The Race To Capitalize On E-Commerce Growth
By Chris Blickhan, DHL Supply Chain North America
The e-commerce boom is driving endless opportunities for a wide range of businesses to grow sales and increase profitability. But e-commerce also creates several significant IT challenges, which, if not addressed swiftly and efficiently, could result in dissatisfied customers and lost opportunities for retailers. To ensure you are able to continue to confidently grow your e-commerce sales and increase profitability, it is critical you and your business are able to tackle three important IT challenges.
Identifying Investments For Maximum ROI
Many retail IT systems were built to handle business as it existed 10 years ago, but the acceleration of e-commerce is changing the game. Inventory management, order processing and shipping become more complex—and distributed—when e-commerce is introduced to the mix.
To keep service levels high, businesses need to reinvest in updated and scalable IT systems that can operate with the level of agility this new service model requires. Those retailers who have made a concerted effort to leverage their system investments across multiple locations and functions when possible, are best positioned to capitalize on the continued growth of e-commerce.
However, as the development of technology continues to advance exponentially, it has an inverse relationship on the ROI of these investments. Their returns are becoming shorter lived, making them more difficult to justify. Additionally, the learning curve for these new systems and technologies is often steep, so there is a risk that by the time they are fully implemented, they will already be (or will soon be) upgradable.
That is one reason many retailers are turning to third-party logistics providers (3PLs) who have established distributed IT networks and experience in managing the emerging technologies and core systems that support an agile e-commerce operation. Their deep industry and market expertise enables them to manage fulfillment while simultaneously integrating emerging technologies and specialized systems that flex with demand and help to minimize infrastructure costs.
Keeping Pace With Customer Demand
Beyond investments in core systems and technology, there is also the added pressure created by more demanding customer expectations. The speed at which orders must be fulfilled continues to increase, and distribution networks must be able to support two-day and next-day delivery to remain competitive. To compress order/cycle times and ensure orders are pulled and shipped the same day they are received, all layers of technology and software must be aligned.
This may seem simple but can quickly become very complex. Newer systems have been bolted on to existing systems over time to address different business objectives, or perhaps systems from one organization have been layered over those of another as a result of an acquisition or merger.
Regardless of the reason, it is imperative to establish alignment and connectivity across all layers of technology, including any emerging technologies utilized throughout the business, to contribute to cuts in delivery times and expanded order windows.
Not all companies are equipped to map out and execute a completely integrated order management system or seamlessly integrate new technologies such as robot-assisted item picking. This is another instance where they may seek the expertise of a third-party provider with an integrated and strategic approach to network and process design, ensuring complete visibility across the entire e-commerce operation.
Finding The Right Talent
Without the right people in place, you can’t hope to clear the first two hurdles. The current environment of low unemployment increases the challenge of attracting and retaining top talent, particularly in high-demand areas such as IT and data analytics.
Further complicating this situation, the rapid introduction of new technologies and ever-growing customer expectations have turned roles and responsibilities for IT professionals into moving targets. It is hard to know what skills may be needed in 12 months, or even six months, and harder still to anticipate fluctuating customer demands.
Third-party partners with the ability to attract and retain top talent through proven labor solutions can be a valuable resource when looking to address this critical challenge, particularly those that have demonstrated the ability to attract talent in high-demand fields such as data analytics and to integrate emerging technologies into operations. These partners have the necessary experience to ensure retailers have the proper resources with the right skillsets to meet specific requirements.
The challenges of keeping pace with e-commerce growth can be daunting; however, by bringing together a team of experienced stakeholders and third-party partners, you can ensure that IT is enabling, rather than limiting e-commerce growth.
About The Author
Chris Blickhan is Vice President of Retail Business Development for DHL Supply Chain North America. Working in supply chain management since 1997, Chris Blickhan is responsible for leading business development for DHL Supply Chain’s Retail sector.