The 7 Questions Interview Series: Logistics and Supply Chain Data Integration
“The 7 Question Series” is an investigative content series where we seek out key leaders in a specific industry and/or subject matter expertise area and ask them 7 key questions that “enquiring minds want to know”. There is a twist however to these questions. We provide the person being interviewed with a hypothesis for each question. This helps to frame and set context for their answer.
Logistics and Supply Chain Data Integration Series Objectives:
The objective of this series is to establish direct connections with Logistics and Supply Chain experts across the globe and ask them the same set of 7 questions regarding e-commerce data integration in the supply chain. We want to derive insights from their direct experiences and expertise that will help e-commerce companies, both B2B and B2C at all stages of their evolution. We are also curious to see if their answers are similar or different. These interviews will be featured on this website as a series.
Interview with Arthur Barrett, President, Barrett Distribution Centers
About Arthur Barrett
Arthur is President, of Barrett Distribution Centers . As President of Barrett Distribution Centers, he ensures that the Company’s operations, systems and infrastructure, finance, engineering, and customer service are delivering quality and efficiency to our customers. He accomplishes these objectives by ensuring that we hire the best people, develop them, and give them the tools to excel for our customers.
Arthur has many years of experience in the third-party logistics and supply chain industries and is recognized as a visionary in this field.
Robin Smith: I hear the terms B2C, B2B and now Omnichannel retailing. How are the changes taking place affecting the supply chain and logistics providers?
Arthur Barrett: The physical distribution of products to consumers is complex regardless of whether those products are shipped to retailers (BtoB) or directly to consumers (BtoC). Retail BtoB distribution has a variety of requirements designed to streamline the flow of product and inventory visibility for both the supplier and the retailer. As systems and processes have become more sophisticated, they have become more complex, adding to the expectations for logistics providers such as Barrett Distribution Centers.
Omnichannel really means all channels working together to provide a great customer experience. The key is to maximize the capabilities across both BtoB and BtoC channels in a manner that brings them together to achieve omnichannel sales potential at a minimal cost.
Third party logistics providers must be able to support an integrated solution for these clients so that they can fully leverage the advantages of selling in both channels. More importantly, this process needs to be seamless to the end consumer, the manufacturer, and the retailer.
Integrating the logistics backbone for these Omnichannel retailers requires collaboration and detailed planning. One of the first steps is to provide the technology to manage one inventory for the entire enterprise. For example, the manufacturer or retailer may want to allocate certain SKUs or volumes of inventory for each segment of the business. In order to successfully support this strategy, the third party logistics provider must be able to seamlessly manage these various inventory segments behind the scenes for the customer. Inventory will need to be seamlessly moved “on the fly” between segments in order to optimize the sell-through for the third party logistics providers’ customers.
A high level of integration between segments is important to optimize sales
Robin Smith: When would it be appropriate for a web based retailer to think about the benefits of integration?
Arthur Barrett: In our opinion, integration of channels needs to be part of the foundation. Even if a company starts life as a 100% web based retailer selling their products only through their own branded website, that company will need to be prepared for a future state where they do begin selling through additional channels. These channels could be brick and mortar retail or websites of other retailers. In any event, the company will need to be prepared to integrate all channels to provide a seamless experience for the consumer.
If a retailer is purely web-based, that is the ideal scenario for outsourcing their logistics and taking advantage of a 3PL’s experience in omni-channel distribution. This strategy allows the e-commerce retailer to focus on their own core competency – designing great products, sourcing production, marketing and sales; and outsource the non-core activities to a partner who will focus on continuous improvement in these non-core areas. A 3PL that is focused on retail distribution will handle all the EDI compliance for the web-based retailer who wants to grow volume by distributing to brick-and-mortar retailers.
Robin Smith: How important is the Logistics provider’s investment in technology and how does it affect the omnichannel customers ability to scale?
Arthur Barrett: The systems of the third party logistics provider must be able to communicate inventory levels real time to the customer’s websites and ERP systems. Sophisticated third party logistics providers are also able to manage fill rate rules, back orders, and replenishment functions on behalf of the customer. These systems will optimize order fill rates and ultimately sales volume.
Successful third party logistics providers are also an asset to an integrated returns and reverse logistics operation. Cross-channel returns must be seamless to the customer and the end consumer. Warehouse Management System returns modules need to be adept at not only accounting for the return, but communicating timely to the customer so that the end consumer is satisfied with a refund or replacement item the same day the return arrives to the distribution center.
In addition to simply accounting for the return, inspecting and dispositioning the item, and satisfying the end consumer, the Returns Center should be accumulating returns data and reason codes, and converting this information into actionable reporting that the manufacturer or retailer can use to improve the front end sales experience. Analysis and reporting of this nature can help improve the satisfaction levels for the consumer with the first purchase, improving customer brand loyalty and reducing return levels. For the manufacturer, this type of actionable knowledge can lead to improvements in the product quality, or simply the information on the product that is provided to the consumer in their purchase process. Both improved product quality and consumer expectations will lead to higher brand loyalty and lower returns.
Robin Smith: I hear many web retailers are small businesses. What have you seen as indicators of success and the ability to scale versus those that can’t?
Arthur Barrett: I am admittedly biased in my answer here, but the small businesses that have the easiest time scaling up are the ones who recognize the value of a third-party logistics partner. For many small businesses, their biggest obstacle is the scarcity of resources. Every successful business has their core competencies, something that they do better than anyone else. That is the premise of a successful business anyway. For 99.99% of companies, logistics is not their forte. By trying to manage that portion of their business, they are diverting valuable resources from the business functions that they should be focusing on. In the end, the old business mantra rings true; “do what you do best, and outsource the rest.”
Robin Smith: As a web retailer’s supply chain gets more complex, as they scale, how do they transition to more complex platforms to handle the growth without killing the business, what do you see as the pitfalls?
Arthur Barrett: Speaking from experience, it is better to plan your growth and scale beforehand than to wait for growth and try to catch up. In other words, where do you want to be in two years? Five years? Once you know that, start to build a team around you who is suited for that
Robin Smith: How complex can the integration requirements become as a web retailer scales?
Arthur Barrett: At small scale, it is relatively easy to provide an integrated and seamless customer experience across channels even if not systemically designed to optimize that integration. As web retailers scale, they need to understand that their business is not about competition between channels. In fact retailers need to realize that customers do not even think about channels. Channels are the retailers’ issue. Customers want to buy from you and use your various channels to support that purchase.
Robin Smith: Any advice on the logistics implications?
Arthur Barrett: The various channels inherently make the business more complex. We encourage our customers to take out complexity by combining the retail and e-commerce distribution, maintaining one inventory for both channels, and integrating back end systems to seamlessly optimize product across channels as the business demands.
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