock replenishment are expanding into direct-to-consumer, requiring their operations 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 e-Commerce is the growing trend for retailers to offload online order fulfillment to distribution partners.
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 e-Commerce into their warehouse operations are holding back many distributors. However, not having an e-Commerce channel today will almost certainly guarantee losing market share and revenue.
With this in mind, let’s explore the steps distributors should take to ensure e-Commerce success.
A (Tidy) Path to Success
Success for any distributor – especially those involved in e-Commerce fulfillment – begins with what I often refer to as good warehouseskeeping. 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. Distributors 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 your warehouse or other problem areas that slow progress towards 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 your 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 distributor that isn’t concerned about workflow disruption, and rightfully so. The most difficult question to answer when making a decision around a transformative investment in the business, like a WMS, is, “why now?” That can be a difficult question to answer, 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 distributors 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 a 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 e-Commerce 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. For e-commerce distributors, 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 eCommerce distributors achieve significant shipping cost savings for the company and its 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 will also 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, but 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 of the big box retailers have contract language allowing them to return any inventory they did not sell or simply no longer want to stock. As a result, distributors 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 e-Commerce fulfillment. This is the new reality for wholesale and industrial distribution, and this 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.
If you’d like to learn more about optimizing your warehouse for the demands of e-Commerce, be sure to check out our three-part podcast series that discusses the ways today’s distributors are being challenged to streamline and modernize warehouse operations.