Most wholesale distributors have recovered from Black Friday and Cyber Monday by now – and are catching their breath just in time to sprint during these last few weeks of the holidays! This time of year is particularly urgent for getting products to consumers more quickly and cheaply than ever before, which means finding ways to strip out supply chain costs while satisfying customer expectations.

Retail drop shipments (shipments directly from the wholesale warehouse) are well-positioned to do just that. Retail drop shipments from wholesale distribution facilities mean fewer handling steps throughout the supply chain, resulting in reduced transportation costs, increased inventory availability, increased product selection, optimized inventory forecasting, reduced re-warehousing, fewer credits and reduced damages.

A big shift for wholesale distributors
The move to retail drop shipments brings a large adjustment to the traditional wholesale distribution operation. With internet retail driving more direct-to-consumer shipments, distributors are dealing with unpredictable spikes in orders while trying to figure out how to meet demand efficiently and profitably. For example, a typical fifty orders a day may now be 100 orders a day. Item demand can fluctuate based on the daily deal. Planning windows change from days or weeks to hours or minutes. Monday orders after weekend accumulation could be as much as eight times the Tuesday-Friday order volumes. Black Friday or other seasonal spikes are impossible to predict but can be as much as 100 times daily volumes.

The change in point of supply from the retail store shelves to the wholesale distributor means increased pressure on the distributor to meet retail customer-experience expectations. In addition to reduced working capital by taking on the retail inventory position, the exponential rise in direct-to-consumer shipments results in increased warehouse labor applied to a more time consuming outbound order execution process. Retail partners are asking for much more than they have in the past, and wholesale distributors will need to rethink their systems and processes to effectively comply with the mandate.

Systems and processes can support the shift
The internet retail paradigm shift presents wholesale distributors – with the right systems and processes in place – the opportunity to leverage existing retail relationships and available capital to leapfrog their competitors. With a finely tuned distribution center as a competitive advantage, they can quickly establish themselves as a key participant in the omni-channel ecosystem.

Wholesale distributors need their systems and processes to manage multiple channels while maintaining flexibility to handle unpredictable demand patterns. Order volumes this time of year can stress the simplest variables: For example, what if a printer jams? Under normal volumes, catching up is no problem… but what happens when there are 10,000 labels or pack slips to print? What happens when order volumes exceed the capacity of the packing stations? They not only need to keep up a steady state with their legacy retail shipments, but also ensure that direct-to-consumer expectations are met in light of variable and sometimes excessive order volumes.

Systems and processes must also account for the fundamental compliance requirements imposed by the customer, retail partner and carrier. Without retail compliance, there is no business. That means incorporating compliance into the system design process, which may result in some inefficiencies that would not otherwise be contemplated if they were not a factor. Just imagine how much simpler life would be if we did not need to produce a vendor-compliant packing slip!

However, there is a balance between optimized logistics processes and vendor compliance. Every operation is different based on variables like product size, weight and number of lines per order. The right systems and processes will have the flexibility to expand the number of packing stations, print shipping labels and pack slips at the optimal point in the picking process in addition to minimizing picker travel while integrating accuracy into the process.

Turning uncertainty into opportunity
There’s a lot to be unsure about with the shift to omni-channel retail and the new demands coming in from retail customers and their consumers. But with flexible distribution center systems and processes, wholesale distributors can deftly manage the uncertainty while continuing to provide the reliability and accuracy on which they’ve built their reputation. This is a new era in our industry, and those that prioritize flexibility and service will ensure that the next 20 years will be as profitable as the last.

Since 1996, Carl Marin has held many leadership roles for HighJump including International and Domestic Sales, Channel Management, Marketing and Business Development.  For the past five years, Carl has occupied the role of vice president of sales and marketing for the AccellosOne WMS product line, which includes the mid-market WMS applications as well as Collect for Microsoft Dynamics GP.  During that time, the products have seen steady and consistent growth, meeting quarterly objectives and achieving high rates of customer satisfaction.  Carl has recently taken on the role of general manager of the AccellosOne WMS business unit, now overseeing sales, marketing and services for the product line.