While brick-and-mortar retailers have struggled to bring in customers in recent years, e-commerce has steadily grown and shows no sign of slowing down. Consumers, however, want more than just the convenience of shopping in their pajamas. They expect their purchases to arrive more quickly than ever, and e-commerce giants like Amazon are obliging with more same-day shipping capabilities. Small and midsize companies are feeling this trickle-down pressure to speed up their shipping times, and many are turning to their business application vendors in hopes of rising to the challenge.
Leslie Hand, research director for IDC Retail Insights, an IT analyst organization based in Framingham, Mass., follows trends in shipping and logistics for years and has observed more manufacturers than ever embracing e-commerce as a business model. By partnering with e-commerce sites like the shipping standard-bearer itself, Amazon, manufacturers can sell a broader range of products and deliver them more quickly to a wider range of customers than they could reach on their own, according to Hand. But that isn't the only way to speed up shipping times.
In addition to finding the right software, small and midsize manufacturers that really want to reach consumers directly and quickly need to foster relationships with partners that can facilitate unit-level picking, the process of taking products directly from inventory to shipping. "We see a migration to direct consumer, where if you have low volume, you might use a corner of a warehouse for that capability and it's highly manual," she said. "If your volume starts increasing, you might make a decision to outsource that e-commerce fulfillment capability completely to someone who is good at unit-level packing."
Manufacturers may need to add additional distribution facilities, if it's financially feasible. "You want to broaden that distribution network so that you're shortening the distance between pick and arrival at the customer," Hand said.
Hand cautioned that manufacturers aiming for faster or same-day shipping should carefully examine the range of regions they can realistically ship to on the same day and still maintain a profit. "The kinds of products and numbers of products that you want to offer for one-day shipping are tricky, because you don't want to be all the way down in the long-tail, as you won't be able to sustain inventory," she said.
Manufacturer makes same-day shipping part of company culture
For Longmont, Colo.-based Specialty Products Company, a midsize manufacturer of automotive suspension parts and tools, same-day shipping is a long-standing central business tenet.
The company ships products through Amazon, as well as directly to its customers, according to Mina Cox, the company's chief operating officer. Having more than one distribution model has helped to make same-day shipping a reality. "[Same-day shipping] has always been our philosophy," said Cox. "We make the promise to our customers to ship on the same day." Cox added that same-day shipping support was a requirement for the company when they selected vendor VAI's S2K Enterprise Software package as its ERP suite in 2006.
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"As soon as we get an order, it's printing a ticket," she said. "We scan the ticket, and [VAI] creates and invoice and sends an email to the customer with their tracking number. All that is totally integrated."
Specialty Products says it has had good luck with the VAI system in particular. "We're a company that had experience with other [ERP] packages, and even some of the biggest packages," said Cox. "For the way we do business, getting it out to the customer with good communication, this has been the best package for us."
Wheelchair manufacturer meets shipping goals through warehouse control
Other manufacturers need faster shipping not just to stay competitive, but to service customers awaiting products that are critical to their everyday lives. Patrick Roth, manager of the Ability Express warehouse division for The Braun Corporation, a Winamac, Ind.-based manufacturer of commercial wheelchair lifts and vehicles, has been a part of his company's same-day shipping movement since the beginning.
"Our customer base can be a little impatient, just because of the industry we're in," Roth said. "That's why we really had to really work hard on our same-day shipping percentages, and we looked at Amazon to see how they were doing that. It was basically about getting as many SKUs for critical products on the shelves as possible."
Braun runs Insite Software's InsiteShip V2.11.430 product for warehouse control.
Braun went live with InsiteShip in 2008, which was the same year the wheelchair manufacturer began gathering data on its most frequently shipped parts, with the goal of moving to a same-day shipping model. "We started with 900 SKUs and a little corner of the main facility," said Roth. "We did the best we could, but we still weren't getting as many parts as we needed to the customers."
By 2009, Braun had moved to a new, larger space and was now working with 3600 SKUs. In an effort to become more efficient, Braun turned to Insite to eliminate its paper-based order management process, which was creating significant lag time between order placement and fulfillment.
"[After implementing InsiteShip,] our lag time went from two hours to about 15 minutes from when the order was presented to when the shipping department saw it and started working," said Roth. "That greatly enhanced our same-day shipping."
In June 2012, Braun moved to yet another new warehousing facility, which allowed the company to increase its SKU count by about 27%. "With Insite, we're able to pick, pack and process an order virtually within minutes from the time we see it in the control screen," Roth said. "The lag time is now from just one to three minutes." Braun's same-day shipping rate has gone from 70% to 93% of orders since implementing Insite, he added.
Improving shipping times across multiple channels
Companies that speed up manufacturing shipping times can expect to do a better job of juggling multiple sales outlets and logistics services. Such is the case for Savvi, a manufacturer of novelty temporary tattoos in Tucson, Ariz.
Savvi has been using software vendor Epicor's ERP system since June 2010, after 10 months of due diligence exploring vendor options. "We have three distinct divisions," said Chris Huff, vice president of operations. "One deals with retailers like WalMart and Target. Another is a custom product, make-to-order division. The other one is our vending machine division."
The company also has a stock division, he added, where an order can be shipped either same-day or next-day, depending on what time of the day the order is placed.
"We've got hundreds of thousands of stock images that you can pull up on our website," Huff said. "You can place your order and get a confirmation number as soon as it ships. We have the same thing with our vending division, where orders that come in before 2:00 p.m. will be shipped same day."
Savvi has to juggle a number of different sales models and outlets when distributing its products, according to Huff, including e-commerce, major retailers, made-to-order manufacturing and inventory control. Its shipping models are also varied, he said, from overnighting products and shipping container loads overseas to sending truckloads for domestic sales and going through FedEx and UPS.
"Epicor has been great for putting all our needs in one package," he said. "We were a mom-and-pop company initially, with a home-grown system. We acquired two or three competitors and at one time had five disparate systems running simultaneously; you can image the chaos that ensues from that."
The company had struggled to bridge sales and shipping data across those five systems, while also having a separate accounting system outside of its inventory control system. The Epicor ERP system helped Savvi simplify its operations, Huff said.
Savvi does some of its stock division sales directly through Amazon, Huff said, and those orders always ship either same-day or next-day. "We fit well into their wheelhouse," he added. "We haven't had to do any crazy modifications to our system, since it's basically just identifying the products that they would offer for sale and then making sure we stock accordingly and have the ability to do quick turns on their purchase orders."
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