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Archives for February 2018

Effortless Drop Shipment: A Seven-Step Program for E-Commerce Success

By Contributing Author | 02/23/2018 | 6:03 AM

By Peter Edlund,  DiCentral

The habits of today’s consumer have shifted rapidly over the last ten years. The long days of shopping at malls or placing orders inside a retail store seem obsolete, even during peak shopping seasons like Black Friday weekend. Today’s consumers expect to be able to order almost anything online and have it shipped immediately.

As a result of this new paradigm, retail e-commerce has ballooned while traditional brick-and-mortar stores have been failing to grow. E-commerce is a $220 billion market and is expected to grow by as much as 17 percent each year, according to AmeriCommerce. Retailers are keenly aware that, in order to survive in today’s retail reality, they need to partner with more suppliers to support direct-to-consumer fulfillment—or drop shipping.

Nonetheless, many retailers still struggle with drop shipment, with concerns ranging from difficulties in forecasting and return on investment to supply chain visibility and control of the customer experience. Getting every step of the drop ship process right is critical because, when a customer shops on your website, you will ultimately be judged for how accurately and timely a dropship vendor handles a transaction.

Your reputation and your connection with customers are on the line with every transaction, even if you never touched the package that arrives at someone’s door. The last thing you want is to hear is a complaint from an angry customer that hasn’t received an item from a dropship vendor. That conversation usually means there won’t be any repeat business.

Drop shipment doesn’t need to be complicated or problematic. There is a seven-step process you can follow that begins long before a package is ever shipped from a supplier’s warehouse. We’ve outlined the steps below, beginning with knowing you might need some help.

Step 1: Use A Complete Dropship Solution

Retailers have plenty to worry about before things like e-commerce and drop shipment are even considered. Before you get started, it’s best to consider a third-party dropship solution. Most retailers were not built to handle direct-to-consumer fulfillment and the volume of single SKU order fulfillment that comes with it. One thing you don’t want to do is shirk on customer service or the core tenets of your business.

A better solution is an end-to-end dropship solution that ensures control over the direct-to-consumer order fulfillment process. You also might want to seek a complete outsourced solution that provides the visibility and tools to manage both your bulk fulfillment and direct-to-consumer order fulfillment processes.

Step 2. Set Expectations With Vendors:

Before you get to the nuts and bolts of online sales, you need to have frank conversations with your vendors. Be explicit about your requirements and timelines and specific dropship requirements, such as scheduled inventory updates and private-label packing slips.

Step 3: Ensure Product Information Is Accurate:

The best dropship programs start with accurate product information, everything from price to weight to product images. Make sure you add e-commerce extended attributes for the product catalog to your Vendor Standards Manual to receive all the information necessary to populate your e-commerce website.

Step 4:  Integrate Available Inventory in Real Time

Accurate inventory is essential if you plan to take orders from e-commerce customers and have them fulfilled by a dropship vendor. Most retailers should plan to update inventory multiple times daily. Also, consider how third-party providers can assist vendors with maintaining and communicating inventory so it’s available for your website.

Step Five: Understand The Critical Dropship KPIs

So, you have a dropship solution, you’ve talked to your vendors and you have accurate product information on your website. Great! You’re almost there. The next step is to look at the KPIs (key performance indicators).

First, make sure vendors send inventory feeds per their SLA (service level agreement) to give you an up-to-date view of what’s available. Second, create a reporting dashboard using transaction data to see how fast the vendors confirmed an order and ensure that the acknowledgement came within a mandated time frame. Also, add order fulfillment to your reporting dashboard to see how quickly an order went out the door and if the vendor shipped an item within the agreed upon timeframe. Third, make sure the vendor’s order fill rate is within acceptable range. Finally, seamless order-to-small-parcel-shipment tracking to invoice documentation should be standard throughout the dropship process.

Step 6: Rigorous Shipment Standards

Errors are a given with the high volume of e-commerce, particularly during peak times, such as the holiday season. However,customers now have full visibility into the shipping process. Keep consumers updated on the status by integrating small-parcel-carrier package shipment tracking. Take shipment documents from your vendor, grab the carrier tracking number and update your e-commerce website with up-to-date shipping information.

