Dave Mack, the author of this article, is the VP of Omni-Channel Retail at SCI and is responsible for the vertical business development. Before joining SCI, he successfully led e-merchandising, sales and operations, and digital marketing functions for The Source, RadioShack and Sears Canada. SCI is a national supply chain partner that provides clients with end-to-end supply chain solutions to improve business results and customer satisfaction.
In the current times of evolving retail models and more demanding consumer expectations, retailers face numerous challenges and are presented with unique opportunities. To stay competitive and help your business flourish, it’s important to understand how the market is changing and react quickly. Discover the top three trends that will impact the supply chain investment strategies of Canadian retailers in the upcoming year.
1. People, processes and systems
E-commerce has been growing at a steady rate in Canada. If your supply chain primarily supports retail store fulfillment, it’s time to rethink the logistics strategy and make necessary investments to ensure that it effectively enables e-commerce distribution. You may need to invest in new processes that can support the kinds of small quantities that consumers order online. Traditional retailers have used pallet pick for large-volume orders. Business-to-consumer (B2C) packing and shipping to enable e-commerce involves unit pick orders that are hand-picked by warehouse staff. These systems require investment in either more manpower or complex automated picking systems. They also require management of high volumes of SKUs for multiple small orders.
The ability to provide real-time stock visibility is also important for the online shopping experience. Shoppers need to know what is and isn’t immediately available to them, so they aren’t disappointed later to find out they can’t get the item they ordered.
Systems with higher levels of automation can help decrease manual labour and provide real-time inventory visibility and delivery options for the consumer. One example of these new automated systems is pick to light, which lights up an item’s location to ease finding and retrieval. Roaming robots, conveyors and carousels can also pick items to reduce “walking waste” in your warehouse.
2. Cost-effective scalability
The e-commerce sales channel is growing rapidly and creating much greater online sales volumes throughout seasonal peaks due to convenience. Retailers need to be prepared for larger, longer and more intense peaks. After all, Canada Post insights show that over ¼ of total Canadian e-commerce volumes are delivered during the holiday season each year, which means that the retailers who can’t scale will miss out on a large chunk of annual income and profits.
From a distribution standpoint, having the ability to scale quickly is essential in order to accommodate a large influx of volume in a short time. To scale your distribution operation, consider investing in additional warehouse space and labour force.
Third-party logistics (3PL) providers can easily accommodate order peaks with the flexibility they provide to allocate space as needed. Some can give you more space during the Christmas rush and others during the summer, depending on your needs.
3. Faster times from buy button to product arrival
While handling an increased number of orders during seasonal peaks is very important, another critical logistics consideration is related to delivery times. Amazon now offers same-day and two-day delivery with standard shipping in a growing number of Canadian markets.
“The Amazon Effect” is changing consumer expectations in terms of how quickly they can expect to receive a product after purchase. This has affected the expectations of Canadian consumers who are no longer willing to wait multiple days to receive their online purchases.
Retailers based in the East that want to sell their products from coast to coast in Canada may want to consider investing in a distribution presence in the West. Having multiple distribution centres can help speed up your delivery times across the country by bringing your product closer to your customer.
The growth of e-commerce adoption, the importance of scalability during intensified seasonal peaks, and “The Amazon Effect” driving consumer expectations of fast delivery have been pushing retailers to rethink the foundations of their supply chain strategies. Doubling down on these areas of your strategy sets you up for success as e-commerce continues to grow in the years to come.