Manufacturers are also getting caught up in the e-commerce wave. Part 2 of our E-commerce series discusses what's new for those on the front lines of consumerism.
Managing in manufacturing
Business-to-business commerce is declining in some areas because purveyors of big brands are coming to understand they can control the customer experience – and satisfaction – if they offer direct sales. Nike, for example, plans to grow its Direct-to-Consumer (DTC) business by 250 percent over the next five years[1]. While consumer brand manufacturers like Nike have been playing the DTC game for years, many companies that make products for true business-to-business (B2B) customers are playing catch up. Shopify correctly points out that B2B e-commerce is "not a luxury"– it's a necessity[2]. In fact, B2B e-commerce outpaced consumer online sales at US$7.7 trillion in 2017[3].
For the manufacturer trying to sell widgets, this can mean a dramatically different way of doing business. B2B buyers are increasingly younger and more likely to be digital natives and are bringing their own consumer habits and preferences to work with them[4]. This means in practical terms that they want self-service, mobile-friendly interfaces, customization, and dynamic pricing[5]. And it goes without saying that they want what they order to arrive on time and complete.
No more can business’ operate with sales reps phoning orders in, over-promising and wreaking havoc with the production line. This old-school approach will still work with some customers and in some industries, but if Amazon is encroaching on familiar turf, it's time to take heed. Order fulfillment processes will likely need an overhaul to accommodate both e-commerce and traditional models. And, once an e-commerce channel opens up, the business can bet they’ll also be expected to sell directly to the consumer to some extent. How do you manage these typically small, orders alongside the bulk orders from retailers and wholesale buyers?
"No more can business’ operate with sales reps phoning orders in, over-promising and wreaking havoc with the production line."
A systems approach
Manufacturers need to adopt a whole new set of practices to adapt to omnichannel e-commerce. Attempting to manage with the wrong systems, for example using B2C software for B2B e-commerce, as many companies did at the beginning of the B2B online sales boom, was a recipe for expensive challenges around customization[6].
However, integrating e-commerce functions with back-end supply chain software systems and customer relations software will help to provide the end-to-end visibility that is needed to be successful at online selling.
The ability to integrate systems will be key to winning at B2B online sales, said Jary Carter, co-founder of CRM supplier, Oro Inc., in a Forbes op-ed[7].
Ultimately, it comes down to ensuring profitable delivery, something manufacturers can achieve by improving forecasting and optimizing inventory, optimizing fulfillment, and compressing cycle times and implementing a fully digital supply chain. Being able to accomplish these three objectives requires the integration of inventory control and forecasting, order management, and other systems. It means being able to nimbly redirect inventory, distribute orders so they are shipped from the most logical location and use the most economical shipping method[8]. In short, logistics processes need to step up their game.
Planning is everything
Integral to the success of these initiatives is the ability to plan for and accommodate the arrival and departure of goods. With shorter lead times it has become even more important to remove impediments to communications between internal departments, such as manual data entries into multiple systems, the filing of paper documents and even back-and-forth chatter on the radio about dock and yard activities.
Using scheduling and yard management tools can eliminate these blockages. With YMS, everybody has the same, real-time view of trailer locations and their contents. For example, at C3 Solutions we worked with a battery manufacturer that had a particularly complex operation with multiple sites, various crews of drivers and both private and outside carriers coming and going. All these variables created a variety of processes and potential exceptions that created a lot of communications and paperwork to manage. Implementing the C3 Yard system allowed them to manage all this with greater efficiency while delivering better customer service. (Read our case study here.)
A way out of the darkness...
If logistics processes are going to become a strategic differentiator, the organization must ensure they are optimized at every possible node. Integrating a dock scheduling and yard management solution to ensure goods are not languishing on a truck in the yard when they are urgently needed elsewhere will help keep all the balls in the air to ensure that this newly complex distribution system works.
Having a system where all the pieces talk to each other will deliver dividends in reduced inventory and shipping costs, more accurate fulfillment, and ultimately will deliver usable data that can be recirculated to improve processes even more.
REFERENCES:
[1] "Why direct-to-consumer is becoming an important retail channel", Claire Hopwood, VisionCritical.
[2] "Global Ecommerce: Statistics and International Growth Trends", Aaron Orendoff, Shopify, September 1, 2017.
[3] B2B e-Commerce 2017, Statista Digital Market Outlook, April 2017.
[4] "How eCommerce is Changing the Manufacturing and Supply Industry", Industry Week, October 25, 2017.
[5] "B2B E-Commerce Trends to Take Notice of in 2018", Jary Carter, Forbes, February 15, 2018. [6] "How eCommerce is Changing the Manufacturing and Supply Industry", Industry Week, October 25, 2017.
[7] "B2B E-Commerce Trends to Take Notice of in 2018", Jary Carter, Forbes, February 15, 2018.
[8] Surviving the Amazon Effect: Differentiating and Optimizing to Thrive in the Age of Amazon, Bill McBeath, Chain Link Research, June 2018.