Step 7: Follow Up:

Having real-time dashboards, a score-carding program, and a comprehensive view of shared inventory will ensure your trading partners are fulfilling orders as promised. You want a view of available inventory at a vendor site that is comparable to your view of internal inventory to minimize customer service issues or lost sales opportunities.

Peter Edlund
Peter Edlund | Senior Vice President of Global Product Marketing 
Peter is a founding member of DiCentral and responsible for leading the company's global marketing initiatives. He is the host of DiCentral's Connected, a video podcast that discusses current EDI trends with leading supply chain experts. Peter has over 20 years of sales and marketing management experience with a focus on supply chain solutions. He has held executive management positions with several technology firms. Peter is a veteran of the U.S. Navy and attended Central Texas College and Embry Riddle Aeronautical University where he studied aviation business management. For more information, please visit www.dicentral.com.

Infographic: How will smart technology impact manufacturing?

By Contributing Author | 02/16/2018 | 6:40 AM

Roadblocks for IoT Implementation

By Contributing Author | 02/09/2018 | 6:40 AM

By, Kristi Montgomery, VP of Innovation, Kenco Logistics.

Part II of III 

The Internet of Things (IoT) technology is disrupting all industries – from retail to healthcare and even the supply chain, but for all the benefits outlined in the first blog post, “The Future of IoT in the Supply Chain: It’s Complicated,” there are many roadblocks keeping IoT implementation in the supply chain from happening today.

These roadblocks are far reaching and very real – and they hinder the ability for IoT technologies to become widely and successfully adopted within the supply chain. However, by recognizing what these limitations are today, it will give us, supply chain leaders, an opportunity to set plans in place to overcome these challenges for IoT implementation in the future.

Roadblocks of IoT Implementation:

Standardization: One of the biggest challenges of implementing IoT devices within the supply chain is having a unified way for this technology to be integrated. Currently, there are no technology standards defined for how IoT devices will communicate – this includes network protocols, communication protocols, and data-aggregation. Without defined standards, we’re unable to figure out how data will be collected, processed, handled, stored, and summarized, leaving the industry wondering how these devices will handle unstructured data. And, once that data is collected, the next question will be: how will it deliver the data to tools that can analyze and store it? While nothing has emerged yet, it should be noted that there are several companies actively working on a regulatory standard. As we look at new IoT devices to implement, we should also consider how the standards and protocols may change in the future.

Security: Security continues to be a main concern for integrating and implementing emerging technologies. The fear around the ability to hack an IoT device is real, particularly because there is such a rush to bring emerging technology to the market that vendors often favor functionality over security. In addition to preventing access to the device itself, there are concerns about the security around the data being transmitted from the device. Questions we need to consider ensuring data is secure includes: Is it encrypted – if so, is the encryption strong enough? And, are industry standard best practices already built into the device around access control, authentication, and confidentiality? Of course, these aren’t the only questions to ask, but can set the basis for how we think about security and what steps we’re taking to protect our IoT devices as well as the data we obtain.

Privacy: Often, the promise of IoT is the ability for a single device to communicate with other internet-enabled devices, combining data and transmitting information to various parties. However, the collection of this information can also reveal data that may be sensitive to employees – like a truck driver’s location. While an employer may see it as a way to know exactly when deliveries will be made, but an employee may see it as an invasion of his privacy. In fact, beyond the data combination and transmission issue, there are legal requirements around such issues such as Personally Identifiable Information (PII) that require careful consideration before implementation. Some of these devices can be so small that an individual may not know that they are being tracked or assessed – a violation of privacy. And consider if the device is manufactured internationally – how can you be sure your company’s data is not being transmitted to the cloud and retrieved in an unfriendly country? The moral concerns around who is collecting data and for what purpose must be resolved before the widespread adoption of the technology.

