E-COMMERCE is booming in South-East Asia, and the dozens of players vying for consumers’ mindshare – and their wallets – tend to spend a lot of effort on making sure they have slick and user-friendly front-ends.
But that’s only one part of the equation. When it comes to customer satisfaction, beyond price and choice, what people really want is prompt delivery.
And this makes the back-end and the supply chain all the more important, according to Glen Borg, Asean and ANZ chief executive officer of Dematic.
“The supply chain is fundamental to the success of e-commerce players,” he says.
“Recent research by EY confirmed that the most important factors for consumers are prompt delivery, good prices, and correct delivery.
“Other factors such as user-friendly platforms and payment options are right down on the scale of importance, perhaps due to the fact that these factors are now a given,” he adds.
In fact, when it comes to lower prices, the supply chain again plays a key role.
“An efficient, responsive supply chain is critical to ensuring not only a lower product price and that the customer places the order with you in the first place, but that the order is correct and promptly delivered,” says Borg.
“If you fail on the last two factors, trust is lost and that consumer may never visit your site again – or worse, they may tell others about their bad experience,” he adds.
The challenge thus becomes a balance between keeping costs down, while ensuring accurate and fast order-fulfilment.
One could just throw more bodies at the problem, but that is hardly a sustainable solution – not when you have the bottomline to worry about as well.
“Increasing the number of warehouse pickers to make sure orders are fast and accurate will increase the logistics cost, and at some point this will be counterproductive as congestion hits productivity,” says Borg (pic above).
“The fast growth as well as seasonal and promotional peaks typically experienced by e-commerce players compounds this further, as companies throw more people at the problem in trying to cope with increasing volumes,” he adds.
The solution is not more bodies, but smarter processes, and this is where automation comes in.
“Leading e-commerce companies look to logistics automation technology to ensure they can fulfil orders promptly and accurately, with the minimum number of people,” says Borg.
“To address seasonal peaks and fast growth, these companies invest in flexible automated systems built on a modular and scalable platform.
“This allows them to temporarily add modular components to deal with seasonal peaks, and seamlessly expand as the company grows,” he adds.
Melding logistics and technology
Mention logistics, and the first picture that comes to mind is a dingy warehouse where people shuffle around filling up baskets.
However, this is far from the reality today.
“The modern e-commerce warehouse is now more like a highly automated factory rather than a dusty, chaotic operation,” says Borg.
“Robotics now handles most of the heavy lifting of picking and transporting products from automated multi-level stores directly to operators at ‘goods-to-person’ stations, where the products are picked and packed.
“A customer’s order can be picked and packed within minutes of receiving an order,” he declares.
Such automation technology is making pickers – yes, the people who pick out items from the shelves – more efficient.
“Today, a single operator can handle the work of 10 traditional pickers,” says Borg.
Human error that can result in an inaccurately packed order is also eliminated with the multitude of checks that automation technology brings to the table.
The traditional paper ledgers also go out the door with such modernisation, allowing for better inventory planning.
“Modern automated warehouses are also significantly more compact than traditional warehouses, able to efficiently handle the huge numbers and varieties of products typical to e-commerce operations,” says Borg.
More importantly, the system can easily accommodate more products as the e-commerce company scales, while maintaining efficiency and accuracy.
Indeed, automation can give e-commerce companies the competitive edge they need in the very dynamic Asean market.
“The companies that adopt automation ahead of their competitors will be uniquely placed to address the velocity, scale, and variety of both pure-play and omni-channel players jumping onto the bandwagon in a big way,” says Borg.
“They will also be better placed to compete against the world’s leading e-commerce companies which have already implemented automation and are looking to expand further into Asia,” he adds.
This is where Dematic step in, helping companies take their first step into automation.
“Our consultants work closely with new customers to understand their exact order profile,” says Borg.
“This includes the numbers and types of products, throughputs in terms of orders per day, items per order, and seasonal fluctuations, as well as constraints – all in the context of the company’s strategy,” he adds.
Scalability is important as e-commerce operations expand across borders.
“Dematic’s automated systems are based on a modular, scalable and highly flexible platform,” Borg emphasises.
“This allows us to provide solutions that are specific to each e-commerce company’s operational requirements.
“Being modular and scalable, they can be readily expanded in line with company growth.
“And as volumes, numbers and types of products and order profiles change, the systems are inherently flexible enough to accommodate these changes,” he adds.
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