THE NEXT-GENERATION E-COMMERCE DELIVERY NETWORK IS HERE HOW TO STRATEGICALLY DESIGN AND IMPLEMENT IT BY MIKE LAMBERT
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hether you’re a growing e-commerce brand or a mature omnichannel retailer, you’re likely evaluating your e-commerce delivery network design as consumer expectations, competitive forces, technology, and the carrier marketplace continue to rapidly evolve. Accelerating advancements in new breed order fulfillment, delivery, and returns technology coupled with the rapid expansion of the carrier marketplace and associated capacity present many challenges, but also a unique opportunity for shippers. That opportunity is the design and implementation of the next generation of e-commerce delivery networks. Where to Start? An effective design process begins with an e-commerce delivery strategy clearly defining goals and objectives related to fulfillment footprint, service, carriers, and cost. Shippers will need to evaluate the current state and assess a multitude of options to create a roadmap leading to optimal results. Furthermore, shippers will need to be prepared with big data analytic capabilities and know-how to model complex multi-variable “what-if” scenarios to support the fulfillment footprint design and carrier service decision-making process. Next, shippers should evaluate their current network to identify opportunities to fulfill their customer promise goals at the least cost. To perform this assessment, develop a baseline cost and transit time data analytic model. This model will identify gaps in achieving optimal fulfillment facility and carrier service selection. The greater the number of fulfillment facilities, carriers, and service options, the
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greater the potential for sub-optimal selections. This evaluation will allow for the identification of symptoms and root causes of sub-optimization for correction in the current network design and to be addressed in the future state design. Then, shippers should evaluate their fulfillment facility and technical capabilities along with their associated constraints. This evaluation will serve as the basis for developing a strategy and roadmap to remove constraints for unlocking the full potential for delivery and returns optimization. For example, if a shipper’s parcel rate shop TMS is limited in its rate shop capabilities to optimize carrier transit and costs, then a business case should be made for removing this limitation. Additionally, locations from which inventory is allocated for order fulfillment may also have physical constraints for processing throughput or volume, and these must be addressed. When designing an optimal e-commerce delivery network, it’s also essential to understand the current carrier market and the solutions available. Many shippers depend on an order fulfillment strategy that requires the ability to ship from a high number of origin points in their network. This dependency presents opportunities for established national and regional carriers to provide solutions. At the same time, there are new gig-economy delivery and service innovations in the market, which are evolving rapidly. Many national, regional, and local/gig-economy carriers and traditional parcel carriers may be incorporated to provide and further an optimized solution in both cost and service. In addition, e-commerce delivery has expanded beyond the traditional small parcel to oversize and bulky items such as barbeque grills and treadmills. LTL or specialty carriers are expanding capabilities to capture the needs of shippers for these product types with cost-acceptable solutions. There is a good chance that many of these carriers and providers can meet the needs of shippers for a portion of their network based on their volume and package profile. Best of all, these carriers are eager to win business by partnering to leverage their unique value proposition. From this evaluation of the carrier market, an initial carrier service strategy can be derived. Beyond delivery capabilities, shippers need to understand the invoicing and tracking data quality capabilities of any new carrier before implementation. This data is critical for managing budgets, understanding gaps in expected costs and transit time, refining network optimization through modeling, and managing the customer experience. If a shipper’s network design will include less-established carriers, look to engage an experienced and quality advisor with a full view of the carrier