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Speedy Deliveries are Changing Supply Chain

December 28, 2015

 With today’s consumers wanting almost immediate delivery of products, more pressure is being placed on retailers and E-tailers. Speed of delivery could be the difference in the buyer’s purchasing decision. A new standard has been set by the recent launch of Amazon Prime’s one hour delivery option in select markets.  Consumers now want to be able to purchase anything, at anytime, from anywhere.

 

E-commerce purchasing grew from $42 billion in 2002 to $237 billion in 2014. Cyber Monday 2015 was the biggest day ever in U.S online shopping with e-commerce revenues up 16.4 percent from 2014, while Black Friday weekend revenues were up 16.2 percent over the same period last year. Mobile devices accounted for 32.1 percent of those Black Friday sales.

 

These shopping experiences are creating a new set of challenges for the supply chains of brick and mortar stores. You can expect to see retailers keeping a larger number of products within regional distribution centers. More of these centers will be set up to handle multiple channels. Select stores will be more heavily stocked and used as smaller fulfillment centers. This process will get the product closer to the customer in order to expedite delivery times and reduce the final mile transportation costs.

 

For this Omni-channel distribution model to work properly, retailers need sophisticated warehouse and order management systems.  They need to know where the product is and how many SKU’s are there at all times. This will allow retailers to determine the most cost effective way to meet the service level expected by the consumer. In today’s world, purchases may be shipping out of a distribution center, store or other location. The ultimate goal is to always meet consumer’s expectations.

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