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FOOD PROCESSING & PACKAGING SCALABILITY AND FLEXIBILITY MEET DTC NEEDS
The rise of Direct-to-Consumer (DTC) – Will Lovatt, General Manager and Vice President, Deposco, outlines how fulfilment technology can measure up to meet the demands of warehousing’s omnichannel era
D
irect-to-Consumer (DTC) is the business model of selling products directly to customers and thereby bypassing any retailers, wholesalers, or any other middlemen. DTC is rapidly becoming a major part of global ecommerce sales. In the US alone, according to eMarketer, DTC ecommerce sales have more than tripled in the past six years. The market has grown from $36.08 billion in 2016 to $128.33 billion in 2021. The research indicates it will add almost another $100 billion in the 2021-2024 period, reaching $212.90 billion by the end of 2024. The challenge is that many warehouse facilities have not caught up with this trend as yet. Look at the design of many large warehouses today and you’ll see large racks of pallets, automated forklift trucks whizzing around dropping off pallets at staging points. The operation is focused on efficiency and moving inventory in bulk. It is pretty much a ‘lights off’ undertaking, with as much of the operation fully automated as possible. Imagine then if one individual orders a single packet of Oreo cookies from the middle of this hive of activity. It should be simple but how do warehouses change their approach to facilitate it? That is a key question now with the move to DTC business models picking up pace.
Many warehouses are simply not
configured or ready to operate in that way. If working practices and flows through the warehouse are configured for a retail business to business (B2B) approach, then looking after DTC is a challenge. It is not possible to pick a single pack with a forklift truck, for instance. Ultimately many of these warehouse
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businesses are running DTC options alongside retail B2B product deliveries, of course. They might have bulk operations well under control but at the same time be running a rudimentary DTC operation in a corner of the facility or squeezed onto a mezzanine floor. Critically too, the introduction of DTC
workflows into the process mix within the warehouse makes it even more important that the business has the right inventory identified for each separate channel. Processes that were traditionally set up primarily for manufacturing efficiency or wholesale-centric operations must now be re-examined to handle DTC workflows.
Maintaining and segmenting available inventory across different channels is difficult because each channel’s inventory needs to be considered individually. Legacy order fulfilment and ERP workflows have the potential to keep your staff in spreadsheets all day, joining up the dots, while still turning up errors and poor decisions. Also, these traditional processes typically only offer visibility at a case or pallet level, while today’s consumers needs are satisfied at a single-unit (EACH) level. Orchestrating orders with a manual, user- driven, non real time process will breed inaccuracies, risk overselling (the same inventory sold simultaneously in multiple channels), backorders and customer frustration. When you consider a recent BRP report, which found that 63% of consumers are likely to stop shopping a brand after just ONE unsatisfactory experience, the risk is too costly. The best way ecommerce companies can provide a positive experience across the whole DTC cycle, especially when it is running
alongside other distribution and fulfilment processes, is through optimising warehouse operations. That means choosing a Warehouse Management System (WMS) that has the functionality to fulfil the organisation’s current needs but also the flexibility to scale and grow as the business expands. Retailers, wholesalers and ecommerce organisations alike, together with their 3PL service providers, will all need the agility to fulfil through pick and pack processes with accuracy and speed whatever the nature of the order. Optimising customer direct shipping using a system that directly integrates with parcel carriers and calculates dimensional weights, and rate shops from available carriers, will save time and money and offer additional service options to the customer. It is equally important that Warehouse Management and Order Fulfilment Systems support operational efficiency and enhanced productivity. In this context, scanning technology with system directives, validation, across all warehouse processes creates a clear fulfilment process for teams to work efficiently. Organisations can improve productivity and efficiency gains by integrating in real-time to automation systems such as fulfilment robotics, pick-to- light, and sortation systems. This allows them to process higher volumes of orders per day. Once again, having absolute network-wide inventory visibility is very important here. Organisations need systems that enable them to manage all inventory processes inside their warehouse, including cycle and physical counting, tracking, and replenishment. To drive efficiencies across their modern warehouse and store operations, they need 100% visibility and an understanding of where all inventory is located at all times across all locations. These kinds of Warehouse Management Solution and Order Management capabilities are increasingly important today, with high service fulfilment now more than ever an essential part of the brand experience for ecommerce organisations and retailers alike. Today, best-in-class organisations need to serve their customers in real-time. from any available source of inventory, at the warehouse, from a retail store or stock located at 3rd party locations.
This need will only become ever more urgent as the move to Direct-to-Consumer models plays out. In this new DTC environment, organisations need to find new ways to drive operational efficiencies across increasingly complex warehouse environments. Furthermore, to be able to scale to embrace the new DTC model, it is key that the business ensures it is running high-quality Warehouse Management and Order Management Systems that are flexible, scalable and capable of bringing in added functionality as and when required.
Deposco
deposco.com
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