Modern Retail: Guide to Fulfilment May 2019 by Modern Retail

Guide to Fulfilment: May 2019

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Get Ship Done

Contents Retail fulfilment at its best

p.6

The need for smart e-fulfilment is greater than ever

p.10 - 12

Want to manage your returns more efficiently?

P.14 - 17

A third of UKs largest retailers ignore customers during shipping

P.18 - 20

Sustainabiity in ecommerce

P.24- 26

Online fashion retail has a special requirement for flexible storage solutions

P.28 - 29

Five key trends shaping the supply chain 2019

P.32 - 33

Three critical steps to a hi-tech agile supply chain

P.34 - 35

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Retail fulfilment at its best A first-class product fulfilment service tailored for large retailers, independents, on-line stores, mail order.

Our proprietary order management software links to all online sales channels and integrates with most popular website and eCommerce platforms.

Improve your retail delivery and customer service by outsourcing your fulfilment requirement to Adstral â&#x20AC;&#x201C; efficient, accurate, cost effective â&#x20AC;&#x201C; guaranteed the Adstral way.

E: info@adstral.com

www.adstralfulfilment.co.uk

Retail fulfilment at its best For large retailers, independents, online stores and mail order businesses, prompt, secure delivery is crucial in the fight to win the hearts, minds and cash of retail customers. Yet, this is an area which can suffer from lack of attention.

If the importance of fulfilment and the attention to detail a first-class service demands are lacking, then customers will vote with their feet and move on to a retailer which delivers the service they require. Retailers understandably concentrate investment and effort in sourcing the products their customers want to buy, but that’s not the end of the story. These products need to reach their destination in the same condition in which they left the stock shelf, and therefore more retailers are outsourcing their retail fulfilment to specialists. Adstral will improve retail delivery and customer satisfaction by providing a first-class, cost-effective service that carries the Adstral guarantee of assurance.

Contributor: Adstral Adstral provides a cost-effective, multichannel, order fulfilment service for delivery throughout the UK, as a gateway to Europe and for Trans-continental shipping. Catering for online retailers requiring same-day order processing & shipping (free integration with eBay, Amazon, Shopify, etc) and businesses with bespoke product preparation and distribution requirements.

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partner is chosen to deliver printed collateral and promotional items to the desk or doorstep of your target audience in perfect condition. Adstral pays as much attention and care to your brand as you do, that’s why our pick, pack and despatch service is fully Adstral assured – that means every stage of the process is checked and approved by a member of our fulfilment team. When you choose Adstral as your fulfilment partner, we will ensure that: • Our team will give your campaign fulfilment the same respect and care that you have put into producing it. • Your campaign fulfilment is packed appropriately and adequately to minimise the risk of damage.

• A bespoke service to answer the specific needs of retailers, online stores and mail order companies.

• Every staff member who handles your campaign fulfilment will sign their name to the task – assuring quality control.

• Secure product storage and efficient pick, pack and despatch.

• We will provide you with a bespoke service that meets your needs.

• Integrated eCommerce solutions with full order accuracy guaranteed.

• The mailing is sent out to your timescales.

• Returns processing, advance consignments and bulk mailing. • Adstral assured. As well as retail fulfilment, Adstral is vastly experienced working with retail brand agencies, experiential agencies and product promotion companies fulfilling mailing and product sampling campaigns. Fulfilment is critical for the success of a mailing campaign, which is why it is vital that the right fulfilment

Adstral is leading the field in retail and campaign fulfilment, working with many leading brands and blue-chip companies to deliver a first-class service. To find out more, or to speak to one of our team about your next mailing campaign, please call us on 01793 725043 or complete our online enquiry form https://www. adstralfulfilment.co.uk/

The need for smart e-fulfilment is greater than ever Ecommerce is rapidly changing the way people buy products and services around the world. And to keep up with the constantly evolving expectations of shoppers, retailers have to continually innovate in the area of e-Fulfilment.

