As people have become heavily reliant on technology and increasingly connected, there has been a surge in online sales. This is good for the eCommerce market; however, it presents retail supply chains with a wide range of challenges. In their efforts to meet the rising expectations of consumers, satisfy the need for instant gratification and improve customer service, many companies are having issues with inventory management, order fulfillment and distribution operations.
Today, people can easily find a product they are looking for online and place an order. And, in addition to shopping quickly, they also expect swift shipments. Research conducted by Peerless Research Group, in collaboration with Supply Chain Management Review and Ryder Systems, Inc., recently revealed that 31 percent of buyers expect same- or next-day delivery on locally made orders.
Obstacles in distribution operations
Supply chain leaders are tasked with managing higher volumes of inventory and making faster deliveries, all while trying to offer cheaper shipping fees. This is tough to achieve, considering the cost of order fulfillment is on the rise and can largely be attributed to expenses related to transportation and labor, the study indicated.
The research report also found that dealing with growing shopper expectations, completing orders on time, having high levels of supply chain visibility and managing increasing order fulfillment costs are the main operational challenges companies struggle with. Only 34 percent of those surveyed said that they believe their distribution processes are sufficient.
In an omnichannel environment, resolving such issues is problematic. Multiple platforms translate to different processes and complex data, ultimately expanding the potential complications and risks supply chain managers face.
More retailers are offering consumers the option of ordering online, then picking the products up in-store. This, too, is difficult for companies to manage. According to Neal Leavitt, a contributor to iMedia Connection, research conducted by the JDA Software Group last year found that about 35 percent of people who placed eCommerce orders chose to pick their items up at the physical store location, and approximately half of these consumers ran into an issue while trying to obtain their packages.
"Retailers might experience service failures because picking products from storage and packing them into unique combinations for customers is easier in a streamlined warehouse than in a chaotic store, where other customers need to be helped and orders can be misplaced," JDA Software Group Senior Vice President Wayne Usie told Leavitt.
Strategic sourcing solutions
And it is not just fulfilling online orders that sellers are struggling with. They also have to deal with returned merchandise. Multichannel Merchant recently explained that, "Every year, 15 percent of goods sold are returned or deemed excess, and many retailers do not have adequate systems in place to manage this flood of items. The traditional reverse supply chain is long and complicated, with goods traveling from consumer to retailer to vendor to liquidator to wholesaler to reseller and finally, to a secondary buyer."
However, the source also added that companies can save time and streamline operations by leveraging reverse logistics technology.
Over the next year, many businesses plan to focus on increasing profit margins, improving customer service and satisfaction, making faster deliveries and lowering costs, the PRG study revealed. One strategy the survey participants said has helped with reducing costs and increasing operational efficiency is outsourcing some supply chain functions, such as transportation and distribution.
Another approach that retailers can take to achieve these goals, and which 43 percent of companies have already begun to do, is to invest in supply chain software and applications that provide executives with enhanced access to essential metrics and analytics, as well as real-time visibility.