Connectivity/Interoperability: With the overwhelming amount of data to be generated and transmitted through IoT devices as they gain popularity, the current communication infrastructure is another concern. Many devices are managed today through a centralized server-based network. But, when the number of IoT devices online reach the hundreds of billions, this will become a bottleneck and could cause entire systems to shut down for extended periods of time. Interoperability is another common roadblock the industry is facing. Device manufacturers are creating proprietary devices to limit the ability to connect these devices to brands other than their own; And with that, the data is inaccessible except through the closed system developed by the manufacturer. This creates an issue for companies to invest in IoT devices as they’re forced to work with one vendor, with no option to switch vendors or to seek enhancements to the existing functionality. Without the standards in place, devices can be designed poorly, even behave badly when exposed to the open network in an organization.

Compatibility: Many of today’s IoT devices communicate through a Web API, a much newer technology that is not available or compatible with legacy systems running on mainframes or industry-specific environments. Without the protocols for machine-to-machine communications in place, organizations are forced to spend on additional hardware or software to create channels between different IoT devices that have been manufactured by different vendors. The inability to directly communicate ultimately complicates the network’s capacity, speed and will increase downtime issues. Ensuring widespread capability of all IoT devices with the organization’s older technologies and systems will require an intermediary system that can help translate transmissions from devices to legacy systems.

Longevity: IoT, smart devices, and the like are today’s buzzword, but how long will these technologies actually stand the test of time? Given there are no standards in place for implementing emerging technologies, how much of the IoT infrastructure created will be rendered obsolete? Moreover, many device manufacturers are creating their own proprietary devices that only connect within its brand, but what if the manufacturer no longer exists? How will that affect your business? These questions are important to think through as your organization makes decisions about implementing devices as well as changing devices. There must be a secure way to decommission the devices and ensure that your data is not exposed nor are your networks compromised by devices that become obsolete. 

Data Usage: In larger enterprises, the amount of data collected and stored is already staggering, but IoT may increase that problem by a thousand-fold. With the nature of always-on devices collecting data in real-time and transmitting that data to another system, the issue of storing that data and the capacity required will quickly get out of hand. The investment in storage, whether internal or on the cloud can be prohibitive – the more devices that are online, the amount of data grows exponentially. Most organizations are not prepared for the glut of data that will result and are not considering the impact on existing infrastructure, system operations, and speed to operate – but they need to begin thinking about this for their IoT adoption to be successful.

Risk – Outages/Equipment Failures: Organizations today are mainly concerned with implementing and deploying IoT devices, but many have not considered the impact the need for internet connectivity will bring once devices are deployed. Unlike internal systems that can operate in a silo of your organization, these devices will require persistent internet connection to deliver on the promise of the real-time data analytics that drive decision making. But, what happens when the internet connection to your organization goes down?  Would your organization be able to function without those devices? If you are relying on them for mission critical business delivery, then the answer is likely no, requiring significant investment in backup systems and connections to ensure limitation of failure.

Conclusion:

With any new, innovative technology or device, organizations will always be interested in ways to implement and leverage the time savings or improved communication opportunities those devices may bring. However, there are many concerns to address and roadblocks to overcome to ensure these emerging technologies are more than just a trend. Instead, it’s identifying standards or industry-wide best practices that everyone follows so it goes beyond a trend and into the mainstream business routine.

 

KristiMontgomery

Kristi Montgomery, Vice President of Innovation, Kenco Logistics

Promoting transformational change in supply chain through delivery of innovation for customer-centric solutions

Like you, Kristi knows that innovation cannot just be a buzzword.  She is a dynamic explorer of strategic innovation that drives revolutionary change.  With 27 years of logistics and supply chain experience, she leads a dedicated team of specialists in Kenco Innovation Labs who identify, research, and prototype creative ideas with the potential to impact the supply chain. Collaborating with customers, entrepreneurs, and vendors from multiple industries enables Kenco to think “inside” the supply chain box and create unique, customer-driven solutions.  As the senior innovation officer, recognizing that no single approach works for every customer, Kristi leads research and development utilizing design thinking and open innovation to deliver business value for the 200+ customers that Kenco serves in North America.  Kristi is passionate about the relentless pursuit of innovation as an enabler of business growth and driver of strategic advantage. Executing on the innovation promise compels her to be a transformational agent of change.