Smart e-Fulfilment is often the difference between competing retailers. Automated processes save time and money, and they improve the customer’s experience at the same time. Fulfilment software that delivers every imaginable ecommerce and omnichannel warehouse automation solution is essential these days — for several reasons.

A More Satisfying Customer Experience A recent customer survey revealed that online shoppers are more discerning and demanding than ever. They demand a range of features and benefits. And if they don’t get them at a particular ecommerce retailer, they’ll go elsewhere in a heartbeat. Around 91% of consumers said that free shipping might persuade them to become a regular customer. And a quarter of respondents said they’d consider paying more for faster shipping. Three quarters said that free gifts and loyalty rewards would persuade them to become repeat purchasers. In short, the modern consumer wants speed, accuracy, flexibility and rewards for ongoing loyalty. As an online retailer scales up their operation, delivering on all of these requirements at the same time becomes more and more challenging. Smart e-fulfilment solutions embedded within ecommerce operations deliver a seamless,

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enjoyable and satisfying shopping experience. Shoppers can choose the day of delivery. And nextday shipments become relatively straightforward. The modern consumer wants to know that, whether they’re in a pub or at the gym, they can order or return items on the go — and with the minimum of fuss. This is why e-fulfilment solutions are in such high demand right now.

Streamlined Delivery and Collection Smart e-fulfilment solutions continue to evolve in line with the changing demands of consumers. Delivery and collection processes benefit from the latest technology enormously. Take Amazon’s ‘anticipatory shipping’ technology, for example. This innovative algorithm will eventually use historical purchasing patterns of its customers to prepare shipments before customers have even ordered them. Argos is now delivering purchases within four hours of an order being placed. House of Fraser is offering early-morning delivery slots for people who want their goods before they head to work. And Next is offering deliveries until midnight in some areas. The way ecommerce businesses deliver and collect goods is changing fast. And it’s all because consumers are demanding more flexibility. To manage these increasingly complex

“...Smart e-fulfilment solutions embedded within ecommerce operations deliver a seamless, enjoyable and satisfying shopping experience.”

delivery systems, retailers are turning to powerful e-fulfilment packages that automate many of the tasks involved. According to eDelivery, two-thirds of online shoppers check a retailer’s returns policy before making a purchase. And 58% of people want a no-quibble policy that allows them to “try before they buy.”

Smart e-fulfilment makes the entire process faster and less reliant on labour. Many of the most timeconsuming tasks are automated. This cuts costs and leaves key personnel free to pursue sales and operational goals. A smooth, streamlined returns process also encourages repeat purchases and loyalty — both of which are crucial to the long-term success of any online retailer.

But a returns process is often cumbersome and labour-intensive. It requires administration, extra communication and packaging. And all this adds to a retailer’s cost-base. The more efficient the returns policy is, the less impact returned products have on the bottom line.

Automated, smart e-fulfilment solutions allow online retailers to service multiple channels at once. Order accuracy is maximized due to the reduced risk of human error. And the customer gets a seamless shopping experience that keeps them coming back for more.

An Efficient Returns Process

Contributor: Rob Gamage Rob Gamage is Managing Editor of Modern Retail. Combining many years of experience in publishing with a keen interest in small business and entrepreneurialism, Rob is passionate about sharing interesting and inspiring content with retailers to help them grow.

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Want to manage your returns more efficiently? The answer ‘reversed logistics’! We have embraced shopping online in a big way. In fact, “big” might be considered an understatement.

With unmanaged or poorly managed returns processes, the more returns you receive, the more it effectively bogs down your system. Eventually, many of those returns will have to be sold at a discount, just to get them out of the system… These returns are eating into your profit. With parcels being delivered to consumers every day, there are bound to be some returns. But just how many returns do e-commerce operations experience, and why? Here are a few statistics: • At least 20% of all products purchased through e-commerce channels are returned and during the holiday shopping season, that number swells to 30% or even higher—50%—for the pricier items. • Apparel is the most often returned online purchase at 43%, as 41% of shoppers buy multiple sizes or variations at one time with the intent of returning some of them. • 23% of e-commerce returns are caused by a miss-pick, where the wrong item or quantity of item(s) is picked.

