Parcel Forum 2017
Top Takeaways from Parcel Forum 2017
Last week ScanData sent team members to Parcel Forum '17 in Nashville for three days of intense networking and education. Attendance and energy was high as all participants were eager to share and learn how to be proactive in an industry experiencing 20% annual growth, facing rapid change due to this growth, needing to combat accelerating carrier costs, and feeling the “Amazon Effect” (of course you can't have a credible conference in virtually any industry these days without hyper-analyzing Amazon's every move).
The networking, sharing, and education was very valuable to all participants we spoke with. For those that were not able to attend, we have summarized a list of the Top 20 Takeaways presented in the last session by industry professionals Susan Rider and Berkley Stafford. With up to seven sessions concurrently, Parcel Forum was creative in finding a way to craft the top takeaways from the attendees via the Parcel Forum mobile app that encouraged attendees to share the best tips from each session.
1. Recognize the importance of dynamic inventory positioning. Regularly optimize to balance inventory and adjust for seasonality based on DC geography (one million ice scrapers warehoused in Texas doesn't make sense). It's best to consider ALL products as perishable – even shoes go out of style.
2. Smart phones are the norm; soon drones will be too. Twenty years ago, it may have been difficult to imagine that today 95% of Americans own a cell phone. Though Amazon has a concept drone with a 25kg capacity that can fly within a 10-mile radius, the real game changer may be personal drone ownership or personal drone landing pads. In 2016, 1.1 million drones were registered in the US; that number is expected to triple to 3.55 million by 2021. It's not too farfetched to believe your personal drone may do the pickup and delivery for you. It is difficult to predict this future, but as a professional you have to regularly follow the trend and forecast the impact. Don't wait until it is too late to have a plan.
3. Ensure agility and flexibility in your Material Handling Equipment and WMS partners. Your automation and software providers must be able to take you into the future. Too often large investments are made that lock a shipper into a current-state warehouse layout, process, business environment, and parcel volume. These limitations often lead to even more significant spending and further constrain growth and change. Prioritize agility and flexibility when selecting, designing, and implementing your partner solutions.
4. Consider all costs associated with an order when doing analysis to make decisions, not just shipping costs. Even customer acquisition and marketing costs can be relevant when making investment decisions. Viewing only shipping costs in your analysis places you in a silo that may lead you to invest in projects that appear to reduce cost, but in reality, are optimizing unprofitable customers/products at the expense of those profitable customers/products. While our role may be in transportation or supply chain, we are still responsible for the company at large.
5. Get orders to the warehouse as fast as possible. Consider real-time instead of batching orders. This additional time allows for better decisions, more options, and happier customers. For example, you may be able to use a regular service to achieve an expedited delivery if the warehouse were to get an order immediately rather than a batch job that was held for 4-8 hours.
6. Customers don't just want their orders fast and free anymore - they want them “faster and freer.” Consider using Regional carriers to deliver on this customer demand. There are some 20,000 zip codes that incur a surcharge via the “Big 3,” whereas Regional carriers cover 95% of the US population. New and existing carriers in the market are hungry for your business and may be able to provide a more customizable solution.
7. Figure out your workforce's currency: what motivates them? (Hint: It's not always money). A powerful example was given during the tour of the Gap warehouse where during the holiday peak, they added a special shift (4-8pm) specifically to employ high-school students. A teenage never wants to be far from their music, so policy accommodations were made to allow these workers to wear earbuds, resulting in greater focus and productivity. In addition, you may need to incentivize tasks that are less desirable (for example, this may be returns processing). These incentives do not necessarily need to be monetary.
8. The Futuristic last mile involves robots, drones, autonomous vehicles, and crowd-sourced carriers/couriers. The Realistic last mile looks more like collection points/lockers, trunk delivery (from drive-in grocery delivery to smart-car technology), and smart home technology. Expect and plan for the Realistic future but don't ignore the Futuristic vision ̶ much of what was considered visionary ten years ago actually happened.
9. During the conference, a major carrier released their upcoming rate changes, including changes to dimensional weight calculation. This prompted an important reminder: Be smart with your packaging; don't pay to ship air if you don't have to! Be aware how promotions can affect the size/shape of your packaging (throwing in a “free spatula with order” could significantly impact the cost of shipping).
10. Forrester projects 11% of retail sales will be “shipped” via in-store fulfillment by 2018. Retailers save money on shipping costs by leveraging their existing store fulfillment, and many customers can get their item same-day at a reduced cost. Retailers will need to alter brick-and-mortar footprints to support BOPUS. In some cases, this will require some difficult compromises that may lead to increasing inventory storage space and decreasing the sales floor. While at the conference we heard the news that Kohl's is taking it up a notch with their partnership to allow Amazon returns within a Kohl's store with the intention of boosting in-store traffic.
11. Asia-Pacific is the world's largest ecommerce market. After all, 60% of the world's consumers live in APAC. Population growth, rising incomes, and increased e-commerce spend means this is a population you should not ignore. Pay attention to where and how they buy: over 50% of sales are in China and 50% of APAC sales are executed on a mobile device (they will expect order tracking and returns processing to be conducted mobile as well).
12. Remember the Pareto principle: 80% of all effects come from 20% of all causes. With a little analysis, you will likely find that 80% of your late deliveries, costs, damaged deliveries, and exceptions come from 20% of your orders, products, customers, carriers, DCs, or geographies. This analysis will allow you to focus your efforts on where it makes the most impact.
13. Social media is the future of ecommerce - even in shipping. This should come as no surprise since there almost 2.5 billion users worldwide (in 2016, 78% of the US population had at least one social account). These platforms allow you to communicate with your customers where they're at: to connect, message, collect data, and ultimately, drive customer satisfaction.
14. Always train a person as if they were your replacement. Forget insecurities and focus on how a skilled employee makes your job easier. Cross-training allows you to tackle bigger, different challenges. There is no such thing as over-qualified.
15. Don't ignore your reverse logistics process. Being able to process returns quickly impacts your customer relationship. The modern customer has high expectations for the returns process: they want zero friction and speed. Reverse logistics will become even more complex as cross-border service expands. Consider using carriers or 3PLs to quickly collect the return, resell, repair, or destroy. Often, they are less expensive options than paying for full shipping back to your warehouse.
16. As you expand internationally, find a service designed to offer secure cross-border transactions. UPS has recently partnered with Payoneer to protect against potential fraud in overseas transactions where funds transferred for payment are held in escrow until recipient acknowledges receipt.
17. In addition to analyzing past performance, look to improve current processes through process mapping, value stream mapping, and process improvement initiatives.
18. Since most companies are not prepared to utilize predictive analytics because they lack the necessary tools, if you make this investment you may find yourself ahead of your competition.
19. Clearly define KPIs and influencers. Of the endless KPIs you could collect, what are those that truly impact your bottom line and your decision making?
20. Build dashboards for visibility. Expand these dashboards to measure outside the supply chain.
It will come as no surprise that “The Amazon effect” was mentioned in virtually every presentation. One speaker noted at the beginning of this quarter, Amazon had been brought up in 130 earnings calls from S&P 1500 companies, with about 50 in one week alone. It was acknowledged that while you can't catch up with Amazon (it's estimated the e-tail giant will make up 50% of all e-commerce by 2021), these takeaways may lead you to re-evaluate a few areas of your own business to ensure you get the most out of your piece of the growing pie.
A huge thank you to all the presenters, and we enjoyed the chance to meet industry leaders, vendors, carriers, and potential customers alike. ScanData is already registered for the Parcel Forum '18 in Chicago. We hope to see you next year!