The growing importance of demand forecasting is elevating the role of data analytics as a tool that can help supply chain organizations better anticipate demand shifts, so they can optimize inventory levels and drive ef ciency. “Data is more important than ever,” says Drew Taranto, senior director, strategy, North America, e-commerce with DHL. Leveraging customer data also offers a competitive advantage. “Understanding your audience deeply allows you to drive higher sales and improve inventory turns even as market conditions change,” Tulloss says. REMOVING FRICTION About one-third of merchants responding to the Shopify survey planned to digitize legacy manual processes within their supply chains during 2022. Cutting manual steps and removing friction has become essential to sustainable e-commerce operations. One reason is the current labor shortage, which makes throwing more bodies at cumbersome and manual processes less feasible. And as both the cost of labor and the volume of e-commerce sales have jumped, some automation investments that previously didn’t make nancial sense now are more likely to. Similarly, solutions like autonomous mobile robots (AMRs) often can be implemented less expensively than, for instance, the behemoth sortation systems of the past. One function that’s typically a contender for automation is inventory management, as many companies still use spreadsheets. Order processing is another. “Companies that receive a few hundred orders per day can manually sort them,” says Johannes Panzer, head of industry solutions-e-commerce with Descartes Systems Group, a supply chain management solutions provider. “But as soon as you reach 500 or so daily orders, you need some automation.” Panzer says. Most of Trade Show Labs' business- to-business client transactions occur online. The company, which develops custom strategies that help clients boost
To accommodate expanded backroom fulfillment space to handle more digital orders, Target debuted a new 150,000-square-foot store, which is about 20,000 square feet larger than average and will be the focus of the retailer's growth moving forward.
farther away. Most times, it probably makes sense to ll the order from the store that’s slightly closer, and cut transportation costs and time. However, if taking the item from the closer store leaves it with no inventory for walk-in customers, it may make sense to pull from the other store. DOM solutions can account for these considerations as they identify which store should ll an order. Because dynamic order solutions allow inventory to be routed between channels, they reduce the likelihood that inventory will pile up in one channel, while others run short, says Anshuman Jaiswal, associate partner in Kearney’s digital transformation practice. DEMAND PLANNING GROWS CRITICAL As Caraway’s experience shows, accurate, timely demand forecasting and planning play increasingly important roles in e-commerce companies’ growth and success. Given how quickly tastes and trends change, demand forecasts based on historical data offer less and less value. Instead, companies need near-real- time data to create accurate short-term forecasts and avoid gluts or shortages.
E-commerce retailers that operate brick-and-mortar stores can leverage their physical locations to ll online orders. The conversion of just one retail store into a mini-ful llment center has the potential to reduce last-mile costs by more than 60%, according to a Shopify report on the future of e-commerce. In its Q3 2022 earnings call, Target announced that it was introducing a new, larger store prototype in Houston, with ve times more space to support digital ful llment services. The retailer also is opening larger locations that can, among other capabilities, offer a suite of ful llment options, according to John Mulligan, executive vice president and COO. DISTRIBUTED ORDER MANAGEMENT To effectively leverage a uni ed, omnichannel approach, a distributed order management solution (DOM) is essential. DOMs use predictive analysis and other technologies that enable retailers to identify rules to balance con icting order ful llment needs. Say, for example, a customer orders a blouse that can be delivered from two stores, one of which is several miles
104 Inbound Logistics • January 2023
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