Logistics providers are increasingly finding the need to ship more eaches and to add more personalized, value-added services

Logistics certainly isn't merely about shipping truckloads anymore. Retail consolidation has given the retailers the ability to call the shots, leaving consumer packaged goods companies having to comply with requests for value-added services, inventory reductions, and more frequent shipments in order to obtain and retain accounts.

At the same time, that new kid on the block, b2c e-commerce, is requiring more direct-to-consumer shipments. Both click-and-mortar companies and pureplays are discovering that putting up a flashy website that draws consumers in is only part of the equation: if you can't deliver the goods on time, you're toast.

Noah Dixon, director, industry strategy for McHugh Software International, explains that when a store chain starts getting volume over the Web, "they now have to do parcel shipments. So suddenly they have to map out an area of their warehouse to handle parcel labeling, staging for pickups, and so on, and there are also additional charges that go along with that."

Dixon says McHugh's Logistics Suite integrates transportation, warehousing and labor systems. "We've had customers reduce total enterprise inventories by as much as 25 percent," says Dixon.

In many cases, those shipments are handled by none other than the manufacturers.

"Many of these retailers are asking CPGs to fulfill orders directly," says Jeff Baum, senior vice president of international operations for Manhattan Associates (Atlanta, GA). "A wholesaler can now be doing fulfillment. The customer would have no idea that the shoes they purchased, from, for example, Nordstrom.com were actually shipped from the manufacturer, because the packaging and invoice would only state the retailer's name. If you had a simple piece of software that couldn't manage this process, you'd be looking at a whole new system. "

John Davies, vice president, strategic planning and analysis at Optum, Inc. (White Plains, NY), says, "Companies have invested a tremendous amount in ERP systems in the last several years and have realized that they are not gaining the benefits they had expected nor have they improved their relationships with their customers or end consumers. That means that CPG companies are looking at projects, and the software associated with them, that bring them either closer to the customer or provide a better customer experience.

Fortunately, logistics providers are moving ahead to offer solutions that ensure on-time delivery and offer better tracking ability.

"In e-commerce, one of the biggest challenges is telling if inventory's in-stock," says Debby Bosselman, director of e-commerce strategy and strategic alliances for PFSweb, Inc. (Plano, TX)."With Entente, you can tell from somebody's e-commerce site if the product's in stock even before you put it in the shopping cart."

Interface issues can be a major problem. Dixon says that McHugh's Logistics Integrator provides standard interfaces to ARP, SAP, Oracle and PeopleSoft.

Adam Messinger, vice president of hosted application services for QRS Corporation (Richmond, CA), says that QRS's Direct Ship provides the ability to "efficiently ship merchandise from manufacturer to retailer and the ability to track and trace all trailer loads or full shiploads into the warehouse. Then it deals with the ability to then take what was one shipment and treat it as thousands of shipments back out to all these consumers."

Putting It Into Reverse

E-commerce can be further complicated by the number of returns received, which can run up to about 20%.

NFO Interactive surveyed 759 on-line shoppers who had recently ordered during the previous six months and found that 21% had returned items bought during that period and 22% said they kept a product rather than returning it in order to avoid paying shipping fees.

Bosselman says PFSweb is being called upon more often to handle returns. "We have clients who have mastered the art of getting it out the door, but getting it back in is a whole other story," she says. "So many companies write off product that gets returned because they don't have the facilities to deal with it."

PFSweb can process returns in 24 hours through its Entente system that offers real-time inventory. If an item is returned to stock, "the next time Entente calls into the website, that product is there; it literally is available for sale," Bosselman explains. "

Up and Coming

While Manhattan Associates has been handling shipping eaches and dealing with returns for over five years, Baum says the company's systems aren't standing still. 'We're continuing to adopt ways to provide real-time linkages to the customer and ATP (available to promise) information to the website, since a site can get hit with a demand surge but have limited inventory.

Dixon says McHugh's Logistics Execution Nervous System allows users to look at all inventory across the entire supply "so it's a true global view of your inventory and all Internet enabled," he adds.

Messinger points to virtual warehousing as a potential growth area. "In theory, if a retailer or e-tailer sells two thousand watches, those items might physically be in Hong Kong, but they could be shipped from the factory directly to a 3pl in the United States or to consumers," he describes. "At no time would the merchandise ever reside in a facility the retailer owns."

Copyright© all text 2004 by Ela Schwartz