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22% of e-commerce returns are due to the product not matching its online description. • 22% of e-commerce returns are because the product received is damaged. • 67% of all returned online purchases are the fault of the retailer. • 48% of online shoppers report returning at least one online purchase in the past 12 months. Reverse logistics is one of the most often overlooked elements of the complete operations cycle but it shouldn’t be. Unmanaged, uncontrolled returns processes can put tremendous strain on a facility’s available space and labour. Further, and perhaps most compelling, are the costs associated with returned inventory. Reverse logistics isn’t just a cost of doing business. It’s a significant cost that can have an enormous impact on the bottom line. According to research by Aberdeen Group, “the top challenge facing manufacturers and retailers in regard to returns management is cost containment.” In fact, as online retailers expand their customer-friendly policies with easier

options for returns—including free shipping and no restocking fees— return costs have jumped to as much as 8% of online retailer costs. Why? Here are some more statistics: • Anywhere from 50% to 90% of e-commerce returns cannot go back into inventory for resale. • Liquidation of returned inventory that cannot be re-sold typically generates anywhere from 12% to 25% of the item’s original cost. • 52% of distribution centre managers lack the ability or resources to process returns; 44% consider returns handling to be a pain point within their operations. • An estimated 10% of overall supply chain costs result from managing return/repair processes. Inefficient processes can exacerbate this cost, cutting profit by 30%. • 64% of retailers have identified returns management as an area needing improvement. • At the conclusion of the 2017 holiday season, UPS anticipated processing 6 million returns in the first week of January 2018. • Companies that implement an improved reverse logistics operation to enhance the speed and efficiency of returns save roughly £230,000 in costs annually.

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• Companies with best-practice reverse logistics operations are 47% more likely to process returns daily. • Implementing a managed reverse logistics process can increase a company’s revenue by up to 5% of total sales. A top executive at one of the largest third-party logistics (3PL) providers, GENCO, says automation can cut reverse logistics costs associated with excess inventory, returns processing and asset liquidation by 10% to 15%. That statement is supported by research from the Aberdeen Group, which evaluated 167 service and manufacturing operations regarding their reverse logistics practices. The top 20% of aggregate performance scorers (the “Best-in-Class” companies) in the study were 74% more likely to have automated their returns process. By putting “a system in place to predictably and repeatedly execute on the return and disposal of a part or product,” these companies are better able to both manage the complexity of a reverse logistics operation and resolve customer issues as quickly as possible. Further, the report states: As a result of automating the returns operation, service organizations have been able to achieve improved results in better first-time fix of issues [64%], greater service level agreement (SLA) compliance [58%], increased

value reclaimed from returned parts [24%], and a higher level of customer satisfaction [77%] as compared to those organizations that have not leveraged the efficiency gains of an automated returns process. The deployment of affordable, flexible automated storage and retrieval systems can simplify reverse logistics processing. Through the implementation of such a system, returns can be handled as another form of inbound shipping through efficient routing and restocking items to minimise inventory costs, labour requirements and space demands. Once returned items have been inspected and labelled with a disposition destination, things can fall apart for many returns operations. Inundated with a potentially overwhelming number of discrete items, managing their sortation and routing can be a real challenge for fulfilment centres. Boxes and totes of returned items can quickly overwhelm both the space allotted for their temporary storage and the labour assigned to their management. Especially for facilities with hundreds of thousands of square feet of conventional inventory storage racking, sending an operator to physically return one item to its stock location can be a time-consuming and ergonomically fatiguing task. To move returned items through the disposition process quickly, an

“...automation can cut reverse logistics costs associated with excess inventory, returns processing and asset liquidation by 10% to 15%.”

