Six Ways You Can Benefit Now From ‘Augmented Fulfillment’
Vice President, Business Development, MonarchFx & IBM Futurist
Sure that all of you have heard of, and are at least somewhat familiar with, Augmented Reality (AR).
Simply put, AR utilizes technology to provide additional insights and abilities in the real world, with one example being the Google Translate app’s ability to take a picture of text in many languages and then immediately translate it for you onscreen. An excellent AR app to help you understand signs or menus in foreign countries, or even that fancy restaurant around the corner!
Well today I’m pleased to introduce you to the concept and emerging new logistics reality of ‘Augmented Fulfillment’ (AF) which will allow logistics operators to add and enhance customer experience capabilities.
Of course, E-Commerce Fulfillment is nothing new, and just continues to grow geometrically along with the online shopping phenomena, with no slowing or end to this dramatic growth anywhere in the near future.
Any major retail or etail companies out there have already invested millions, tens of millions or even hundreds of millions of dollars in their e-commerce fulfillment center or network of fulfillment centers to support the online business.
These days the majority of e-commerce fulfillment operations are done out of one or two fulfillment centers due to the fact that large volumes of orders are needed to justify the capital expense of building these large automated fulfillment centers and drive a satisfactory Return on Investment (ROI).
Up until recently this was the most viable e-commerce solution at scale when the majority of customers were willing to wait 3 to 5 days to get delivery of their e-commerce order.
As I’m sure you’re all aware, or rapidly becoming aware, those days are over with Next Day and likely soon Same Day becoming the e-commerce norm in expected customer delivery experience.
Big problem is the consumer is not willing to pay anything more for these improved service levels and likely e-commerce business leaders are telling all of their Logistics and Supply Chain operators they need to now also provide Next Day and Same Day service. However, the unfortunate truth is there’s not enough (if any) money being offered up to pay for at least doubling the size of your current fulfillment network to help meet these consumer customer experience demands.
So Logistics and Supply Chain operators are now truly between a rock and a hard place, and without a solution Retailers and etailers who just maintain the status quo will likely not be around in 3 to 5 years.
Fortunately, there’s a new solution emerging which can be rapidly and cost effectively bolted on to your existing e-commerce fulfillment network to deliver on Next Day and Same Day delivery demands and that’s Augmented Fulfillment!
Augmented Fulfillment is the addition and integration of a specialized suite of technology, flexible automation and forward micro-fulfillment locations which will effectively ‘augment’ your current fulfillment network allowing you to improve Next Day and Same Day delivery to consumers.
So what are the six ways that Augmented Fulfillment can now benefit your logistics network?
Distributed Order Management (DOM) — Working closely with an Augmented Fulfillment Provider (AFP) will require effective order management allowing all parties to rapidly know if the In-House Fulfillment Center, Store or which of the AF Provider Micro-Fulfillment centers will be delivering the consumer order. All successful retailers and etailers going forward will almost certainly need some form of DOM capability and integrating with an AFP will provide these capabilities at virtually no additional cost as an integrated component of the service offering.
Add Automated Local Micro-Fulfillment Centers — As mentioned, most current fulfillment networks cannot provide the needed improvements in consumer delivery without massive additional investment. Working with an Augmented Fulfillment Provider can allow logistics and e-commerce business executives to work together to design the solution which best fits the needs of the business. Important to note is the flexibility in the AFP offering means that the number and locations of micro-fulfillment centers used can be adjusted on an ongoing annual basis to match the changing needs of the business and consumers. Driving the need for these micro-fulfillment centers is something called The Automated Local Fulfillment Imperative.
Capture Delivery Savings Utilizing Local to Local Delivery Options — Shifting inventory closer to customers and shipping from stores means traditional courier hub and spoke models are becoming less efficient as they add time and cost to delivery. Utilizing the AFP’s micro-fulfillment network provides a methodology of intercepting these shipments and redirecting for immediate delivery and lower delivery cost.
Double, Triple or Quadruple Same & Next Day Delivery Coverage — Working with an Augmented Fulfillment Provider means that businesses can quickly understand and implement the desired customer delivery service levels and geographic coverage. AFP models have been developed and show required micro-fulfillment center utilization in order to double, triple and quadruple the population covered by service level.
Add Flexible Replenishment Options for B2B Wholesale or Store Replenishment — Given the number of channels Brands and Retailers need to deliver to, the complexity and compliance requirements are now bordering on the ridiculous for in-house operations to support so many varying pack, label and deliver methods. Brands and retailers can ship product to the AFP in bulk and then AFP will configure and deliver based on the directions provided via the Distributed Order Management (DOM) system. As well, if desired rapid store replenishment at the each level for selected categories can also be driven from the AFP micro-fulfillment centers allowing for potential store space and inventory reductions
Upgrade In-House Fulfillment Automation — One other potential benefit available from working with Augmented Fulfillment is to utilize the AFP automation and technology solutions to enhance and improve brand and retailer in-house operations. Working with the AFP in micro-fulfillment centers means that all of the integration, order and control requirements are already in place and can be leveraged to assist with internal improvement initiatives as appropriate and necessary.
So welcome to the world of Augmented Fulfillment where solutions to looming rapid fulfillment and delivery challenges can now be found, modeled and then rapidly implemented providing both merchants and logistics operators with the tools needed to work together and solve ever increasing consumer demands for an accelerated customer delivery experience.
Vice President, Business Development, MonarchFx & Futurist, Coined: Augmented Fulfillment, Matrix Commerce, Matrix Retail & Endless Store