Cam Elliott

Supply Chain

Keeping Up with the (Delivery) Jetsons: Creative Order Fulfillment Strategies from the Pandemic

At first thought, order fulfilling robots and virtual reality lipstick try-on may conjure a mental image of something right out of The Jetsons. The long-running TV series portrayed a utopian future of three-day-workweeks, aero cars, and even a robot maid called Rosie —a life simplified by all manner of technological advances, leaving plenty of time for leisure. While current trends in order fulfillment are driven by a need for customer satisfaction and cost savings, as opposed to more time for leisure, order fulfillment strategy has changed, and technologies in place today are a lot closer to The Jetsonsthan you may realize – and the urgency to embrace the trends of the future is very real. Let’s take a look at three trends you should not ignore.

Micro-fulfillment 
It’s not difficult to understand why so many retailers, especially grocers and big box ones, began looking to create smaller versions of their warehouses and distribution centers inside their less-populated (and sometimes closed) store spaces. At the heart of micro-fulfillment strategies is an increased desire to meet the customer where they’re at, a positive message during the pandemic. Micro-fulfillment often blends the power and efficiency of a shipper’s warehouses and/or distribution centers with the swiftness and personalization of regional fulfillment, sometimes even including last-mile delivery. Some see micro-fulfillment as a natural progression of another popular order-fulfillment strategy during the pandemic (BOPIS/curbside pickup), the premise being that widespread investment and expansion of these programs lead to retailers naturally rethinking their retail spaces, along with reconsidering how they can best use all of their available resources to fulfill as quickly as possible to the consumer and outmaneuver pandemic-driven logistical concerns. Both Kroger and Target have notably invested heavily into micro-fulfillment in the last year, announcing their own highly specialized order fulfillment centers. Kroger believes its planned two dedicated order fulfillment centers will reduce the costs and increase the speed of online grocery delivery, and, while announcing their planned order fulfillment center, Target stated its belief that “shipping a package from a store rather than a fulfillment center is 40% cheaper”.

Robotic Order Fulfillment 

While robots have been promised as a serious and innovative game-changer for shippers for some time now, their adoption has been slow as brands remained steadfast to carefully planned budgets. Then came the pandemic, which quickly threw those plans off course and gave shippers new reason to consider more long-term opportunities. According to a recent RetailWire survey, “73% of large retailers say the importance of using robotics in warehouses or distribution centers has increased due to factors that emerged during the pandemic.” Whether they’re facilitating order picking or packing, robots make great and fast additions to the socially-distanced warehouse. And not only are they speedier than their human counterparts, 100% of their activity data can be mined for greater network goals, like inventory management. But their benefits go beyond the warehouse; many brick-and-mortar retailers (especially grocers) have found use for robots in scanning product shelves for low stock, price verification, and more.

Augmented and Virtual Reality Selling and Fulfillment 

Yes, really. Much like robots, AR and VR technology seemed somewhat of a novelty prior to the pandemic. But 2020 saw a dramatic drop in in-store foot traffic (an average 16% decline, according to Retail Dive), leaving many retail shippers seriously reconsidering the at-home shopping experience. Brands such as IKEA, Macy’s, and Sephora began heavily emphasizing AR/VR-enabled mobile apps that let consumers visualize everything from furniture sizing/placement to lipstick colors. It’s estimated 100M online consumers were AR shoppers in 2020, making for an incredibly effective retail selling tool; however, these brands also discovered an impact on returns. The common belief is that AR/VR technology lets consumers understand products better, which leads to fewer returns. Macy’s notably reported that return rates for their AR/VR-assisted purchases dropped to less than two percent (up to a five percent difference from the industry average). But this technology goes beyond selling – shippers of all types, as well as vendors, are finding that wearable computing devices can decrease order picking and packing times. One study found “wearable computing devices” increased the average picking speed of new warehouse employees by 37%, and DHL prominently expanding its “Vision Picking” smart glasses worldwide after finding a 15% bump in warehouse employee productivity. And again, while not exactly new, this technology directly addressed some of the unique challenges created by the pandemic, such as social distancing measures, filling gaps created when employees had to quarantine or chose to leave the job due to safety concerns, as well as a growing desire amongst brands to speed up order fulfillment as much as possible to seemingly increase delivery speeds during unprecedented decreases in carrier capacity.

Should you go all-in on AR and robotic order fulfillment? That depends. Much like the rise of carrier diversification, these order fulfillment strategies were not created during or by the pandemic; however, they have amassed huge interest and buy-in from shippers of many types and sizes (especially e-commerce retailers) looking to combat pandemic-driven industry challenges. And, almost all of these new fulfillment strategies enhance the customer experience. Our best advice? As you envision near-term future enhancements to your order fulfillment strategy, consider the technologies necessary to ensure you’re not playing catch-up with your competitors and the market.