automated storage and retrieval system (AS/RS) can speed up processing times to maximise asset value recovery in a compressed footprint while reducing cycle times and labour-associated handling costs. While there are a variety of AS/RS technologies offered in the market— including capital-intensive, multimillion-dollar robotic installations— the most affordable and flexible solutions are Vertical Buffer modules, vertical lift systems, vertical carousels and horizontal carousels. These self-contained systems offer higher density storage in a more compact footprint than manual storage equipment can provide. The selection of the most appropriate AS/RS for a given reverse logistics operation is dependent on a variety of factors, including the number of inbound returns received per day, the size variability of the returned items, and the desired rate of throughput for returns. When paired with fixed mounted or radio-frequency (RF) scanners for barcode reading, light-directed picking workstations and/or put walls, items routed to the automated returns processing area post-inspection can be quickly identified and operators guided to the appropriate receptacle presented by the AS/RS. Because the automated systems deliver the destined receptacle directly to the worker and highlight their position, both walk and search time are eliminated, enabling a

need for fewer personnel to sort and route more returns. In certain applications, the storage bins in the AS/RS can even be utilised as forward pick areas. This functionality is enabled by integrated inventory management software that not only keeps track of the contents held within the machine but also interfaces with a facility’s warehouse management system (WMS) and enterprise resource planning (ERP) systems. This function allows picks to be sourced from the most convenient location (in this case, the returns processing area) for even faster restocking and resale of returned inventory. Likewise, when the AS/RS’ software recognises that a pre-determined quantity of returned inventory has been reached, it can work with the WMS to assign and interleave a task for those items. To learn more about optimising your returns management process contact Kardex Remstar at info. remstar.uk@kardex.com or visit our website at www.kardex-remstar.co.uk

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Contributor: Kardexremstar Kardex Remstar is one of the world’s leading suppliers of automated storage and retrieval solutions. Their products are designed to increase productivity and improve the efficiency of your working practices. With tailor-made solutions, which can considerably reduce your company’s storage space. Kardex have successfully installed more than 140,000 systems in sectors such as retail, warehouse & distribution, defence and aerospace since 1873.

A third of the uk’s largest online retailers ignore customers during shipping

Birmingham, UK – April 3, 2019 – Only four of the UK’s 100 largest online retailers provide customers with personalised information about the status of their orders, with 27% not communicating with shoppers at all during the delivery period. These were some of the key findings of a recent in-depth study carried out by post-purchase communications specialist parcelLab that indicates UK online retailers’ obsession with customer service before checkout tails off badly once a shopper clicks to buy. The research involved placing orders with all 100 online shops, from beauty and household retailers like Boots and Sainsbury’s to clothing outlets like M&S and ASOS, and technology sellers like Currys PC World and Apple. The services offered before and after checkout were then documented in a full report. Of the 100 retailers surveyed, only 11 communicate with their customers directly during shipping. The remaining 89 either leave this to the delivery carrier or the customer receives no updates at all. This makes

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it impossible for retailers to offer personalised shipping information or even send out branded communication to at least boost brand awareness. parcelLab’s study also looked at delivery time choice among other factors, finding that only seven of the UK’s 100 largest retailers offered a same-day service, and when this was offered it was at a high price. Only 12 offer free shipping on all purchases. “Despite various studies showing that shipping costs are a major ‘conversion killer’, the UK’s largest online retailers rarely offer this free of charge,” said parcelLab founder and CEO Tobias Buxhoidt. “comScore, for example, found that 61% of customers are ‘at least somewhat likely’ to cancel their purchase if free shipping is unavailable.” “Meanwhile, offering personalised post-purchase support not only keeps customers informed and happy, building loyalty, but also provides the opportunity to share offers and suggest complementary purchases, increasing sales,” Buxhoidt added. “And when you consider

that our research shows that 7080% of personalised post-purchase messages are opened and result in 0.5-1% of customers immediately making a new purchase, it’s clear that by not doing this UK retailers are missing out on millions of pounds in potential sales every month.” Among the UK retailers highlighted in the research as offering a stand out shipping and returns service were New Look as the ‘Overall Winner’, ASOS for ‘Best Checkout Experience’, The Fragrance Shop for ‘Best Shipping Process’, Zara as ‘Best for Delivery’ and Chain Reaction Cycles for ‘Best Returns’.

