The world of retail has changed, dramatically. Not so long ago, if I needed something, I would have to go on a trek from mall to mall and from store to store. If it was something particularly specific or unique, the quest would be near impossible. Today, leveraging your search engine of choice, you can find and acquire almost anything without leaving your home.
With Amazon on one end of the spectrum and boutique start-up retailers on the other, this puts traditional brick-and-mortar retailers in a challenging position. How do you meet the needs of consumers across multiple domains of fulfillment and how do you do it profitably? And where does transportation fit? Here are some thoughts to consider as we move into this year and beyond.
Leverage the network
On December 1, 2013, 60 Minutes aired a segment featuring online retail giant Amazon. Of the many topics discussed, much of the fanfare from that piece centered on Amazon’s longer-term investment in drone technology. For me, however, the more interesting comment was the continued investment in additional fulfillment centers. Amid all the science fiction was this very simple strategy focused on getting closer to the consumer. For traditional brick-and-mortar retailers, this should be a signal to leverage that which you already have, infrastructure. The trick of course, is to look at the network holistically, leveraging common assets across channels, not isolating them.
Plan incrementally and iteratively
How do you combine the desire to create economic density for effective transportation optimization with the need to be able to react to new orders and rapid changes to existing orders? The answer is the ability to iteratively and incrementally plan your network, only releasing loads for execution that are either optimal or just have to be processed because of time limitations. The rest should be left in the pool for your solver to improve as new data becomes available.
When venturing into strategies, such as holistically leveraging a network infrastructure or planning incrementally and iteratively, there is an additional enabling premise that has to be enabled, and that is the collapsing of the walls between fulfillment planning, transportation and warehouse execution. For retailers to enable true dynamic response across consumer demand, regardless of channel, the latency between these processes must be eliminated. More than integration, these domains need to be truly aware of each other. 2014 will become the year of integrated planning and execution.
Let me know what you consider to be some of the greatest challenges to leveraging your transportation and network assets to meet the needs of consumers across multiple domains of fulfillment, and do it profitably. I would love to hear your feedback on this topic.