eStar has conducted a large piece of research around the holistic impact of COVID-19 on the eCommerce landscape. This research has highlighted that the vulnerability of supply chains due to the pandemic and the “COVID Consumer” gravitating to retailers who can adhere to reliable delivery promises. This means that order management & fulfilment are more important than ever. Get it right and win big. Get it wrong and you will struggle or worse.
Whilst many retailers are looking to dramatically grow online revenue and transaction volumes to make up for a lack of bricks and mortar trade, they are subject to operational chaos in the order management and fulfillment function. Part of the reason for this is that the fulfillment function is labor-reliant.
Executing systems and processes to fulfill an online order requires products to be taken from inwards and put on the shelf, picking and packing. Moreover, there are many hands touching a single order and when fulfillment systems are not designed for scale, even more “hands” touch the same order, increasing operational costs.
So, how can retailers scale a labor-reliant function in a COVID world? All it takes is one warehouse employee to test positive for COVID-19 to put this entire business function at risk. Retailers need to design this part of the business for a “COVID World” which will permanently increase operational costs to the business.
Designing this function for scale is strategically because being un-prepared for operations in a “COVID World” will increase costs; and online sales will continue to grow. Without the ability to scale, profits will steadily degrade. This research highlighted five primary areas of focus to ensure that order management and fulfillment function effectively and scale in a “COVID world”.
Software
Having the right software delivers a high level of logic and intelligence that will actively control and scale fulfilment. Good software should do the following:
- Capture and reduce human error (46% of fulfillment errors are from employees)
- Enhance business reporting – transparency
- Improve inventory accuracy
- Enable the capability of a high standard of email notification messaging to be sent to the customer
- Can rapidly send the order information to the right picking and packing site based on unique business rules and logic
- Be able to accurately and rapidly send and receive information from one business system to another
- Tight connectivity with eCommerce technology to enable rapid and accurate information to move from one system to another.
The last point is especially important and must be entirely “two-way”. Not only is the eCommerce technology passing information to the order management system, but the order management system should be passing back order updates for customers to view in their own account area.
This function contributes to scale due to the better information customers have access to in relation to their order and its progress.
“COVID-Care plan” for warehouse employees
One of the biggest challenges for fulfillment operations are the practices required in keeping employees safe while working. This is key to keeping warehouses and factories operating, and keeping products flowing.
Amazon has introduced COVID related safety procedures and testing stations in all US distribution centers in the efforts to construct what they are calling a “COVID-free supply chain”.
Partner with specialist third party logistics
The partnerships with 3PL’s has grown in popularity as a result of COVID-1974. The intricacies behind how this could work will differ for each retailer, but this partnership does have potential benefits for those retailers who feel exposed.
This is because 3PLs can:
- Take on all new procedure and system changes to prepare for the “COVID World”.
- Take on the associated capital costs (which may be passed on, but this can be negotiated).
- Employee management and support is the responsibility of the 3PL.
Enhance transparency to customers
It has been openly documented the large-scale issues that have arisen with last mile courier companies around the world. To put this in perspective, both Fed Ex and UPS have announced the suspension of their own service guarantees.
So how can retailers respond by ensuring a great delivery experience to their customers? Firstly, they can promote click and collect to reduce the reliance on home delivery and secondly, they can improve the notification experiences to keep customers informed. With the right order management system in place, there can be established “triggers” which should send elegant messaging notifying a customer with an update throughout the home delivery process.
Dark Stores and Click and Collect
The idea of building or converting stores exclusively for eCommerce fulfilment, what is commonly called a “dark store” has grown in popularity during the pandemic, especially to redeploy underperforming stores and add capacity and scale to fulfilment.
Like dark stores, Click and Collect can leverage existing infrastructure and employees and provide businesses with additional scale.
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