“Retailers are no longer defined by their products, but instead they are differentiated by the service they provide from initial visit right through to returns,” said Buxhoidt. “Therefore, if a retailer wants to consistently outgrow its competitors, they need to build strong customer loyalty through above average customer experiences. This is just as important after checkout as before, if not more so.” The full parcelLab UK Ecommerce Shipping Study can be found here https://parcellab.com/en/uk-ecommerce-shipping-study-2019/.

Contributor: parcelLab parcelLab is a cloud-based, post-purchase solution for smart parcel monitoring and targeted customer communication during the e-commerce delivery process.

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Sustainability in ecommerce: it’s not just about packaging According to Carnegie Mellon University, ecommerce retailers use 30% less energy than traditional retailers. That’s great, but it’s only one facet of a sustainable business.

More than two-thirds of UK shoppers say that the environmental impact of packaging affects their buying decisions. What does this mean? It means a business that can’t demonstrate its sustainability credentials might lose customers to competitors that can. But this issue goes far beyond whether or not ecommerce retailers use sustainable packaging. How Can I Make My Ecommerce Business More Sustainable?

Sustainability isn’t just about the packaging a business uses — although that’s very important. It’s about putting environmental issues at the heart of every operation and process. There are four principles all owners and ecommerce entrepreneurs should keep in mind: Create value for society Balance the needs of stakeholders with high moral standards Be accountable for all actions — and their consequences Be transparent to the public Fortunately, sustainability in ecommerce isn’t rocket science. Implementing some very simple practices can transform a business’s green credentials overnight. Develop a Recycling Policy

A recycling policy should be a written document, and it should be

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understood and signed by everyone within the business. A basic policy might state expectations with regard to recycling bins, waste points, and paper. It might also require named individuals to enforce the policy on a day-to-day basis. There are three core principles that should be at the heart of any corporate recycling policy: • Reduce • Recycle • Reuse • Renew • Replace An effective policy that impresses online shoppers should contain a separate section for each of these principles. The retailer must demonstrate that the materials it uses are ethically sourced and manufactured. Minimise Energy Waste

A sustainable ecommerce business can demonstrate the various ways it minimises energy. For example, there might be a very basic “lights off” policy in place. Other potential measures include climate control, a renewable energy contract from a green provider, and making the switch to energy-efficient appliances. Minimise Packaging

Packaging is a hugely important issue for ecommerce businesses.

It’s not only essential for the safe and speedy shipping of goods, but it’s also an intrinsic part of an ecommerce business’s brand. Online retailers should take steps to minimise packaging wherever possible. A lot of materials, particularly those for cushioning goods, are reusable. So reuse them — and let your customers know you’re doing so. Cutting down on packaging is important, but so is using the right type of packaging. More than 70% of UK shoppers believe retailers aren’t doing enough when it comes to environmentally friendly packaging. By switching to sustainable packaging such as cartonboard, online businesses can demonstrate their sustainability credentials every time they ship a product. Go Paperless

An online business that operates without the constant need for printed documents earns a lot of credit for its efforts. The use of digital storage services such as Google Drive can take the place of filing cabinets stuffed with paper. And the vast majority of customer and supplier communications can take place via email.

Give Customers the Power

Ecommerce can be a force for good in terms of the environment. But it’s not without its issues. A carbon footprint is involved in every online purchase. And it’s up to the business and the customers to offset it as much as possible. A great idea involves providing a carbon offset option during the checkout process. Choose a reputable carbon offset project, and include it as an option with every purchase. The customer makes a small donation to the project that guarantees the carbon used in the delivery of their purchase is offset in some way. Pursuing sustainable business practices is the responsibility of everyone — including ecommerce retailers. It’s essential if we’re going to reverse the effects of climate change and pollution. But sustainability is also good for business, so make it a priority in your daily operations.

