To take advantage of this trend, CG companies need to be on top of their logistics chain and ensure that products are packed and delivered to customers using the `lowest-cost + fastest-delivery’ option. This means facilitating deliveries direct to consumer to be made from a number of stock points including factory, supplier, warehouse, back of store and directly off retail shelves.
This shift in consumers’ buying trends has direct implications on the CG organizations to build up their own e-commerce operation, either by developing their own fulfillment capabilities or by distributing the product via a third-party platform. Let us look at some components of this rewiring:
- Products/ SKUs must be picked and packed accurately as per customer order; else the surge in returns can impact margins apart from fueling customer dissatisfaction.
- A capability to pick and pack products from multiple stock points may be needed to complete a single order.
- Tight delivery windows based on customer convenience focuses on outbound transportation optimization.
- Delivery destinations can be completely unpredictable, forcing better routing decisions to optimize delivery costs.
- Ability to proactively inform the customer in the event of order changes (substitutions, partial/split fulfillment, delivery window changes etc.)
- Reverse logistics should look at returns policies as well as processing.
Technology comes into play once the above processes are outlined. Giving visibility to the logistics partner into the CG Company’s production units, suppliers, order management system, warehouses and other stock points is a start. In addition, the IT system (whether it’s the logistics provider’s or the manufacturer’s) must accurately estimate shipping time and costs, communicating it clearly to the customer upfront and staying through the order life cycle all the way to fulfillment and order closure.
What are the biggest hurdles a CG company is going to face when setting up the IT systems to integrate channels, orders and logistics? I would love to hear your thoughts on this.