As the landscape of eCommerce continues to evolve, it has become crucial to explore new operational strategies that ensure competitiveness and efficiency in this ever-evolving landscape.
To shed light on this topic, we have analysed the emerging trends that are shaping the operations of multichannel companies. Here, we present a creative compilation of seven strategies that can drive success in the face of fierce competition.
Strategy 1: Pioneering Product/Service Development
Embracing innovation is vital for sustained competitiveness across all facets of a company, including IT, inventory control, and merchandising. Multichannel enterprises venturing into new markets, such as wholesale to prominent retailers, encounter the challenge of meeting rigorous vendor compliance standards.
Strategic Direction: Acknowledge the unique order profiles and requirements associated with each channel and customer. It is crucial to embrace flexibility within your systems and operations to accommodate this diversity effectively. This recognition necessitates adapting internal processes to meet the distinct demands of various channels, resulting in substantial changes to procedures and systems. By embracing this transformative approach, your business can successfully navigate the complexities of a multichannel environment and optimize its operations for enhanced performance and customer satisfaction.
Strategy 2: Supply Chain Optimization
In the past two decades, companies have heavily relied on overseas markets for manufacturing and product sourcing. Beyond viewing operations as mere warehousing, enhancing both inbound and outbound supply chains unlocks significant advantages and cost savings. Due to severe backlogs, the pandemic has magnified the importance of optimizing the entire supply chain, from origin to the customer’s doorstep.
Strategic Direction:
Inbound:
– Elevate value-added services (e.g., ticketing, packaging) and quality inspection earlier in the supply chain to reduce costs, minimize rework, and expedite product delivery.
– Establish and enforce vendor compliance policies to maintain consistency and efficiency.
– Gain visibility into inbound shipments through Electronic Data Interchange (EDI) or Advanced Shipping Notices (ASN).
– Implement vendor portals to facilitate information exchange regarding purchase orders, deliveries, invoices, etc.
Outbound:
– Acknowledge that outbound shipping costs have surpassed all other expenses, including management, labour, occupancy, and packing. Continual renegotiation with carriers and strategic adjustments to inventory positioning closer to customers is necessary.
– Explore strategies like multi-FC (fulfilment centre) approaches, zone skipping, last-mile delivery options, and potentially third-party fulfilment to reduce time-to-customer and shipping expenses, ultimately enhancing customer satisfaction.
Strategy 3: Navigating Labour Challenges
Labour costs constitute a significant portion (50%-70%) of order processing expenses, excluding outbound shipping and employee benefits. Availability of qualified labour has dwindled in many areas, and rising wage rates and unemployment decline have increased the overall cost of delivery.
Strategic Direction: Unleash the full potential of your workforce through strategic measures aimed at fostering productivity and employee satisfaction. Develop comprehensive reporting structures at individual and departmental levels, providing valuable insights into performance and progress. By offering regular feedback and guidance, you align employees with the organization’s overarching goals, nurturing a sense of purpose and driving them toward success.
Embrace the power of career path planning, collaborating closely with employees to create personalized growth trajectories within your company. By investing in their professional development and minimizing turnover, you retain valuable talent and reduce the costs associated with recruiting and training new staff members. This collaborative approach enhances employee engagement and cultivates a loyal and dedicated workforce.
Consider implementing an incentivization system that recognizes and rewards exceptional performance. By aligning rewards with higher output and extraordinary achievements, you motivate employees to go above and beyond, fueling a culture of excellence and continuous improvement. This proactive approach to fostering productivity creates a dynamic and inspiring work environment where employees feel valued and empowered to reach their full potential.
Strategy 4: Bridging the Manager Talent Gap
There is a persistent need for more experienced multichannel managers for various operational domains, including inventory, IT, and overall operations. As companies recruit new managers, the challenge lies in finding individuals with the necessary expertise.
Strategic Direction: Make the development and retention of your current managers a top priority. Take the time to identify their individual needs and provide them with access to a wide range of educational resources, both local and online. Encourage and support internal initiatives that promote knowledge and skill enhancement in areas such as inventory management, accounting, productivity improvement, and effective employee leadership.
By investing in the growth and development of your managers, you empower them to excel in their roles and contribute to the overall success of your organization. Equipping them with the necessary knowledge and skills enhances their ability to make informed decisions, drive efficiency, and foster a positive work environment.
Encouraging internal initiatives further strengthens your management team by creating shared learning and collaboration opportunities. By focusing on specific areas of expertise, such as inventory management, accounting, productivity enhancement, and employee leadership, you facilitate the exchange of best practices and foster continuous improvement within your organization.
By prioritizing the development and retention of your current managers, you build a solid and capable leadership team that can drive sustainable growth and success. By providing them with the resources and support they need, you cultivate a continuous learning and improvement culture, ensuring your managers are well-equipped to overcome challenges and seize opportunities in an ever-evolving business landscape.