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Online fashion retail has a special requirement for flexible storage solutions Online fashion retail has a special requirement for flexible storage solutions, says Edward Hutchison, managing director of BITO Storage Systems.

Online fashion retailers face numerous challenges to be successful. They must constantly adapt to rising growth rates, broader product ranges, seasonal changes, peak periods and fast-evolving trends. Even the sensitive materials used in fashion design create their own special storage requirements. Remaining in vogue means continuously updating and adding to product ranges in response to customer demand. This necessitates holding a large and diverse range of products in stock in order to deliver goods promptly to customers. Consistent product availability and ever-faster delivery times have become standard customer expectations. Online fashion retail does not just require a high capacity for holding stock: it must also be possible to expand or rearrange a storage system, This will allow the retailer to react as flexible and quickly as possible to constantly changing market conditions. Depending on order volumes and the number of items sold, it is worth considering whether manual or automated storage makes more sense. It might be that a combination of the two would be the ideal option for storage and picking. How should goods be picked? In online fashion retail, multi-level picking is a common choice. Here,

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items are picked individually and only later consolidated into specific orders. Shelving systems with adjustable shelf dividers can be used as ‘put’ shelves for collecting orders in individual trays. Here, the trend for picking directly into the despatch carton has become particularly prominent. The fastest sellers of all and the top products, in general, are sometimes held in an outer warehouse for crossdocking so that they can be picked direct from the pallet they were received on, saving time, money and travel distance. Shelving systems: a flexible storage solution

Manual storage systems offer the most flexibility and shelving systems are therefore a key component of warehouse design – even in the e-fashion sector. Shelving systems should be designed so they can be easily assembled, reassembled or expanded to meet the user’s needs. If shelves can be serviced from both sides, this will make them ideal for storing and picking containers, cartons and items of various sizes. Shelving depths will depend on the items to be stored, or the containers or cartons in which they will be stored. Easily adjustable shelf heights will allow various numbers of shelves to be positioned at varying heights within the rack. Light, individually positioned dividers and dividing walls can be positioned on

shelves to create sections of different sizes, making it easier to organise products. Highly visible plastic dividers – with no sharp edges, mind – ensures that the size of each compartment is clear to see. Dividers can be positioned anywhere along a shelf to create compartments of any size. They can also be moved around easily. Using dividers maximises the density of the storage space within a shelving system, making unused space available once more. This smart sorting aid efficiently simplifies every imaginable step in the storage and picking process, including the allimportant returns process for online retail, saving time and money and making everyone’s jobs easier. High-quality shelving systems should not have sharp edges and corners. This is particularly important for storage solutions in e-fashion. This way, sensitive textiles are not only kept safe during storage, but also the risk of accidentally damaging delicate materials and items of clothing is significantly reduced. Easily view and pick hanging items

Manual hanging racks are also particularly good for carefully storing valuable clothes. Inserts integrated into shelving systems are an ideal solution for hanging clothes on rails to store them without the risk of creasing. This storage option is ideal for storage rooms in brick-and-mortar stores. This way, goods are clearly

visible and can easily be picked up and taken out onto the sales floor. Long-term solution for cartons

How can you store textile items such as shoes and accessories which do not necessarily need to be hung up, but which do need to be protected, conserved, well sorted and clearly organised? An ideal solution here is to use highly stable and moistureresistant plastic containers. Units will be available in many different sizes and colours. They can be carry company logos and there are often numerous options for identification, dividers to better sort small items, and lids.

dividers. These ‘pigeonholes’ help with sorting and directly restocking returned goods. These are just a few ideas that will help keep storage and order picking intralogistics flowing, as a vital part of addressing the challenges faced in the fashion retail sector.

