Strategies To Modernize Your Grocery E-Commerce Supply Chain
This is an article co-authored by Terence Leung, Senior Director of Product Marketing for Supply Chain Execution, and Nina Seth, Director of Product Marketing for Commerce for Blue Yonder
Online grocery sales are soaring to new heights. In fact, more than 70% of U.S. households, or 93 million, received one or more orders via pickup, delivery and ship-to-home channels. With changing expectations, grocers today need the right grocery e-commerce supply chain technologies to help them optimize and fulfill orders across channels for better customer service and improved margins.
Grocers face many challenges as they work to serve today’s modern shopper. They need to ensure product availability for shoppers walking in the store, those using click and collect, and those choosing home delivery — all of which require inventory accuracy. They need to figure out the most optimal way to fulfill orders across a multitude of fulfillment locations, such as local stores, MFCs, dark stores and distribution centers and in many cases a combination of these. They need to account for product substitutions. And last, they need to provide more experiences while finding ways to reduce the cost-to-serve. But more than anything else, they have to find ways to compete on delivering the experiences that customers want.
Omni-Channel Inventory Management
Let’s start with inventory management. Having an enterprise view of inventory enables grocers to meet customer expectations. This involves understanding how much inventory is available and where, and exposing just the right amount of inventory online to cater to e-commerce shoppers without limiting inventory for shoppers walking in. With grocery e-commerce growing rapidly, grocers need to optimize how they fulfill orders to ensure that they not only meet customer expectations but don’t reduce margins. Order optimization can help offset and even lower the cost to serve by finding the most cost-effective fulfillment location to fulfill an order. Store order fulfillment capabilities can help grocers support today’s hybrid shopper who wants to utilize curbside pick-up as well as click and collect.
Omni-Channel Warehouse and Transportation Network
To win over customers, grocers are changing their logistic operations and network to provide convenience. Warehouse operations are making a fundamental shift from filling large orders, defining delivery terms, and relying on manual processes and static business rules to supporting a new level of speed, agility and service personalization. They are exploring new distribution models, including micro-fulfillment centers located closer to the ultimate consumer.
With the need to manage smaller orders and more specialized tasks with a scarce workforce, advanced warehouse, labor and tasking solutions make the labor workforce much more productive by reducing travel times, increasing throughput, improving fill rates and optimizing available human resources. They provide a tightly connected environment in which robots, co-bots and other forms of automation can be optimally integrated with the human workforce. Resources can be strategically re-assigned in real time as conditions change and, over the long term, associates can be coached to achieve continuous improvement. These solutions also increase real-time visibility of exceptions in the warehouse and across the network — and enable autonomous resolution for most events — but they also allow a granular, moment-by-moment assessment of labor productivity and task completion.
While grocery consumers are increasingly demanding fast, flexible delivery on their terms, transportation teams are facing significant challenges in accommodating this growing need because driver shortages, high gasoline prices, and disruptions like port closures. Advanced transportation solutions can help by connecting the entire shipping network, including customers and carriers, in real time. As disruptions emerge anywhere, they are visible and immediately actionable. This improves greatly delivery predictability, an important consumer requirement.
Given today’s compressed windows for fulfillment and delivery — and the frequency of disruptions — AI- and ML-enabled solutions are the only reasonable way to manage the transportation function. These digital solutions make it easy, fast and seamless to manage the complexities of all the transportation function’s moving parts and keep the overall supply chain on an optimal course while optimize the cost to serve. As they enable flexible multi-mode delivery schemes, dynamic transportation planning and re-planning, unified inbound and outbound logistics, and carrier collaboration, these solutions deliver a high return on investment.
With the growth of omni-channel, supply chain operations have become more and more complex. Learn more about how Blue Yonder’s order management, warehouse management, and transportation management can help drive your business forward.