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As a leader in the logistics industry for the past 30 years, it has been interesting to witness the emersion of the e-commerce fulfillment industry and the building of an extremely complex supply chain and fulfillment network. Customers demand the immediate gratification of home deliveries and do not want to go to a store where they may or may not find exactly what they want. On-line shopping fulfills their needs precisely. These events have created an intricate network of technological solutions requiring the supply chain to be linked with one another through electronic data communications.
These online purchases initiate a chain of complex events that lead to the delivery of the item on the porch within 2-3 days. Providers have built Inventory and tech support systems, both upstream and downstream, over the recent years through incredible innovation, technical advancements, artificial intelligence, and creative solutions to these complex problems. I can only imagine where the next 30 years of logistics management will go.
In my current role at NRI, we have 230 clients for whom we perform wholesale distribution, and e-commerce fulfillment. To meet the needs of our clients’ customers, we have integrated with a great many tech systems to communicate those needs from the customer to our associates who pick, pack, and ship the orders. We then integrate with our carrier partners to rate shop their rate tables using weights, dimensions, and dimensional divisors to select the most cost-efficient carrier to meet the service level agreement (customer expectation for delivery). Upstream of our portion of the supply chain, our clients pore over data – hopefully using data scientists, business analytics, and artificial intelligence – to predict what the customers are going to need, when they are going to buy it, and where to place it to optimize transportation spend. They then source their product, arrange manufacturing, sourcing of raw materials, establishing quality expectations, inbound transportation to our docks (sea, land and/or air) within a timeline that facilitates the fulfillment of the customer need or desire for that item. The process is both art and science to produce, transport, and stock the inventory to meet market demands and sales goals.
After we receive the inventory, stock it in our bins, and communicate that inventory availability to our clients, they then inform us of the orders they need fulfilled based on their sales. We pick, pack, and ship the items using our rate shop selected carrier. The carriers then use their complex systems and freight network to pick up from NRI, move the parcels to a cross dock to sort to the proper line haul conveyance, transport by air or deliver to another cross dock across the country with an over-the-road truck or intermodal solution, truck to delivery station, sort to a delivery vehicle, final mile drop it at the porch and take a picture, email that picture to the customer to show where the parcel was left and communicate to all upstream stakeholders that the customer has received the parcel. Meanwhile, there are parallel virtual tracking records, handoffs, and notifications updating the seller, receiver, and other stakeholders. All done, right? Not really.
Sellers, shippers, or carriers get feedback from the customer on how that customer’s expectations were met, exceeded, or disappointed. All upstream parties use that data to measure their performance and affect change to the process and customer experience to further iterate and innovate on their processes. All done, again, right? Nope.
Now the customer wants to return the item because of a myriad of the usual reasons: wrong size, wrong color, ordered three items to select one to keep, damaged, changed their mind, etc. The customer goes back to the website from which they originally purchased the item. They go to the shopping cart and initiate a return, fill in the order number, select the item they are returning, and reason code, and generate a shipping label. The customer can print it and tape it to the box to ship back the parcel or can take a QR code to a shipping location to have the store ship the item back to the shipper. Some brands are partnering with return platforms where the customer returns the item to a returns bar where the operator of the return bar takes the item and ships it back for them or the platform has the items pick up and sorted them shipped back in bulk to the shipper. The biggest opportunity to retain the customer is to make the returns process a great customer experience. Improving the experience comes from speeding up the customer’s credit for the return and minimizing the effort the customer must expend to complete the return.
The returned item currently flows back to the original shipper through the same supply chain in reverse (Reverse Logistics) through all the same complex and sophisticated steps that it did on its way to the customer. Once it arrives back at the shipper, they process it. If its in original condition, it can be resold as new and will end up stowed in inventory, sold, and shipped though the same chain described earlier. If the item cannot be sold as new, as it failed the grading process the brand established, then the item will end up in one of several different places. First the returned item might need to be repaired and/or cleaned to be sold as new or might have to be sold as used. Or it might be out of date and liquidated through another third party, donated to a charitable organization, or destroyed. In some cases, current fulfillers are limited as to what volume of goods they can send to landfill. They must find an incinerator plant that burns items to generate electricity.
In summary, all these complicated physical transportation systems are monitored, controlled, and operated by complex tech systems that communicate with other upstream, downstream, and reverse logistics virtual systems to facilitate the manufacture, product placement, sale, fulfillment, shipping, receiving, and returning of all this merchandise in this new e-commerce ecosystem. And it seems like magic.