Rebecca Wyatt is a Solutions Manager at Green Mountain Technology(GMT), where she partners with clients representing nearly $1B in parcel spend to provide GMT’s strategic Parcel Spend Management solutions – Network Optimization, Spend Analytics, and Contract Management. Cam Elliott is the Brand Manager at GMT, where he oversees the design, creation, and direction of GMT’s customer touchpoints, particularly as they relate to the mission, vision, and values of GMT and its audience. 


This article originally appeared in the September/October, 2021 issue of PARCEL.

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A Parcel RFP Guide: Five Critical Components to Consider

As a shipper entering a parcel carrier bid process, you are subject to a great deal of doubt and risk from the unknown. A successful RFP often begins by considering two critical questions – both of which should be evaluated before ever entering the RFP: what is the likelihood of success, and is a contract extension more advisable to the health of my parcel network (and my parcel carrier relationships)?

This is not to say that an RFP is not a successful cost avoidance or cost mitigation tactic, but rather an endeavor that will greatly impact your parcel network, and thus deserves thorough consideration. In those circumstances when it is most clear that your brand and parcel network would be better served through the means of an RFP, there are typically five critical components to consider in order to achieve a positive and rewarding RFP outcome. Today, we’re providing a summary of those five components to help you as you enter a future RFP – or possibly change the course of a current RFP.

1.  Develop a strong RFP strategy that helps you identify your key savings objectives. Ask yourself, “What is the point of entering the RFP?” Is it a cost goal, a carrier relationship goal, or something else that your brand is trying to reach through the RFP? Consider key questions like:

•  What about your past experience is motivating your RFP?

•  What are the challenges your parcel network faces during peak season or, perhaps even more specifically, during a pandemic, that you would like to see addressed in the RFP?

•  Are you frequently impacted by GRIs?

This seems obvious, but as with most tasks easier said than done – and worth doing – success often means constantly reminding yourself of the purpose in order to stay on track. Through such questions, you’re working to define a clear path of success. For example, by understanding the exact savings objectives you’re attempting to solve, you can more easily identify components of your parcel contract(s) to target – is there a specific carrier better aligned to meet your need, will a GRI cap assist your savings objectives more than a specific rebate percentage or vice versa, etc.

2.  Remember that your RFP is not a battle, but a prospective partnership. It’s important to keep in mind that you’re attempting to enter a new agreement with a carrier(s) that is beneficial to all parties involved. Understanding the prospective carriers and their needs (just as well as you understand your savings objectives above) will undoubtedly serve you well in finding success in your RFP. By understanding the needs and wants of your prospective carrier(s), you’re better equipped to find compromises that also serve you and your parcel network simultaneously. However, as with all relationships, direct communication about a past experience is sometimes uniquely necessary in order to move forward. In these rare circumstances, we advise that you rely on data to help assert any misgivings or negative experiences you may have had with a carrier in order to move forward. Just be sure that this communication is necessary to the savings objectives of your RFP strategy and will not hinder the current RFP or a future one.

3.  As you consider the objectives and questions above, prepare to think creatively and to work collectively to create solutions. Typically, it’s helpful to break down your parcel contract(s) into its base components. For example, consider the below:

1.  General Rate Increases (GRIs)

2.  Termination Clause/Fee

3.  DIM Divisor

4.  Minimums

5.  Rebate and Bonuses

6.  Major Accessorial Discounts

Consider, how can these components be targeted and/or blended to meet the savings objectives of your RFP strategy? Is one prospective carrier more inclined to meet that component or offer a compromise over another? It’s not uncommon for shippers and carriers to meet in the middle when it comes to these components, such as forfeiting a rebate percentage for capped GRIs or specific accessorial discounts.

4.  Read the terms and conditions of each RFP round thoroughly and, even better, model the proposed networks that arise within each round. Understanding the terms and conditions of the proposed parcel contracts in their fullest terms is probably the most crucial step in awarding your parcel spend to the right parcel carrier. For example, if you receive multiple proposed carrier contracts with varying terms and conditions, how do you know which is the best contract to meet your savings objectives without comparing the proposed parcel contracts down to their exact savings and expenses? Through parcel contract modeling, you model your network’s activities and expenses as if they were operating under each proposed parcel contract iteration, so that you can directly compare the activities and expenses of your parcel network as it exists today, and how it would exist under those new contracts. An experienced parcel contract modeler will be able to replicate and visualize each proposed parcel contract down to the penny, so you have a complete understanding of what you are or are not agreeing to with the proposed parcel contract. Such a thorough strategy provides you both peace of mind and the ability to compare apples to oranges, literally.

5.  Consult with an experienced parcel spend management partner to gauge the level of service you’re receiving from your parcel carrier and the contract(s) you would like to bid. Seeking guidance from someone familiar with a wide range of shippers with complex parcel networks and parcel contracts will help you identify answers to questions like: Are you receiving average, sub-average, or best-in-class service? What kind of prices, requests, and bonuses are feasible for brands like yours? Are there particular accessorials or rebates that tend to be prevalent or on the rise in your industry that should be considered throughout the RFP? Partnering with someone that has a variety of experience and industry awareness is another confidence builder when undergoing and entering such a vulnerable and stressful event.

