Archives for June 2020

Is the Fulfillment Velocity Demanded During the COVID-19 Crisis Sustainable Long-Term?

By Jeff Schmitz | 06/18/2020 | 5:22 PM

These four things can aid with operational continuity as warehouses and distribution centers work to balance worker safety and speed.

In 2018, Zebra surveyed more than 2,700 professionals in transportation and logistics, retail and manufacturing firms on their plans, implementation levels, experiences and attitudes toward omnichannel logistics as part of the Future of Fulfillment Vision Study.

At the time, nearly everyone (89%) agreed that a boom in e-commerce was driving the need for faster delivery, yet more than half (55%) of organizations were still using pen and paper to manage omnichannel logistics. Even more concerning was that inventory levels were only reported to be 66% accurate on average.

If they were struggling to keep up with demand then, one can only imagine the scale at which warehouses and distribution centers are challenged right now.

COVID-19 upended the brick-and-mortar retail model and forced supply chains to transition an almost-100% e-commerce fulfillment operation in a matter of days – something that would normally take months or years. At the same time, traditional online retailers saw a surge in orders for everything from essential household items such as cleaning supplies to food staples that would normally be purchased at local grocery stores. New customer acquisition rates soared.

To further compound the issue, online shoppers started buying items at a higher volume (i.e. one case of cereal versus one box) and at a higher frequency (i.e. two orders a week versus one order every two months). It didn’t help that essential retailers were already struggling to keep physical store shelves stocked amidst a surge in foot traffic and a surge in cart sizes.

In other words, the pandemic posed challenges that most retailers and their supply chain partners weren’t prepared for, and it’s going to be difficult to stabilize anytime soon.

The economy continues to adjust to a new reality nearly every day. Supply chain professionals must be able to adapt just as quickly. That is a complex challenge. Supply chain efficiency thrives on certainty and predictability. The more the better.

What changes can warehouse and distribution center operators make right now to recover from recent disruptions? What new processes or new technologies need to be implemented to retain fast fulfillment capabilities as orders increase and ensure the even distribution of available inventory as omnichannel obligations expand?

Continue Planning for the Unpredictable (Because the World Can Change Again at Any Moment)

With social distancing practices institutionalized and the expectation that they will remain in place for an extended period of time, we’re seeing the natural preference for online shopping and the home delivery of goods increase. This is true even for cold chain items, and as the reopening of non-essential retailers’ brick-and-mortar locations will likely do little to reverse this trend. As such, delivery from distribution centers (DCs), stores and micro-fulfillment facilities could be expected to grow much faster than previously expected. The surge demand experienced over the past few months may well turn into sustained demand.

Since it’s impossible to predict the future, warehouses and DCs must be agile enough to act on any opportunity and resolve any issue in real time. That takes preparation, even if its mere minutes before you execute versus the months-long planning cycles to which you’re accustomed.

When a disruptive event first occurs – whether due to a manufacturing interruption, natural disaster or viral outbreak – you need to immediately assess the current situation and consider the worst-case scenario based on currently available public data and proprietary operational intelligence:

  • Market impacts: Will the event cause a temporary, if not permanent, acceleration in retailers’ move to e-commerce fulfillment? If so, how will operating plans change? Will retailers be able to move forward with plans to grow their direct fulfillment channels? Or will fulfillment actions have to be re-directed to your warehouse/DC in an accelerated manner?
  • Inventory stability: What is the projected impact on your product mix? Will there be temporary shortages of some SKUs due to delays in manufacturing or transportation capabilities? Or will you need to prioritize the storage and distribution of some SKUs (i.e. personal protective equipment and cleaning supplies) and refuse the receipt of others (i.e. clothes or toys) to better meet customer demand or critical needs? What are your demand profiles?
  • Channel stability: What channels are growing or slowing down? Are these changes temporary or long lasting?    
  • Supply availability: How is the supplier community holding up? And will they be able to sustain operations in a prolonged disruptive state?
  • Lead time: Are suppliers completely shut down? If so, are there alternative sources for high-demand SKUs? If suppliers are open by operating in a reduced capacity, how is production and shipping being affected?

I recommend you repeat this exercise often – perhaps once a week or month. Demand and delivery preferences can literally change by the minute, and supply chain volatility will remain high as long as there is instability in the general market. It will be critical for distributors to assess inventory velocity and re-slot more frequently than usual for the unforeseeable future. Right now, every item is a new item.

Implement New Technology Solutions That Enable You to Sense, Analyze and Act on Even the Slightest Supply or Demand Changes Instantly

COVID-19 wasn’t the first event to trigger a sudden change in demand patterns or delivery channel preferences in the consumer or commercial sectors. But it was the first event in a long time to have a simultaneous impact on nearly every region of the world – and the first to warrant drastic operational safety changes. That means the goal right now must be to protect your supply chains and preserve fulfillment speed without compromising worker safety. That’s where technology investments can pay off significantly.

If your operational visibility is contained within your four walls, you could easily be blindsided by supplier work stoppages or transportation delays. You must be able to see what is happening in your supply chain from end to end, analyze its impact (using the steps I mentioned above) and then act quickly on “opportunities” – either to generate more revenue or mitigate losses. Most importantly, you must find new ways to preserve fulfillment speed as demand shifts drastically without compromising worker safety.

Fortunately, the members of the 3PL industry are accustomed to making technology choices biased toward flexibility due to the dynamics of their business models, and those inclined to inject more tractability into their own operations should follow their lead:

  • Make the investment in wearable technology and highly flexible automation solutions that can adapt to multiple business models.
  • Choose mobile computing, scanning and printing technologies that can be scaled quickly to enable the fast introduction of new workflows and onboarding of new workers.
  • Deploy real-time location solutions (RTLS) that enable you to track and trace both pallets and individual items from the moment they approach the loading dock to the moment they’re loaded onto a truck. This will prove highly valuable in increasing your overall inventory accuracy. Plus, RTLS can help you track the movement of people, which is currently proving invaluable considering the emphasis on social distancing policy compliance. You can identify high trafficked areas, help re-route individuals to avoid close interactions and simplify contact tracing.
  • Employ co-bots that can help minimize worker movements in picking and packing processes. Beyond reducing the number of steps taken by workers and aiding with social distancing, co-bots help you reassign more of your workforce to higher value tasks that can only be completed by humans – tasks that will enable you to process a sudden influx of change orders without issue. 
  • Utilize the advanced analytics tools available to you, including those that enable you to monitor the health of your technology devices.

I recommend you ensure all technology devices within your four walls are thoroughly sanitized throughout the day – not just the shared label printers, wearables or handheld computing devices. Rugged devices are designed to be cleaned on a regular basis and the manufacturer’s user guide describes precisely how to clean them without causing damage. Keeping your workers safe, healthy and armed with the right devices will help you continue driving your operational productivity during this unpredictable time.

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 Jeff Schmitz

Jeff Schmitz

Jeff Schmitz is senior vice president and chief marketing officer at Zebra. Mr. Schmitz most recently served as executive vice president for multiple business units and sales at Spirent Communications where he had previously also held several senior leadership roles including chief marketing officer and vice president of networks & applications. Prior to joining Spirent, Mr. Schmitz held senior marketing positions at Rivulet Communications, Visual Networks and Tellabs Inc. Mr. Schmitz holds a B.S. degree in electrical engineering from Marquette University and a Master of Science degree in computer science from the Illinois Institute of Technology.


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