In 2015, ecommerce sales totaled $317.7 billion, up nearly 15% from the previous year. With so many transaction made worldwide, it’s not surprising that consumers don’t actually consider the technology and process behind making an order. Even ecommerce business owners can sometimes make costly mistakes in the logistics area.
In many cases, early stage startups lead with a multi-task approach that forces them to take care of all aspects of a business, including shipping. The truth is, there’s so much more to the order-to-door process — putting a product in corrugated boxes and sending it off — especially if the business has a large volume of orders. Thankfully, there are transportation management solutions that can help you fulfill these requests promptly and without too much hassle.
While there is a difference (and plenty of ambiguity) between logistics, supply chain, and operations, they all play an important role in satisfying the customers beyond the “Order Now” button.
Warehouse Technology: How Logistics Plays A Crucial Role
Most businesses work with a fulfillment/distribution company to take care of all shipments and make informed decisions regarding the supply chain several months in advance. These companies have the knowhow and most up-to-date warehouse technology to get products carefully packaged and where they need to be in the most efficient manner possible.
Information exchange is critical. For example, Electronic Data Interchange utilizes electronic documents to exchange information related to inventory. With warehouse receiving and shipping services, the distribution company can create, schedule, and ship orders. Inventory reporting provides a wealth of data can help the business make better informed decisions. These reports allow businesses to foresee potential product shortages, detail warehouse storage capacity, and outline scheduling activities.
Inventory Management
If you’ve ever experienced a situation where a product you wanted to order was out of stock, or nearly sold out, this is a prime example of inventory management. Without proper inventory management, a business could spiral downhill quickly.
In some cases, businesses might lose valuable customers who go elsewhere when there’s no product available. Too much of a product can also hurt, because there’s a cost to holding inventory. Business owners could be throwing away money for products that simply take up shelf space for far too long.
Additionally, because vendors are unpredictable, reorders aren’t always the same for one product as they are with others. Distribution centers juggle these fine details to ensure the inventory is always at its optimal level.
Metrics That Matter
Ecommerce businesses are always looking to improve their bottom line. Distribution centers play a large role in aiding those efforts by helping business units align with accurate logistical and manufacturing data. Some behind-the-scenes metrics that matter the most to businesses include:
Order Fulfillment Accuracy: Errors could result in product shortages if the company accidently includes too many units of a product in an order. On the other hand, it could result in mistakes that anger the end customer.
Warehouse Capacity: Based on historical data, distributions centers are able to tell when there needs to be more (or less) of a product.
Cycle Times: Cycle times refer to three primary metrics: dock-to-load time, the internal cycle time, and total cycle time. Each play their own key role and allows the distribution center to identify any areas of inefficiency.
Percentage of Damaged Product: The distribution center will identify if damaged products occurred as a result of the staff, driving, or unloading at the destination.
The Price of Bad Shipping
In the world of ecommerce, too many mistakes can cripple your online reputation. Consumers expect to receive the the right products in good packaging and within a specified timeframe. As discussed, these responsibilities are all quickly handled by third-party logistics companies. If an error is made at any point in these steps, the customer may leave a bad review, and bad reviews are nearly impossible to come back from. These days, consumers trust online reviews just as much as they trust word-of-mouth recommendations. And a RightNow survey found that 89% of shoppers will stop doing business with a company after just one bad experience.
