COVID-19: a wake-up call for internal processes
First published by Admin, on 23 April 2020Warehousing and fulfillment
The COVID-19 pandemic has resulted in many countries closing their borders, causing extensive disruptions to supply chains worldwide. These disruptions have forced businesses to review their existing supply chains and internal processes for business continuity, and to be better prepared for future instances of business interruption.
Previously, it was common for merchants to draw supply chain insights from multiple logistics service providers and platforms; the circuit breaker measures swiftly implemented and enforced would have inevitably caused some service delays1. Hence, businesses might find their ability to make accurate, timely decisions compromised, as they do not have real-time visibility over the entirety of their operations2.
The pandemic thus highlights an opportunity for businesses to identify gaps in their internal processes, and to explore solutions that allow for agility and flexibility in times of uncertainty.
Ownership vs. outsourcing
Warehousing and fulfillment is a crucial component of any eCommerce supply chain. As business expands, the complexity and scope of managing these processes can become overwhelming, especially in the context of a global pandemic.
An option is for businesses to outsource these functions to a single third-party service provider - with relevant expertise in the local logistics industry and access to pertinent infrastructure, a third-party logistics provider can provide customised solutions to best suit business needs. Moreover, outsourcing to a single provider instead of fragmenting the supply chain and outsourcing to multiple vendors will allow for centralised management of the entire logistical process. This centralisation thus serves to provide better visibility over the supply chain, and hence streamline the decision-making process with more accurate insights.
Capacity to manage demand peaks
It is challenging to maintain a balance between accurate forecasting and actual demand. For merchants, this could come in the form of unused storage space, and thus represents an avoidable cost. Without the extra storage capacity, they may be hard pressed to fulfil orders in the event of a demand spike. However, demand spikes notwithstanding, merchants incur costs for renting the unused space.
Working with a logistics service provider allows merchants access to dedicated infrastructure and tools, empowering them to better manage demand peaks more efficiently and cost-effectively.
Ability to focus on core competencies
Inventory management and order fulfillment are time-consuming processes that are essential to get right. Providing an accurate count of items available for sale and notifying customers when inventory is low helps to eliminate discontent and inconvenience for consumers.
Businesses should thus evaluate if this skillset should be internally nurtured as a core competency, or if they should outsource it to trained professionals.
Keeping fixed costs low
Building an inhouse warehousing and fulfillment department will mean time and effort invested into planning and development, not to mention, the tremendous amount of capital required for investing in warehousing infrastructure, staffing and equipment.
Choosing to outsource these processes would allow businesses to save on these costs and maintain lower overheads. The capital to be invested can then be channelled into developing other core competencies, for better performance in the long run.
Find out more about blu’s tech-enabled retail logistics solutions
Our best-in-class technologies enable businesses to scale their operation and respond to unexpected disruptions quickly and effectively. Powered by robotics and AI, our systems are automated and integrated for optimal performance across the retail logistics value chain:
- Swift and accurate order fulfillment: whether you have 10 or 10,000 SKUs, our systems are fully-equipped to respond to sudden demand spikes.
- Real-time visibility: with all our processes seamlessly integrated, rest assured that your business decisions are based on real-time inventory balances.
- Safe and secure storage: inventory is kept humanly-inaccessible for security and accountability.
1 World Economic Forum, “Because COVID-19 has led to lockdowns… logistics providers can no longer transport goods as seamlessly, particularly across borders.”
2 Ibid., “Supply chain visibility is crucial to understanding the impact of disruption.”