Trays are ideal for transporting goods or cartons, which cannot be transferred to containers for time reasons. These particularly stable holders allow you to safely move loads of various sizes on conveyors. They also help protect goods, since cartons are not impactresistant and, in particular, do not have a very long lifespan. Fashion retailers must process a particularly high volume of returns compared with other e-commerce sectors. Returns need to be received, sorted and returned to the warehouse as quickly as possible so they can be placed back in their proper position ready to be sold again. Where return rates are extremely high, it can make financial sense to set up complete returns warehouses using shelving systems with multiple tiers and shelf

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Contributor: BITO Storage Systems With its head office and main production facilities in Germany, BITO is an internationally operating manufacturer of storage and order picking systems. The company’s product range includes shelving and racking; storage and order picking systems; bins and containers and warehouse equipment and accessories.

Five key trends shaping the supply chain in 2019 2018 was a turbulent year for most industries – logistics and supply chain was no exception.

With Brexit, stockpiling, supply chain problems for big brands, and big name retailers closing stores left, right and centre, the next year is undoubtedly going to be as eventful, if not more so. So what’s in store for the next twelve months? Here are five key trends shaping the supply chain in 2019. Brexit

Whilst the rest of the world despairs at our ridiculous folly, the warehouse industry is loving it. All the uncertainty over trade agreements has sparked fear and panic amongst the business community. Companies are stockpiling ahead of a doomsday scenario where trade is disrupted and our just-in-time economy grinds to a halt. Every warehouse owner in the country is capitalising on a once in lifetime opportunity.

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time in history, there is still a race to the bottom when it comes to pricing. The problem? No one knows what their neighbours are charging. The market needs a marketplace, where 3PLs and grey space providers can post and compare their pricing with their competitors; and where businesses looking for space and services can easily browse through warehouses with available space, quickly choose between them and move in quickly, as it’s becoming scarce with Brexit. Payments

The average price to store a pallet of goods jumped to £2.10 a week in December from £1.85 in September. It wouldn’t be surprising if it exceeded £3 should a no-deal Brexit become a reality. That would still be relatively cheap compared with the cost of not getting products to the end consumers.

2018 saw a wave of high-profile retailers go into administration. When these companies fold they leave their logistics providers exposed to enormous risks that are impossible to hedge against. When publicly traded companies like XPO are left £30m out of pocket when House of Fraser collapsed, shareholders ask questions. With over 2,500 stores affected and 43 retailers failing last year, including big names such as Toys’r’us, PoundWorld and Maplin, the industry will have to start getting tough on payment terms if it is to survive, particularly if the economy goes into a downturn.

Transparency

Urban fulfilment

If the gold rush caused by Brexit has taught us anything – it’s that pricing is all over the place. Despite warehouses being in more demand than at any

With Amazon leading the way with ever shorter delivery times it is inevitable that we will see more and more requirement for urban

fulfilment centres. You can’t change where people live, so the only solution is to have product closer to the customers in the first place. Before the rise of huge distribution centres storage always used to be in city centres close to manufacturing and retail, but as cities expanded and transport improved warehouses moved away from cities. We are now seeing more and more demand for fulfilment centres closer to the end consumers, receiving a constant flow of inventory from larger regional distribution centres to keep up with demand.

are a lot of inherent inefficiencies in current operating models that represent business opportunities. As more startups looking to break into the industry, expect to see a wave of disruption, in warehousing, freight forwarding and fulfilment, shrinking the time it takes to make data-based decisions and to manage human heavy processes – for faster and more agile supply chains.

New players

There’s a lot of demand for warehouses and logistics services and people have noticed that there’s money to make and that the big players are slow to innovate. There

Contributor: Charlie Pool Charlie Pool began his career in finance. He started in the City at Cazenove then at JPMorgan investing in listed companies, private companies, project finance and derivatives. He then began investing in Startups before actually starting one himself. Charlie is now the CEO of Stowga, the ondemand marketplace for buying and selling warehousing and logistics services.

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Three critical steps to a hi-tech, agile supply chain Retailers are facing a new reality and as a consequence supply chains must change.