Strategy 5: Effective Inventory Management
Historically, inventory represents a significant portion of a company’s balance sheet assets. To meet the demands of multichannel customers while minimizing backorders and overstocks, companies shipping from multiple fulfilment centres and stores must maintain higher inventory levels.
Strategic Direction: To maintain profitability, it is crucial for omnichannel retailers to effectively fulfil both e-commerce and in-store orders, striving for the same level of efficiency seen in direct-to-consumer businesses. This requires careful optimization of labour utilization, implementing customer-facing inventory systems, and adopting cost-effective outbound shipping methods.
By maximizing labour efficiency, retailers can optimally allocate resources across various channels, enabling smooth order fulfilment and reducing unnecessary costs. Implementing customer-facing inventory systems allows for better visibility and management of stock, ensuring accurate and timely order processing. Also, employing cost-effective outbound shipping methods helps minimize expenses while promptly delivering orders to customers.
By prioritizing these strategies, omnichannel retailers can create a seamless and efficient fulfilment process, regardless of the sales channel. This enhances customer satisfaction and improves overall operational performance and profitability.
Strategy 6: Harnessing Cloud and Subscription Software Models
Traditional reluctance to replace on-premise OMS (Order Management Systems), ERP (Enterprise Resource Planning), and WMS (Warehouse Management Systems) has stemmed from the substantial investments required. Cloud-based and subscription-oriented systems offer a pathway for transformation without extensive upfront costs.
Strategic Direction: Explore the inherent potential and diverse benefits that await your organization through the utilization of cloud-based systems. These sophisticated solutions possess the capacity to significantly enhance flexibility, seamlessly align with productivity goals, streamline FC inventory management, and optimize labor allocation within your enterprise.
A noteworthy advantage of cloud-based systems is the alleviation of the demanding burden associated with IT operations. By transitioning to the cloud, you can offload the responsibility of infrastructure maintenance and management, enabling your team to prioritize core business objectives. Additionally, the adoption of a usage-based monthly pricing model facilitates efficient cost management, as expenses are incurred solely for the actual resources utilized.
Seize this exceptional opportunity to upgrade your existing systems and witness a transformative impact on your organization. By harnessing the robust capabilities offered by the cloud, you can unlock new levels of productivity and bolster profitability. Experience the unparalleled scalability granted by the cloud, allowing your operations to seamlessly expand or contract in response to fluctuating demand. Simultaneously, streamline your inventory management processes, fostering improved collaboration and communication across teams.
The cloud empowers your workforce with unmatched accessibility, granting them the ability to access critical data and applications from any location, at any given time. This newfound agility, efficiency, and responsiveness enable your personnel to address the evolving needs of your esteemed customers.
Do not overlook the invaluable advantages that cloud-based systems can bring to your business. Embrace the power of the cloud and embark on a transformative journey towards heightened productivity, optimized operations, and enhanced profitability.
Strategy 7: Embracing Continuous Process Improvement
Over the past decade, pursuing greater productivity and cost savings has been a recurring focus for multichannel retailers and vendors. However, some companies need help implementing promising ideas due to their lean operations.
Strategic Direction: Infuse your organisation with a culture that thrives on continuous improvement, where the pursuit of progress becomes ingrained in the very fabric of your company. Dedicate intentional moments to delve into the intricacies of your operations, meticulously evaluating each facet with a discerning eye. Explore the untapped potential for system enhancements, uncover opportunities to bolster capacity, and uncover methods to optimise material handling. Streamline workflows, unveil the hidden efficiencies waiting to be harnessed, and diligently work towards reducing costs.
Embrace a forward-thinking mindset that acts as a compass, guiding your company towards new frontiers of growth and advancement. Cultivate a proactive approach that seeks out avenues for progress, anticipating the needs of tomorrow. This mindset becomes the cornerstone of your organisation’s resilience, propelling you forward in an ever-changing business landscape.
Instilling this culture of continuous improvement lays the foundation for an enduring growth journey. Your company remains agile and adaptive, capable of navigating the evolving tides of the industry. Embrace the transformative power of ongoing improvement, and unlock your organisation’s true potential as you forge ahead on the path to sustained success.
Conclusion
By embracing these seven innovative strategies, companies can increase their competitive edge and achieve optimal operational efficiency in an ever-changing business landscape. Embracing innovation, optimizing supply chains, nurturing talent, and harnessing technology will propel organizations toward sustained success and growth. Remember, continuous improvement and adaptation are the keys to thriving in the dynamic world of modern business.
In addition to our valuable business tips, Fullstack offers the expertise of our dedicated team of eCommerce professionals. We are ready to assist you with a comprehensive range of tax, VCFO, accounting, and bookkeeping services to take your store above and beyond.
