There is substantial evidence of how e-commerce has dramatically transformed supply chain and logistics operations over the past two decades. But while its impact on retailers has been well documented, e-commerce has also created new challenges and opportunities for manufacturers. What are some of these challenges and opportunities? How can manufacturers achieve e-commerce fulfillment excellence? Those are the key questions I discussed with Sophie Dabbs, Senior Vice President of Solutions Engineering at Transportation Insight, during a recent episode of Talking Logistics.
E-commerce impact on manufacturers
While retailers have been immersed in e-commerce fulfillment for some time, manufacturers are relatively new to the discipline. Therefore, I started our conversation by asking Sophie what impact she is seeing for manufacturers attempting to enter this space.
Sophie says, “It has upended the manufacturing world. They are still trying to figure out how to compete, how to engage, how to break into the e-commerce space while supporting their retail customers. Many manufacturers are in the ‘we don’t know’ category, but they are not alone. It used to be all manufacturers wanted to talk about was truckload — even LTL was a bad word. Now all they want to talk to me about is parcel. It has upended their mindset.”
I next asked Sophie how those manufacturers who have begun e-commerce fulfillment got started. Sophie notes that many, especially CPG companies, enter by default because their retail customers are demanding they drop-ship orders to their customers. They go through the difficult transition from shipping truckloads or pallets to shipping one or two products at a time. They have to deal with issues such as how to configure the warehouse for picking, packaging and parcel manifesting for UPS or FedEx.
“Once they go through all the pain of this transition, they start to think about how they can leverage all that they’ve learned to do e-commerce for themselves,” Sophie states. “But they are also concerned about competing with their retail customers.”
Sophie explained that there are three main challenges, among many, that manufacturers are facing with the transition to e-commerce fulfillment. “The first is technology,” she says. “How does it impact their transportation management system and their ERP? How do they receive orders from customers and process them through their systems?
“The second is the whole delivery piece — dealing with parcel carriers and the shipping costs. And then there is social media. You have millions of consumers sharing their experiences on social media, so the delivery has to be perfect, otherwise it could impact your brand’s image.
“The final challenge is inventory management and distribution. Where will you actually source the inventory from to fulfill the orders? What is your interim plan for that and what does ultimate success look like?”
What to look for in a third-party partner
With so many challenges and unknowns, I asked Sophie how third-party partners can help and what manufacturers should look for. “With supply chain and logistics, the first thing companies should look for is experience,” says Sophie. “Have they done this before? Do they have a good story to tell? Have they helped other companies like yours?
“The next is flexibility. The market is changing almost daily; how will the partner help you navigate through the changes? From a digital marketing perspective, how can they help you get ahead? And then, finally, innovation. Look at the way people think. Are they thinking ahead?
“When considering potential partners, the facilities and technologies will be similar. The difference is the people. You want to partner with someone who will ask the hard questions when they see you going down a path with risks you don’t understand. Do they have the professional courage to engage you to make sure you’re doing what’s best for your business?”
Mistakes, unknowns and success
To wrap up my discussion with Sophie, I asked her what is the biggest thing manufacturers overlook about e-commerce, what mistakes they make when getting started and how they can best position themselves for success. I encourage you to watch the full episode for all of Sophie’s insights and advice on these questions and more. I also recommend downloading the whitepaper Start the Cart: A Manufacturer’s Guide to Achieving E-Commerce Fulfillment Success for an in-depth look at this topic. Then keep the conversation going by posting your own thoughts and experiences on achieving e-commerce fulfillment success.