As more manufacturers pursue online sales direct to the end user, supply chain management professionals are challenged to fulfill a growing number of individual, small shipments. Operations that are structured and staffed for cases, pallets or full truckloads are simply insufficient. Traditionally, manufacturers considered logistics, transportation and distribution to be necessary evils — they were required, but didn’t really offer any great business opportunities. The rise of e-commerce is making these competencies integral; yet many companies are ill-prepared to handle them.
E-commerce necessitates more employees, fixtures, equipment and space. Instead of moving pallets stacked with cases to loading bays, individual cases or cartons are moved to packing areas where products are mixed in shipping boxes or individually boxed and padded. Shipping documentation and labels will multiply, and picking equipment such as pick-to-light racks or carousels may be needed — along with printers, labelers, carton packing material dispensers, packaging tape and more.
Given all this added complication and cost, is it worth it? For a rising range of businesses and industries, it’s not a matter of preference: E-commerce is growing at such a rapid pace that most manufacturers have no alternative but to ship direct to consumers. The only real choice is whether to facilitate the effort internally or engage a third party.
For those opting to take on the challenge, begin by asking these questions, which are outlined in the APICS Certified in Production and Inventory Management body of knowledge discussion of outsourcing:
- Is the activity strategically important?
- Does the company have specialized knowledge?
- Is the company’s operations performance superior?
- Is significant operations performance improvement likely?
If the answer to any of these questions is yes, then internal operations should be carefully explored and cost-service trade-offs considered. If all answers are no, outsourcing is probably the best alternative, although a quick comparison of cost versus service would still be in order.
Whatever the ultimate decision, keep in mind that e-commerce is poised to become a large part of most businesses, and it is a vital link in the creation of value for the customer. Now is the time to cultivate positive working relationships with package delivery services such as DHL, FedEx, UPS and the postal service. Finally, paying closer attention to key shipping considerations is a smart first step.
Dave Turbide, CFPIM, CIRM, CSCP, CMfgE, is a New Hampshire-based independent consultant and freelance writer and president of the APICS Granite State Chapter. He also is a Certified in Production and Inventory Management and Certified Supply Chain Professional master instructor and The Fresh Connection trainer. Turbide may be contacted at firstname.lastname@example.org.
To comment on this article, send a message to email@example.com.