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Crunching Data for Painless E-Fulfillment Growth


Crunching Data for Painless E-Fulfillment Growth

An enduring trend of the e-commerce market is continual growth. Proving that convenience is king, online purchases have become a ubiquitous part of the global economy. While this is good news for e-commerce businesses, demand puts increased pressure on e-fulfillment centers and warehouses to accommodate growth. Specialized analytics software is providing a solution, which helps to overcome traditional space, personnel, and inventory constraints by harnessing big data to identify and implement efficiency improvements.

Hans Jongebloed, Senior Postal Expert at Prime Vision, a global leader in computer vision integration and robotics for logistics and e-commerce, explores how bespoke analytics software allows warehouses to scale up operations and support growth.

No stopping online shopping

The e-commerce market is an unstoppable juggernaut. Revenue from online shopping in the USA is predicted to be US $ 915,354 million in 2023, with a compound annual growth rate (CAGR) of 11.3% expected between 2023 and 2027.[1] With online shopping becoming ever more popular, the pressure is on e-commerce fulfillment centers to keep pace. In the US, 274.72 million e-commerce users were forecasted for 2023 and though the curve doesn’t rise as steeply as in the last five years, this number will keep on growing. In 2027, it’s expected there will be around 290 million US users of e-commerce services.[2]

There are three key factors in effectively managing this growth. Arguably the most important is people. Having access to the right amount of skilled personnel can make all the difference when expanding. Available space is another consideration for growth. Maximizing the business footprint may involve moving to another facility or installing an automatic storage and retrieval system to hold more items in less space. The final aspect is inventory. The key here is to achieve an efficient stock profile that provides everything customers require while optimizing internal warehouse processes.

Analyzing an e-commerce operation

Any constraint regarding these factors can stifle growth, and many warehouse managers see digitalization and specialized software solutions as a way to overcome staff, space, and inventory limitations, whilst admitting that their own operations are not quite there yet. The criticality of this was illustrated in a recent survey of 250 facility managers – 45% of respondents thought that their business could become unviable without an improvement in digital technology and skills.[3] Optimizing an e-fulfillment operation with software analytics requires data, and thankfully, warehouse infrastructure and other sources can provide plenty of it. Collating information from warehouse management systems, barcode scanners, sorting machines, plus online shops, retail sales, personnel, and trucks allows warehouse managers to identify e-commerce trends, spot the underlying reasons behind them and make improvements.

Turning correlations into improvements

For example, stock replenishment can be informed by data on which products sell well in certain seasons or those that are often bought together. Therefore, stock profiling can be more optimized to demand at certain times or locations. This data can even be used to influence consumers, offering recommendations through online shops of what products are popular with other buyers, or setting up repeat orders, or subscriptions, for consumables. Employing sales data and shaping customer behavior means warehouses can tailor their offerings between fast- and slow-moving stock. Ultimately, sales forecasting greatly improves inventory and maximizes space, leaving room for growth.

This information optimizes internal processes too. If Mondays are busier than Tuesdays, personnel and resources can be allocated more efficiently, targeting days with higher demand. With data and expectations regarding inbound goods from suppliers or returns, warehouses can manage stock more effectively. Information can be displayed on dashboards in the facility, allowing operators to easily digest findings and react accordingly. Streamlined warehouse processes are always a strong foundation for expansion.

No single solution for all

However, every logistics operation is different, and the effective application of analytics software differs from warehouse to warehouse. Prime Vision supports customers by assessing their data, analyzing it in detail, and providing relevant observations as part of a joint consultation process. This ensures that what’s actually important to a customer’s particular operations is prioritized, with findings on these topics translated into concrete and applicable improvements. With its broad experience across a wide range of e-commerce customers, Prime Vision can interpret this from large quantities of data.

However, operators often know their challenges but struggle to find a solution. A recent Prime Vision project involved optimizing the usage of parcel chutes at a facility. Designed to sort parcels to 500 shops, the volume of items passing through the different chutes varied wildly. Some received the vast majority, overworking personnel, while on others, staff had little to do. Using analytics software to map trends and implement general rules for daily operations, an optimal parcel sorting plan was achieved, resulting in equal parcel distribution and better staff allocation across the chutes, improving efficiency. This example shows the ability of bespoke analytics software to provide an answer to a very specific question.

Prepared for anything

If growth hits a warehouse operation, it is important to be prepared. This is hard when staff, space, and stockholding can’t expand proportionately. However, by identifying the ‘what, where, and when’ regarding a purchase, or, improving internal processes by applying real-world data, warehouse managers can be prepared for anything.

Software analytics solutions from Prime Vision, especially when combined with other scalable automation infrastructure, such as autonomous mobile robots (AMRs) and automatic storage and retrieval systems, provide a proven route for accommodating rapid e-commerce growth. By connecting to any surrounding warehouse system, combining data, and delivering actionable insights – businesses can ensure that meeting future expansion places less pressure on their e-fulfillment operations.


5 Reasons Why E-Commerce Brands Need a 3PL Provider

Online shopping is a force to be reckoned with. Between 2019 and 2022, worldwide e-commerce grew from 15% to an estimated 22% of all retail sales. With e-commerce potentially exceeding $1 trillion by the end of 2022, online retailers are wondering how to stake their claim, make themselves truly competitive and continue to grow into new markets.

The answer may lie with third-party logistics (3PL) providers. E-commerce 3PL is a growing trend among online retailers looking to scale, keep themselves competitive, and insulate themselves against the current risks and upheavals in retail and logistics.

What Is E-Commerce 3PL?

