Reinventing fulfillment operations

If supply chain leaders know one thing, it’s this: Their fulfillment operations need to change significantly.

Why? Because evolving consumer demand, labor challenges, and ongoing supply chain disruption are causing warehouse operations to fall short of delivering on the promises made to customers and investors.

Inside the four walls of the warehouse are highly choreographed flows of products, people, and materials fueled by data, equipment, and devices. If just one of the steps in the process is out of alignment, fulfillment operations are, at best, less efficient. Or, at worst, completely broken.

These challenges call for more than Band-Aid fixes. Fulfillment operations require an overhaul from the ground up so companies can remain competitive and meet customers’ expectations.

Recent research from Accenture shows that technologies and ways of working allow supply chain leaders to totally reinvent core elements of fulfillment—supply chain operations and customer service—and, thereby, their entire fulfillment operations.

Putting fulfillment reinvention into practice

These new ways of working can include wearable technologies, automation, autonomous vehicles, and drones. New technology enablers include digital twins, predictive analytics, and AI, each of which promises greater fulfillment accuracy.

Supply chain leaders must bring the right technologies and new ways of working together in a holistic strategy. This strategy needs to align operations with customer promises and create a fulfillment network that is efficient, flexible, sustainable and offers a clear ROI to the business.

1. Understand the current state

A complete fulfillment assessment is a strategic starting point. This assessment focuses on current capabilities and typically includes the following:

• Processes/equipment. Assess the product flow from dock to stock with advanced simulation techniques.
• Labor. Measure productivity/activity and cost.
• Systems and data. Evaluate the systems used to manage operations, data sources, and connectivity.
• Financial. Analyze the cost to serve, including pick/pack/ship, labor, operating expenses, and capital investments. These dimensions must be underpinned by key performance indicators (KPIs) that evaluate the performance inside the warehouse as well as overall fulfillment performance.

2. Align fulfillment with the company’s broader vision

Changes to fulfillment operations have an impact on the entire organization. To align fulfillment with the company’s broader vision, supply chain leaders must answer fundamental questions, including the following:

• Business. What are the long-term revenue targets? Is the company growing through acquisition or divesting product lines? How much flexibility do fulfillment operations need to respond to business disruption and seasonal spikes?
• Customer. What is the customer segmentation strategy? How are segment profiles, buying trends, and service expectations evolving? What are the commitments of the business to service levels for each segment?
• Sustainability. How can fulfillment operations support ESG targets? How can improved waste management programs and energy efficiency initiatives—inside the warehouse and with vendors—support sustainability goals?

3. Reinvent with purpose

Assessment of the current state and alignment with the company’s broader vision are the pillars on which supply chain leaders can build their strategy for fulfillment reinvention.

But how does it all come together for fulfillment operations?

• Focus decision making. There are many options for warehouse management systems, material handling equipment, and devices. Consider working with a partner focusing on the opportunity and creating synergies with existing assets. From there, use advanced simulation techniques to run various scenarios to determine the impact of process changes, technology, and automation with a clear financial view.
• Build on the digital core. The data generated inside the warehouse will provide insights needed for continuous reinvention. Leverage the power of cloud, data, and AI through interoperable systems across the enterprise. Create a digital architecture that integrates legacy solutions with new technology.
• Remember the fundamentals. A clean, well-lit warehouse is rarely managed poorly. Focus on the warehouse team by sharing the reinvention strategy, getting feedback, and consistent communication. Invest in people, including upskilling and reskilling the warehouse workforce.

Don’t be enamored with new equipment or tech loaded with promises. Assess carefully while focusing on a holistic strategy that uses advanced simulation techniques and reinvents fulfillment operations with purpose.