Kristi received her BS in Organizational Management from Covenant College She is a certified Specialist in Design Thinking and Innovation as awarded by the Darden School of Business, University of Virginia.  She also received her Certified Information Executive designation from the Institute of CIO Excellence at the University of South Carolina.

Kristi serves on the Board of Directors for ChaTech, a non-profit dedicated to the promotion of technology and STEM education, is the Co-Chairman of the International Warehouse and Logistics Association Education Committee, and serves the industry speaking, participating as a panelist, and publishing articles promoting supply chain innovation.

What the World Would Look like Without Freight Brokers

By Contributing Author | 02/02/2018 | 8:22 AM

By Chandler Magann, Founder, Next Exit Logistics

As of October 2017, 83% – just a bit over four-fifths – of all shippers outsource their domestic transportation needs, according to the Council of Supply Chain Management Professionals. In the council’s 2018 22nd Annual Third-Party Logistics Study, researchers also found that a quarter of all shippers are using a 3PL to plan and manage transportation logistics, both foreign and domestic.

So consider, for just a short moment, what a world without freight brokers would look like for your bottom line, employee retention, and indeed for the long-term well-being of your organization. No doubt, it would not be a season of The Walking Dead, but a world without freight brokers would be slower, more expensive, and populated by a horde of very grumpy and dissatisfied customers, who are not zombies.

Put aside the fact that planning and managing transportation would be an additional logistics position. Instead imagine using your current personnel to take on the additional responsibility that is outside of their current expertise. The individual or team will need to learn a whole new set of required skills; they will need time to find, create and foster relationships with multiple carriers; and understand efficient routing, permitting, and more.

That person must remain continuously read-in to what freight is available when and to what location.  That staffer then must harmonize those data points to your supply chain processes, or else shipments will sit at the loading dock. If your employee cannot execute the transportation and delivery of your products, the result will be delays – the third rail in the age of e-commerce.

Without freight brokers, overhead costs will definitely increase. Remembering that 83% of shippers outsource their domestic transportation needs, same report states that current transportation expenditures cost roughly 11% of revenue. What’s more, shippers are spending just over half of their transportation budget on outsourced transportation services.

So, let’s reverse-engineer this equation. A single logistics planner’s annual salary, before benefits, according to Glass Door, averages $57,105 but can run as high as $80,000. If your needs dictate building out a transportation department, the overhead costs will exponentially grow, and encompass hiring costs, space, and management systems to incorporate tasks into the overall supply chain operation.

Shippers will also need to invest in a routing and scheduling software solution that can find and communicate with carriers; track and organize pick-up and delivery windows, truck capacities, and various load configurations (LDL, intermodular, etc.), and provide access to the carriers’ current safety records. This is important to reduce fuel costs, to negotiate the best rate possible, and to mitigate legal vulnerabilities through compliance, on top of getting the cargo to its destination on time.

I recently stumbled across a blog describing freight brokers as close cousins to the Devil himself. Funnily enough, at the top of the freight broker’s Seven Deadly Sins was lowering costs. As a freight broker myself, I am not ashamed in the least about finding transportation efficiencies for my clients, because my job is to represent the interests of my clients.

That said, there is a balance to be struck. The best freight brokers work with shippers and carriers to promote close, dependable and cross-functional relationships, wherein the outsourced services are integrated into the supply chain, just more efficiently and at a lower cost.

 

Chandler Magann opened a Texas sales office of his father’s company and worked out of a spare bedroom in his house. In January 2009, Chandler’s father sold his entire business to investors. It was then that Chandler founded the freight brokerage Magann Texas, LLC, which later changed to Next Exit Logistics in July 2009.

 

 

The opinions expressed herein are those solely of the participants, and do not necessarily represent the views of Agile Business Media, LLC., its properties or its employees.

About One-Off Sound-Off

Welcome to "One-Off Sound-Off," a blog page devoted to guest commentary on all things supply chain. This is a space where industry leaders can share their opinions and expertise with the logistics and supply chain community. If you have an article or commentary you'd like to share, please consider sending a guest blog proposal to feedback@dcvelocity.com.



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