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Omnichannel retailers face many challenges in satisfying customer demands. Justin Cramer, co-founder of ProShip, discusses how they can make the best use of technology to enhance service while decreasing operational costs.
SCB: How do you meet customers’ shipping expectations in today's omnichannel world?
Cramer: It’s not about just one thing. It’s getting a lot of systems put together properly — all the way from your e-commerce site, where you're advertising information to your customers, down to stores, warehouses and partners. It’s about getting inventory from them and communicating that back to an order-management system. Then, once the OMS has determined where you’re going to source it from, using intelligent software to execute the sourcing. By using all inventory sources, we can often shorten the last leg to the customer and make more cost-effective choices as to which shipping mode we want to use for last-mile delivery. If you can improve the customer experience, you’ll bring them back to you time and again.
SCB: What are some of the unique technology implementations that are at play here?
Cramer: At the last mile, a lot of it is about checking all of the services that are available to you very quickly, in relation to the customer’s expectation of delivery time. From an operational standpoint, you can't specialize your personnel —the specialization needs to come in the software. If this package in front of me needs to be delivered in two hours, I should handle it no differently than the next package that needs to be delivered in two days. By moving all that specialization into software, your operators can focus on other things that enhance the customer experience, such as packaging.
SCB: So the speed and mode of delivery, and what’s in the package, might change. But one thing that doesn't change is the need to keep the customer apprised of where the package is at any given time. How is that being done today?
Cramer: Now we're rolling back up into the enterprise software stack. We want to make sure that as soon as that that parcel is labeled that the software stack is informed of it. When the carrier comes to pick it up, it’s going to start sending back tracking information. Often, though, there’s a gap between when we first labeled the shipment and the first time a carrier scanned it. A lot of our customers want to monitor that gap, especially during peak season, when a trailer might get set to the side. That's when the warehouse manager will call up the carrier and say, "Hey, did you leave this trailer in the back of the yard?"
SCB: A lot of what we're been talking about so far is customer-facing. But you’ve also got to be working to control your operating costs. How is that being done at the same time you're providing this fantastic service?
Cramer: There are many things that are being looked at. One is doing a cost evaluation in real time with powerful software. If you're comparing 12 service levels, you might find the exact fit that comes at the intersection of cost, speed and customer expectation. Additionally, I can't emphasize enough the importance of the sourcing piece — balancing that with the cost of goods sold, as well the transportation portion. A lot of companies are starting to ship directly from the manufacturer, even though the cost of goods sold from that source is higher, because the shipment leg is so much cheaper that it makes sense.
SCB: Where does the order-management system come into it?
Cramer: The OMS's job when the order is in the e-commerce cart is to work with other parts like shipping software, to determine the lowest cost of the total transaction. It's the combination of all of those different things that helps to maintain your logistics cost at a low level. And if it's done really well, if you've got a really extensive network, you can reduce those overall costs.
SCB: Give me an example of a retailer that is successfully pursuing an omnichannel shipping approach.
Cramer: Probably my favorite example would be QVC, part of the Qurate Retail Group. They bring in a hundred thousand small items at a time. They seriously leverage every vendor that they have, and their warehouses across the country. They check multiple times a day on stock levels in various areas, and their vendors give them feedback as to how they might shift fulfillment internally and externally, in order to strike the right balance of cost versus customer expectation.
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