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Top 5 Supply Chain Headaches Created by Retail | LoadProof

 


I still remember the very first time I saw this thing called the Internet. It was July 1997 and I got an after-hours glimpse at the German multinational company where I worked. To the music of a vacuum cleaner wielded by cleaning staff, I clicked on the new-fangled Netscape Browser, typed a request into something called altavista.com and saw my first website: Mercedes Benz. My dream was to buy a Mercedes Benz E220D someday—and I wanted to see the car come alive on the screen. I wasn’t impressed: it looked like an electronic brochure, not different than a newspaper or a magazine.

Fast-forward a year and a half to June 1999: I had moved the United States and was focused on working late and learning fast. Those were the years of the .com boom and the .com bust. Everyone was trying to figure out how to monetize the Internet. Then, Internet access was easy to get, email was entrenched, and individuals were starting to buy online and even had their own Web pages.  I ordered my first cool watch, a Casio that displayed the time on glass over an analog set of hands. It cost $80. I sent the payment—and started waiting anxiously for the delivery. The promised day came and went, and then another and another. Finally, the UPS truck stopped at my door. The watch was cool—and I wore it and bragged that I had bought it on the Internet. Having a watch not available at nearby stores overcame the stress of delayed delivery. I was a happy customer.

A few weeks later, I had to travel to Columbus, OH, to support a go-live for a client that supported a third party Order Fulfillment Operation that shipped product on behalf of somebody else. When I visited them, I was able to see exactly what happened behind the scenes for online orders.  Back then, catalog companies were the first to adopt, and even create, e-commerce businesses.  The catalog model was simple: a catalog was sent to a prospective mailing list, and people read the catalog and made a call to place an order. The move to the Internet was easy to justify, because it eliminated printing and mailing catalog. Better still, SKUs could be made instantly available on the Internet, which allowed products to be ordered immediately. Eventually, every single retailer jumped to e-commerce as they realized that twice as many customers were ordering online compared to traditional retail brick and mortar stores.

The new world created a number of supply chain headaches that have continued to plague retailers and their distribution centers. These top the list:

  1. A new order profile.  To accommodate the new profile, processes in the distribution center (DC) needed to evolve. Before the inventory flow moved from a manufacturer to a wholesale distributor’s DC and then to a retail store. Consumers went to the store and took products from the shelves. Backend processes were designed to handle boxes with a bunch of units. In the e-commerce world, they had to be changed to pick one or two unit orders in an optimal fashion using either mechanized or non mechanized picking process and then consolidate those orders.
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