As eCommerce continues to grow, with a projected growth rate almost a full 8% higher than the total retail growth rate through 2018 according to eMarketer, it should be no surprise to anyone that this brick-and-mortar-less market sector is changing the way supply chain logistics are managed.
Supply chains have had to adapt and become faster, lighter, and more flexible to meet the rapid fulfillment needs of many eCommerce companies. According to David Egan, CBRE‘s head of U.S. industrial research, it’s become necessary for many companies to change how they handle logistics, and to “expand and make your supply chain much more complex if you want to be able to promise and deliver on that same-hour, same-day or overnight delivery everyone is coming to expect.”
Filling In The Blanks
Amazon is a great case study for the ways in which eCommerce is changing the physical logistics of fulfillment. A quick look at the growth in warehouse locations over the past year and the average size of those warehouses offers some great insights into the changing map of supply chain logistics.
Amazon now has 19 small warehouses up and running in the U.S., filling in the many blank spaces on the map between their massive fulfillment centers and their many demanding customers, who expect the giant eRetailer to always make good on its promises of next day (and same day) fulfillment.
As business grows larger for eCommerce companies, supply chains are growing the complexity of their supply chains and developing smaller, localized facilities that can help speed up fulfillment times in major markets.
Ultra-flexible urban warehouses that could easily fit inside regional, intermodal facilities allow online retailers to spread their inventory capacity out over a greater geographical region with a much higher density per locality that means what a customer orders might only be thirty minutes or an hour away, rather than a full day’s drive on the interstate.
Tech Makes it All Connect
These systems make it possible for eCommerce companies to keep track of all their moving parts and exercise the same level of control and management that used to be limited to simpler supply chains. By connecting all the links in the chain through centralized communication software that seamlessly integrates with warehouses’ cloud-based WMS systems, it’s possible to direct merchandise downstream quickly, accurately, and most importantly — efficiently.
As supply chain logistics moves to the cloud, the physical distances and differences between freight carriers, 3PL providers, and warehouses matter less and less. EDI systems that communicate seamlessly with each other mean that on-premise, centralized systems are becoming less relevant, as does the need for large, centralized warehouses.
These changes ripple outward through every layer of the fulfillment cycle, impacting everything from drayage and line hauling to the development of advanced robotic pick-and-pack systems.
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