Companies implement supply chain management (SCM) strategies in order to meet customer expectations like fast delivery. Delivery time is the sum of fulfillment time and transport time. Companies are emphasizing the importance of fast fulfillment in order to reduce overall delivery time. Creating an SCM strategy includes aspects of logistics management and demand planning that work in tandem with a transportation strategy. It is a crucial step in reducing freight costs.
More people are shopping online. This year, US online sales are expected to increase by 12% to $371 billion. On Black Friday, Americans spent $1.7 billion online. As the number of online consumers grows, so does the demand for quick delivery; 65% of buyers want next-day delivery. In our instant gratification culture, where customers want everything as quickly as possible, expedited shipping would be the best transportation service. With expedited shipping, shippers can guarantee a product will arrive on schedule.
But, fast shipping depends heavily on the warehouse fulfillment process. According to a recent Inbound Logistics article, Amazon continues to set the standard for fast fulfillment. Many other companies are forming fulfillment and transportation strategies in order to satisfy customer expectations. A recent Logistics Management survey finds that the use of a warehouse management system (WMS) software and warehouse technology has increased.
A WMS is capable of releasing orders to a voice-directed picking system, which tells the picker what products to get and from where. Then, it chooses the best packaging and instructs the operator to pick items directly to that box. Warehouse technology and automation have cut the time it takes to process orders in half.
Fulfillment processes must connect to the transportation strategy. Carrier pick-up and delivery times have to be scheduled according to the DC processing time. Once the product is packaged for shipping, companies with a transportation management system (TMS) gain more time and savings, as the technology reveals information on the fastest, cheapest way to move freight.
A TMS provides shippers with visibility into the fastest shipping route and carrier, while a WMS improves the speed and efficiency of order fulfillment. Together, these technologies reduce the need for expedited shipping.
Shippers can enhance the fulfillment process through new technology. According to Don Derewecki, senior consultant with St. Onge Co., “the pressures on operations are intense and complex. The encouraging thing is that companies are getting things done by employing more technology.” Amazon uses robots to transport racks of products to human pickers. Other companies are experimenting with new transportation methods like drones and Uber-like services.
5 ways fast fulfillment benefits companies:
- Increase revenue
- Gain more customers/ increase market share
- Lower inventory costs
- Eliminate excess safety stock/reduce capital expenses
- Lower transportation costs
Customer demand for quick delivery doesn’t mean rushed delivery. Technology enhances the supply chain, and ultimately, the customer experience.
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In order to satisfy customer demands, there is increased use of 3PLs among companies, likely tied to the need to gain market share. Request a freight quote now.