Though RFPs can be a stressful and vulnerable period for your brand and parcel network strategy, they are also often a uniquely rewarding and cost saving measure for your parcel network when applied correctly. Understanding when to implement an RFP is just as important as how you implement am RFP. Applying considerable research, creativity, and flexibility throughout the process will likely serve your brand well and help build lasting parcel carrier relationships that will no doubt affect future RFP events.

Cam Elliott is the Brand Manager at Green Mountain Technology (GMT), a Parcel Spend Management service provider for shippers with over 10 million parcels per year. GMT also helps its customers model prospective parcel carrier contract adjustments down-to-the-penny, so you can be confident that no money is being left on the table. Visit the GMT Knowledge Center (https://resources.greenmountaintechnology.com/gmt-rfp-checklist) to download our RFP Checklist to learn more about how GMT supports our customers through RFPs.

This article originally appeared in the November/December, 2020 issue of PARCEL.

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Three Transportation Missteps You Don’t Want to Make

GMT’s fifth annual Benchmark Report, The Impact of Brand Strategy on Parcel Transportation, is here. And there’s a lot of data and insights to explore, ranging from influential industry trends to strategic best practices that can be applied to a variety of supply chain obstacles.

Our purpose with the report first and foremost is always to provide a convenient and helpful benchmark document to parcel industry shippers, furthering your success to continue the success of the industry. With that same spirit in mind, we thought it might be helpful to breakout three key takeaways we saw in this year’s Benchmark Report.

Don’t sacrifice profitability for fast order fulfillment As in past years, Fast Order Fulfillment (FOF) is top of mind for everyone. And we mean everyone. Benchmark survey participants ranked FOF their #1 strategic focus and also their #1 internal challenge. On track with a year that saw the Big 2 announce competing and future plans to support 7-Day and Weekend Delivery, as well as COVID-19’s increasing transit time disruption across the transportation industry as a whole. Yet, the Benchmark Report also reveals a middle-of-the-road trend for shippers – where Same-Day Delivery and Deferred Delivery (4-7 days) are shrinking, while Express and Economy (between 1-5 days) are the majority, with an emphasis on around three days transit time. The cost equation between meeting rising consumer demand for fast shipping and creating a parcel network that can support such FOF is no secret challenge, and this year’s Benchmark Report is clear – don’t sacrifice the profitability of your existing parcel network for outrageously fast shipping. Find a balance that works best for your brand strategy and parcel network.

Don’t ignore regional carriers Though the Big 2 are still the Big 2, the Benchmark Report reveals continued growth for the use of regional carriers, with more than half of survey respondents planning to increase their use of regional carriers. Why? Regional carriers present a unique and affordable opportunity to influence or implement FOF strategies, as they can often reach your end consumer much faster than traditional routes. And that’s important when you are shipping temperature dependent items, such as food and groceries. Especially in the wake of COVID-19, we have seen many businesses equip and utilize regional carriers for continued success or survival.

Don’t avoid the challenge of OmnichannelFive years ago, in the 2016 Benchmark Report, we found that less than 27% of respondents were implementing an omnichannel strategy within their distribution network, while a nearly 47% majority operated the inventory of their brick-and-mortar and e-commerce stores separately. This year’s Benchmark Report finds that a new majority (45%) now operate under an omnichannel strategy, and those managing physical and online store inventories separately has since declined (now 38%). What does this data tell us? Though a substantial number of shippers are still managing their inventories separately, omnichannel implementation has seen significant growth in a relatively short amount of time. The success, challenge, or lack of an omnichannel strategy can also greatly influence this year’s top four strategic priorities ranked by shippers: 1) fast order fulfillment, 2) differentiation of brand and product, 3) order fulfillment / returns profitability, and 4) product price competition. It’s been generally accepted for some time now that the need for a holistic inventory management strategy would only continue to increase as technology advances alongside rising consumer expectations for faster and free shipping. The impact of COVID-19 highlights this need for the industry further.

Check out the full 2020 Parcel Benchmark Report for a closer look at these parcel industry insights and more.

About GMT’s Parcel Benchmark Report

Each year, we partner with the Cleveland Research Company to survey some of the world’s largest and most complex parcel shippers with the purpose of yielding data-based insights around industry defining trends and strategic best practices, all combined in a convenient and straightforward document: our annual Benchmark Report. Survey questions are intentionally designed to gain understanding into the underlying strategic practices of respondents, while also obtaining a gauge for what trends the respondents feel are most prominent in the industry, as well as their confidence in the marketplace. To ensure quality data, we seek responses from a targeted mix of consumer/retail and industrial businesses. Specifically, this year’s Benchmark Report saw a 47% majority from retailer/distributor respondents, with over 50% of respondents spending $51 million or more on parcel transportation.

Cameron Elliott is Brand and Content Manager for Green Mountain Technology.

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