Inbound Logistics | March 2023

INCREASING E¶COMMERCE EFFICIENCIES BLOCK BY BLOCK

S everal years into the Topping the list is the slowing growth rate of online orders. Total retail sales in Q4 2022 grew 5.2% year over year, with e-commerce accounting for 26.4% of that growth, DigitalCommerce360 reports. While impressive, it’s a fraction of e-commerce’s 74.6% share of retail growth in the same period in 2020. Ination has also become a greater concern. Prices have jumped for numerous budget items, such as packaging, materials, and the cost of borrowing, with the Fed Funds rate increasing from near zero in March 2022 to about 4.5% one year later. BOXED IN BY CONSUMER EXPECTATIONS Even with these challenges, many consumers still expect their orders to arrive within a day or two. Most also assume the orders will be accurate. These shifts are prompting many organizations to rethink their e-commerce sales boom, organizations face an evolving set of pressures. e-commerce fulllment and operations. “Companies are going back to the supply chain models that were developed out

clinical associated professor of management with Purdue University. For instance, when picking mammoth bags of dog food, the packaging materials need to provide enough tension that the robots don’t drop them, but not so much that the robots rip them. Over time, it’s possible packaging will change so robots can better handle it, David says. If major retailers demand that vendors provide robot-compatible packaging, it’s likely companies will comply. STREAMLINING PROCESSES Given consumers’ continued expectations for rapid deliveries, companies need a streamlined fulllment process and negotiated freight rates, says Aley Saleh, manager, supply chain implementation with Clarkston Consulting. Supply chain organizations that leverage technology to automate order processes—while also ensuring accurate, complete master data across their enterprises—can mitigate supply chain risk, plan for various scenarios, and create an omnichannel strategy to provide customers an end-to-end e-commerce journey. GAINING VISIBILITY Visibility also is key to boosting efciency and improving fulllment operations. Systems that show the orders coming into the system, as well as the inventory available across stores, distribution centers, and warehouses, enable a “cost-optimized network,” says Lakshman Lakshmanan, managing director with the consumer and retail group of Alvarez & Marsal, a management consultancy. Competing effectively in today’s business environment requires supply chain organizations to leverage every possible asset in their networks. This often means using technology to provide visibility that can help determine the optimal mix of fulllment options for each order, Lakshmanan says. Does it make sense to ship from the store? To pull from a distribution center?

of necessity during the pandemic, and making them more efcient,” says Alan Amling, Ph.D., distinguished fellow, University of Tennessee, Knoxville, Global Supply Chain Institute. GETTING TO THE NEXT LEVEL For example, many companies are actively preparing for the next level of fulllment automation, says Tim Smith, chief technology ofcer with MagicLogic Optimization Inc., which provides powerful load planning software.

One sign of this is the growing number of robotics deployments.

Robots can streamline operations and cut the miles people must often walk within fulllment centers, Smith says. By 2026, 75% of large enterprises will have adopted some form of intralogistics smart robots within their warehouse

operations, Gartner predicts. Yet robots also can present

challenges. “Robots are not as smart or versatile or dexterous as people,” Smith says. “Software implementations that engage robots need to consider how the devices will actually move and place products.” It’s also critical to consider what the robots will pick, says Amy David,

By 2026, 75% of large enterprises will have adopted some form of intralogistics smart robots within their warehouse operations, Gartner predicts. Since robots are not as dexterous as people, implementing software tools can address how and which products to handle.

36 Inbound Logistics • March 2023