Consumers may have gotten used to seeing container ships waiting to dock or more delivery vans on the road, but longer shipping times? Forget it.
Executives from across the logistics industry descended on Las Vegas for the three-day Manifest conference, which capped Thursday, as they talked challenges and trends amid continued supply chain issues and no slowdown in sight on consumers’ rapidly changing shopping behavior.
While carefully crafted marketing and celebrity endorsements have long played leading roles in generating consumer interest, retailers’ and brands’ logistics and fulfillment strategies are being forced to take center stage in conversations on customer experience. Those flexible enough to weather the changes stemming from the supply chain are likely to emerge the winners, executives at the conference suggested.
“The only thing we could do was be very transparent with our customers and we reset expectations,” said John Roman, the co-founder and CEO of outdoor subscription box company BattlBox, in discussing logistical issues. “The good news was we weren’t the only ones that did that.”
BattlBox, which is featured in the Netflix series “Southern Survival” was acquired in October of last year by Emerge Commerce Ltd. for nearly $19 million.
The company has tripled its procurement team to navigate the current operating environment. Where lead times typically used to be 120 to 150 days out, BattlBox in December began purchase orders and manufacturing product for the following December.
“We can’t expect this to go back to what we used to know as normal. We just have to adapt,” Roman said during a Manifest panel on new strategies for shipping and fulfillment.
“Try to change the narrative. Don’t overpromise and underdeliver,” Christopher George, the chairman and co-founder of the Subscription Trade Association, added on that same panel.
George, who is also cofounder and former CEO of men’s subscription box company Gentlemen’s Box, said retailers and brands need to get used to ordering product six to 12 months out and being comfortable with the idea they might sell out of inventory.
All of this is happening as consumers continue to demand the ability to buy product wherever they want and have online orders delivered within a day or two.
While shoppers may recognize issues in the supply chain, they haven’t changed their expectations of brands, pointed out Mike McBreen, COO of Rad Power Bikes, a consumer electric bike maker that also has a commercial fleet business catering to suppliers of last-mile delivery and warehouse logistics.
“When these things happen, there is an awareness that doesn’t mean patience,” McBreen said at Manifest of the consumer mindset.
Companies in the last 18 months have been forced to look at their logistical gaps and then make changes, said Gina Anderson, vice president of solutions and growth at logistics company Geodis.
“What this is, and what this is hopefully going to get brands to think about, is…how the hyperlocal delivery network has to evolve,” Anderson said of speed-to-market.
The intricacies involved in deciding where to invest in warehousing and just how many stock-keeping units to fill those boxes with, has only been exacerbated by rising real estate rents due to lack of available space and the labor shortage.
“This year we’re seeing our customers stock up on inventory significantly more than any time they’ve done in the past and it’s resulting in no inventory on empty [warehouse] space, and it’s putting pressure on warehousing in the U.S.,” said Jan Bednar, CEO of e-commerce fulfillment company ShipMonk, which acquired third-party logistics provider Ruby Has Fulfillment earlier this month.
Executives at Manifest also talked microfulfillment, which took off initially in the grocery e-commerce space, but has quickly expanded out to other retailers.
Julien Seret, vice president of network supply chain for Attabotics, said his company decided to start opening its own microfulfillment centers. The warehousing robotics company works with retailers like Nordstrom and has raised more than $125 million to date.
Companies have to weigh profitability and service when thinking about microfulfillment, Seret said.
How to have as many SKUs as close as possible to customers is the challenge and there’s no one-size-fits-all solution, executives said.
Inventory planning and predictive analytics comes into play, but forecasting is not what it used to be in the current environment.
Seret offered an interesting take in where forecasting may be headed.
“I feel like this link between marketing and logistics, the micro, macro levels all moving goods, are coming together, and that’s really fascinating,” he said.
The VP said Attabotics is exploring influencer marketing data, which could further help in making forecasting more accurate.
“One area that’s really prime for disruption with [artificial intelligence] is forecasting, the ability to forecast more frequently and more accurately,” said Azita Martin, vice president and general manager of artificial intelligence for retail and consumer packaged goods at technology company Nvidia.
As more and more retailers fulfill online orders out of existing stores or dark stores, additional complexity is only added to the process, Martin said. While many talk of automation, retailers should keep in mind the end goal of any technology, she said.
“AI is about intelligence,” Martin said. “So even when automation doesn’t work, AI provides insights and recommendations to humans, so humans can make better decisions.”