Parcel growth will continue to rise at a rate of 17%-28% each year between 2017 and 2021, and by 2020, same-day delivery will drive up logistics costs as a percentage of revenue by 50% (Source: Gartner, October 2017). For most omnichannel businesses, the cost of shipping now exceeds the sum of all other fulfillment costs including direct and indirect payroll, benefits, facilities and utilities, packing supplies, etc. Businesses need every advantage they can get to hopefully evaluate, reduce or control the rate of shipping expense increases.
A recent article in the Wall Street Journal revealed that Walmart executives plan to announce a further tightening of their on-time, in-full (OTIF) policy to go into effect in April 2018. Whereas the previous requirement called for larger suppliers to deliver within a one- or two-day window 75% of the time or be assessed a fine of 3% of the cost of the goods in the shipment, the new requirement raises the target to 85%. Smaller suppliers will see their compliance target rise from 33% to 50%. OTIF targets vary by department, and some of AFN’s clients have seen higher OTIF requirements (as high as 95%) go into effect already.
Retail has changed a lot in just the last few years, never mind the past 10 or 20 years. In order to keep pace with today’s market and be prepared for the coming wave of even more demanding customers, retailers must eliminate their old and outdated habits before they can achieve improved profitability, greater sell-through and increased service levels.
How to Gain a Competitive Advantage in Today’s eCommerce Retail Buying Space.
About 15 years ago, I changed industries from healthcare to logistics. As I am an IT professional, you might think it was a jump from an antiquated, paper-based world to a high-speed, technologically advanced one. Actually, I’ve been surprised at the extent to which the exchange of supply chain data in the logistics world remains old-school or simply manual.
Many logistics executives in consumer packaged goods companies have come to believe that a shared warehousing environment generally requires that you sacrifice your ability to get your goods ‘retail ready’ – that is, ready to meet unique retailer requirements. Learn more about how this misconception can get in the way of consumer packaged goods companies achieving 99.5% shipping accuracy from their warehouse operation.
Delivering packages and products on time is more important than ever in our economy of instant gratification.