Welcome to the 7th edition of Q&A with Dr. Tompkins. Please be sure to write me any of the questions you may be having with regards to your own eCommerce supply chain operations.
Q: Can brands or retailers “Do It Alone” in pursuing eCommerce supply chain excellence?
This question has three answers for the three components of the eCommerce supply chain:
- BULK Transportation & 4 Walls.
- Each 4 Walls.
- EACH Transportation.
These are my definitions:
- Bulk: Any unit load larger than an EACH. So, could be container, pallet, or case.
- 4 Walls: The receiving, storing, picking, packaging, and shipping processes that occur within the 4 Walls of a Distribution Center (DC), Fulfillment Center (FC), Returns Center (RC), and/or Liquidation Center (LC).
- Transportation: Any movement outside of the 4 Walls within the supply chain.
- Bulk Transportation: Any movement outside of the 4 Walls of containers, pallets, or cases within the supply chain.
- Bulk 4 Walls: The receiving, storing, picking, packaging, and shipping in a DC/FC/RC/LC of containers, pallets, or cases
- Each 4 Walls: The receiving, storing, picking, packaging, and shipping in a DC/FC/RC/LC of Eaches.
- Each Transportation: Any movement outside the 4 Walls of Eaches.
The three answers are:
- Yes, the brand or retailer can “Do It Alone” for Bulk Transportation & 4 Walls. This is done all the time with the brands and retailers handling the transportation and 4 Walls of the flow of containers, pallets, and cases. Doing all or some of this supply chain would be normal.
- No, the brand or retailer CANNOT “Do It Alone” for Each Transportation. It would be unusual for a brand or retailer to handle their own Each transportation. The key here is the density of delivery and obviously UPS, FedEx, USPS and many other smaller parcel delivery firms like, Postmates, DeliveryCircle, Deliv, OnTrac, LaserShift ,etc. are firmly positioned as the “GO TO” providers. Of course, due to their huge volume Amazon in the U.S. and Alibaba and Jd.com in China are exceptions to this rule.
- Yes and No, the brand or retailer can “Do It Alone” for Each 4 Walls. The answer to the Each 4 Walls topic will most often be a hybrid answer. Typically, there are locations where an organization will do their own Each 4 Walls (FCs where a significant investment was made, repurposed DCs) and there are locations where an outside organization should be utilized, like Fulfilment by Amazon (FBA), Cainiao (Alibaba), or MonarchFx. The FBA, Cainiao, and MonarchFx solutions are all Distributed Logistics solutions where the brand or retailer retains an external logistics provider to cover a geographical location closer to the customers. This allows for quick and inexpensive delivery, as the distance from the location to the customer is short. Then by combining several brands and/or retailers in the shared distributed FC, the economies of scale come into play for justifying automation and performing the final mile delivery.
If you missed last week's Q&A you may read it here. Be sure to send me your questions!
James A. Tompkins, Ph.D.
Chairman and CEO, MonarchFx
Executive Assistant: Debbie Flynn, 919-855-5447