What should the strategy for an e-commerce company be while setting up a warehouse?
James A. Tompkins, Ph.D., CEO,
supply chain consultants
We are strong believers in Strategy-Structure-Implementation process to creating the correct warehouse capabilities to support an eCommerce business. So, the question needs to go back a few steps to allow the warehouse to fully contribute to the overall supply chain and business objectives. The first step then has to do with the Business Strategy. This addresses what products are to be sold to which customers, in which locations at what price points and an understanding of the unique selling position that will allow the company to accomplish their objectives. Next, from this Business Strategy must come the Operations Strategy. The Operations Strategy must answer questions such as:
- Receiving capabilities
- Storage requirements
- SKU counts
- Order profiles
- Shipping requirements
- Operating performance requirements
- Speed of delivery
- Status of free shipping/free returns
- Returns processing requirements
- Packaging requirements
- Value added requirements
Then from this Operations Strategy will come Network Options, 3PL Considerations, Transportation Strategies and Inventory Strategies. From this will flow a wide variety of warehouse considerations to include: Storage Options, Picking Options, Material Handling Options, Layout Options, Space Plans, Operating Practices, Technology Solutions, etc. The economic and qualitative evaluation of these alternatives will beget the Right Warehouse Structure that can then be placed into a Roadmap for implementation of Do Now, Do Next and Do Latter.
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