Consumers are becoming ever-more demanding, wanting their purchases faster, delivered as and when they choose and at highly competitive prices; while their smartphones are empowering them to review products, check prices and shop around on the move. Technology has enabled consumers to be highly agile in the way they shop and seek value, so likewise, retailers too must learn to leverage technology fully if they are to become agile organisations capable of delivering the services and value consumers now expect. Here are three key points to consider when using technology to support agility: 1. Shaping the future: Understanding future demand is notoriously difficult. However, Artificial Intelligence (AI) and Machine Learning are opening up exciting new possibilities for the forecasting of demand. This burgeoning technology is being used to analyse internal data on past sales in stores, taking into account the influence of markdown value on sales volume per outlet, and this data is being aggregated across whole store geographies to help position stock more advantageously, to maximise margin. AI is also helping to reveal predictable ordering patterns for store and online sales by bringing together external data too, such as trends on social media, economic data, the

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weather, and a whole multitude of other factors. All this information is analysed to help shape the expected sales quantities for each product. Big Data is used to reveal hidden patterns that are simply not visible at the item level. So, retail businesses need to tap into these fast-developing technologies to better understand and predict order profiles, as having a clearer idea of the future helps determine just how agile an organisation is needed. 2. Visibility and responsiveness: Of course, a prerequisite for achieving supply chain agility is to have complete visibility throughout the chain, and critically, that depends upon having highly connected and intelligent IT. Visibility of inventory deployment, order management and execution, right through to the customer â&#x20AC;&#x201C; as well as on returns â&#x20AC;&#x201C; forms the basis for automating processes and making informed decisions. This is where having agility really counts and where it can offer huge rewards. For example, knowing where inventory is in transit allows for products to be re-directed to where demand is greatest or where the greatest margin can be achieved. Or perhaps, a home delivery may be dynamically re-routed for pick-up from a store or a click & collect locker. But enabling these actions to be taken often involves a complex set of tasks â&#x20AC;&#x201C;

requiring knowledge of transport routes available, possible added value services, such as re-labelling or repackaging, and all this takes precise timing. Orchestrating tasks of this level of complexity demands highly connected, integrated systems capable of responding with speed and agility. These capabilities and much more are now increasingly available through a plethora of Software-asa-Service offerings, presenting new opportunities for creating agile retail businesses. However, there are many choices here too and SaaS may not always be appropriate. 3. Enhancing operational performance: There are a growing number of operational challenges. With mounting cost pressures, rising demand, special promotions, multiple service offerings and the increasing scarcity of labour resources, many businesses are now looking to the automation of key processes within the warehouse and wider supply chain as a solution. Technology offers the potential to improve productivity, whether that is by using mechanisation, robotics, new SaaS offerings or advanced AI. However, there are many important questions that need to be asked before any such investments are made. What level of flexibility is necessary for the fulfilment process and where is it most required? Flexibility tends to come at a cost,

so understanding just what needs to be flexible and what doesnâ&#x20AC;&#x2122;t is important to determine. In a dynamic environment, such as an omnichannel warehouse, the many varied processes and physical layout of a facility should be constantly reviewed and adjusted to optimise performance. So, careful planning and analysis are essential. A new eBook â&#x20AC;&#x153;The technology and infrastructure needed for an agile landscapeâ&#x20AC;? explores the various options and technologies available to those retail businesses seeking to develop an agile enterprise. Technology is the great enabler that drives productivity, but exactly which technology and where, when and how it is deployed is absolutely critical to both a successful implementation and the future performance of the business. Get it right and great gains can be made. Used imaginatively and a huge competitive advantage can be won. To gain further insights and a greater understanding of how to use technology to create an agile and responsive supply chain, download the free eBook https://www.bis-henderson.com/ ebook-3-launch/

Contributor: Sid Holian Sid Holian is Managing Director of Bis Henderson Consulting, an operating division of Bis Henderson Group.

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