Not every company has the same logistics needs, and consequently, not every 3PL offers the same service packages. The potential workflows and specializations brands might outsource to an e-commerce 3PL company include:

  • Order picking and fulfillment
  • Distribution and general logistics
  • Stowing, storage and warehousing (including cold-chain storage)
  • Transportation (including last-mile delivery)
  • Reverse logistics (for customer returns, warranty claims, etc.)

Companies should find a reliable partner to carry out some or all of these functions. Here are some other ways modern e-retail brands could dramatically improve their competitiveness, earnings and rate of innovation by turning to e-commerce 3PL providers.

1. It Promotes Innovation

Adopting 3PL services is increasingly a matter of competitiveness. One study showed that 89% of brands improved their operations’ effectiveness after signing on with a 3PL partner. In the same survey, 73% of adoptees said these services introduced innovations into their logistics processes.

3PL companies live, breathe and dream logistics. It stands to reason that these service providers have ideas and technologies to commit to logistics operations that brands don’t have since it’s not their core focus.

These partners provide value-adding innovations to logistics, but they also support innovation in other ways. Losing the burden of planning, building and supporting logistics infrastructure lets brands thrive thanks to a renewed focus on core objectives.

2. The Digital Economy Is Always On

There may be a learning curve for brands that transition from a solely brick-and-mortar existence to the world of e-commerce. Gone are customers filing in neatly during business hours. People can now shop anytime from any place and expect service that matches their timezone and lifestyle.

Third-party logistics often doesn’t sleep, either. A 3PL company can do the work brands can’t do during hours when teams are working on expanding and innovating or after regular business hours.

If the digital economy never sleeps, logistics infrastructure can’t afford to blink, either.

3. Brands Need an Omnichannel Approach

One of the reasons for having this conversation at all is the sheer diversification of the e-commerce world. Manufacturers and retailers could get by with one-size-fits-all logistics systems in the years of shopping exclusively in brick-and-mortar shops. They could afford to be rigid in their approach because there was a limited number of points of sale and minimal potential touchpoints with consumers.

The internet has rendered this model archaic. The consumer experience is now omnichannel, meaning e-commerce brands need logistics support that meets customers wherever they are, no matter the channel they use to do their shopping.

3PL companies can provide the required technologies and segmented approach, including support for diversification in service levels — like various shipping speeds or subscription-based models.

4. Ensure the Ability to Scale and Pivot

One of the reasons why 3PL is a perfect fit for e-commerce is because retail is diverse, dynamic and sometimes unpredictable. Retailers and online brands may find their audience, inventory or geographic markets changing rapidly and often. What better way to insulate one’s brand against these paroxysms than to outsource the processes most likely to be affected by them — fulfillment and logistics?

The transportation, logistics and warehousing systems used by 3PL companies are created from the bottom up for diverse clientele. They are designed to be flexible and meet various and ever-changing needs.

Diversifying and strategizing the placement of available inventory is another closely related benefit of e-commerce 3PLs. Brands can rapidly expand their footprint — and potential clientele — by leveraging existing warehouse execution systems, strategic locations, data centers and support facilities, and other infrastructure elements.

5. Minimize Financial Outlays for New Technology

The worldwide e-commerce fulfillment services and technologies market was worth $18.6 billion in 2020 and is expected to grow by almost 10% per year between 2022 and 2030. One of the reasons for the rapid expansion in this sector is the equally rapid proliferation of new fulfillment technologies.

Newer e-commerce brands that want to credibly do business with more mature companies must leverage emerging technologies. This includes automated order picking, collaborative robots, advanced software for organizing and prioritizing customer orders, and perhaps fleet-tracking technology for monitoring freight and managing dock traffic.

All these technologies require e-commerce brands to invest time and money. Hiring an e-commerce 3PL company with access to cutting-edge fulfillment technologies could be a savvy move that saves finances and effort over time.

Is E-Commerce 3PL the Right Choice?

There may be many other reasons to choose 3PL solutions that might be more relevant to a company’s brand, products and business model. For example, someone considering offering refrigerated or frozen products for home delivery may want to build their own cold-chain storage infrastructure or purchase access to mature, scalable infrastructure instead.

Companies must put themselves in consumers’ shoes, too. The biggest names in retail and e-commerce have set high expectations for order fulfillment. Some customers expect certain purchases to arrive in two days or less as an industry standard. Businesses should ensure they’re materially prepared to answer the call of the market but they don’t necessarily have to own the materials that make that possible.

Companies must create and ship the best products in the industry. It’s not necessarily in their knowledge base to deliver lightning-fast delivery, on top of all their other responsibilities. Brands that commit to building and maintaining their own warehousing, logistics and fulfillment systems are diluting their efforts and taking focus from their core offerings.

However, those are exactly the sorts of things 3PL partners can add to a value chain, leaving companies to focus their innovative energies where they’re needed.



Setting Up Your E-Commerce Supply Chain Strategy

Amid the COVID-19 pandemic, e-commerce implementation has become more relevant and important for businesses to keep up with competitors and adapt to the new normal. Before implementation, however, businesses must consider what strategy makes sense and what resources are needed to overcome challenges and potential delays.

Whether your business has already implemented e-commerce or is considering steps to take for the successful implementation of e-commerce operations, the following tips from experts at ARPAC will help you begin to understand what it takes and what to expect when navigating domestic and international markets. From inventory all the way to customer service, these e-commerce strategy tips are helpful for a variety of industries looking to transform operations to meeting consumer demand.

Setting Up Your E-Commerce Supply Chain from ARPAC