Digitized Warehouses Outperform Their Non-Digital Counterparts – How can your firm boost e-commerce fulfillment competitiveness?
As firms compete, they do so with the knowledge that their competitors are always trying to erode the value that they create by disrupting their business model. Strategic convergence is the duplication of competitive advantages within a competitive landscape. As a result, the product or services become more and more alike. Once this happens, competition will become price-based.
Firms have realized this for some time now. As a result, they have sought to find ways to leverage critical differentiators to ensure their sustainability in business by making their strategies challenging to duplicate. One way how firms have achieved this is by using their supply chain as a competitive advantage.
As firms compete more and more on the cost, capital, and service incurred by their supply chains, the basis for competition within those supply chains tends toward price-based competition. An easy way for firms to break free of the stranglehold of strategic convergence is differentiation by digitizing their supply chains.
What are Digitization, Digitalization, and Digital Transformation?
We must stop here to ensure that we have a common understanding of these terms. But unfortunately, people often confuse the definitions, namely digitization, digitalization, and digital transformation.
- Digitization - means converting paper-based systems into digital formats to be accessed, stored, retrieved, analyzed, or otherwise enhanced by a computer system. Digitization is the first step in leveraging data to benefit supply chain competitiveness.
- Digitalization – whereas digitization is an adjective, digitalization is a verb. Digitalization is the act of using digitized data to improve or transform how an organization works. Digitalization makes existing data accessible on digital platforms. In contrast, digitalization utilizes digital assets such as software programs to add value to data [Gartner]. Therefore, digitalization cannot occur without first having undertaken a digitization exercise.
- Digital Transformation – speaks to an organizational shift that will change the ways of working within a firm. Although digital transformation impacts how a firm creates value, it may also influence its customer value chain, business model, or revenue model.
It is essential to have a firm grip on the meaning of these terms to understand the various levels of commitment required to plan and implement each stage of a digital journey within a supply chain. For this article, we will be focusing on two of the three definitions, digitization, and digitalization.
What are some of the challenges to a digitalization initiative?
Many warehouse operations have already undergone some level of digitization of the systems of governance used to manage them. However, what many small and medium enterprises lack is an effective way to streamline disparate activities and procedures so that the business can benefit from the data it already has.
Small businesses are also very aware of the costs of digitizing their operations. Many cannot afford the related downtime associated with implementing a traditional Warehouse Management Software. As a result, small and medium enterprises need to stick with a cloud-based solution that offers easy and abundant integrations with databases, software, hardware, and marketplaces. When switching to a digitalized solution, an efficient integration process is one of the main factors that purchasing teams should prioritize.
Monthly roundup of top stories in e-commerce fulfillment and warehousing.
Another pain point for switching to digital is training and associated downtimes or inefficiencies. Whenever you implement change, it may impact how people do their jobs. Therefore, it's essential to ensure that adopting the change is simple and easy to learn and understand. Some traditional WMS systems, which were essentially add ons for legacy accounting systems, can be cumbersome, difficult to learn and use, and not ideal for today's e-commerce enabled marketplace. Small and medium firms need to understand that for a high adoption rate for newly deployed technology to be achieved, they should use solutions with a familiar or intuitive interface.
Successfully managing the costs, capital, and service levels [1] within any warehousing operations is fundamental to delivering a high standard of service and may be the difference between success and failure. As small and medium enterprises grapple with scarcity, a lack of capital is often their biggest obstacle. It's no secret that the cost of a traditional WMS system can be prohibitive to small and medium-sized enterprises.
If small and medium enterprises are to benefit from digitalization without disrupting their Supply Chain Triangle, they should utilize Software As A Service (SaaS) based solutions. This will allow them the flexibility to match their organization's needs with the solution set. More importantly, SaaS solutions offer the ability to scale up or down, reducing the risk faced by these firms. In addition, SaaS CRM solution providers show up as an expense rather than capital expenditure on financial statements, which ultimately positively impact the main financial ratios.
How can small and medium-sized operations outperform the competition?
Within any supply chain and, more pointedly, within any warehousing operation, team members engage in a single more important activity than any other. This activity often goes unnoticed, but its impact on operations forms the basis for competitiveness.
What is this activity?
Time compression. Be it lead times for order processing, receivals, put-away, retrieval, dispatch, distribution, or reverse logistics – teams within warehousing operations are busy compressing time for the benefit of the customer. Time compression isn't generally associated with warehousing activity, and you're more likely to hear the phrase related to transportation. However, the warehouse operation cannot be decoupled from the supply chain and is integral to the transportation process. Therefore, time compression is valid as time compression improves response times, turn-around times, and processing times and reduces lead times.
Hopstack enables small and medium enterprises to leverage the benefits of time compression to outperform supply chains that don't have this benefit. Time compression is the main driver for improvements within warehousing operations. Doing more in less time means warehouse operations can improve fulfillment output and accuracy, which are critical drivers for more significant revenues.
Integrated SaaS solutions such as Hopstack do more than simply compress time, allowing faster order fulfillment speed and accuracy improvements.
How does Hopstack help firms to outperform their peers?
Within any warehousing operation, there exists three main activities inbound, stock management, and outbound. These activities form the basis for the supply chain's customer value chain within a warehouse operation. Hopstack allows small and medium businesses to leverage the power of digitization within their warehouse operations. As a result, digitization can lead to improvements in the effectiveness and efficiency of their operations.
By shortening the time required for each activity within the value chain and improving the accuracy of those related activities, Hopstack enabled warehouses to experience a reduction in fulfillment errors of more than 83%, with an overall increase in order processing speed of 187%.
Digitalized warehouse operations such as those that leverage Hopstack experience reduced operational costs. Within a warehouse, there exists what is called Hidden Costs[2]; these incremental costs erode value dollar by dollar and generally go unnoticed until it's too late. Hopstack reduces the occurrence of rework caused by poor order processing, retrieval, picking, packing, and shipping by formalizing the rules and exceptions that govern the warehouse operation.
The Hopstack solution allows small and medium warehousing operations to improve consistency, crucial for quality control and service delivery. Users can validate and verify process flows by providing users with immutable audit trails for transactions. A significant value-added benefit of this feature is the ability to review processes and identify bottlenecks within operations. It is always essential to have a realistic understanding of the performance of processes within any warehouse operation. Hopstack will allow for continuous monitoring and improvement and the implementation of KPIs that are achievable.
Many warehousing operations are experiencing increased levels of complexity, especially with the growing influence of e-commerce which dramatically increases product and portfolio complexity within operations. Throw in multi-channel systems for inbound orders, and we have a scenario that could easily lead to chaos. However, small and medium warehousing operations can leverage Picking and Batching Optimization offered by Hopstack to reduce the impact of this complexity.
Hopstack also allows small and medium enterprises to maximize their space utilization, a key metric within any warehouse operation. By utilizing real-time data, Hopstack can provide improvements in space utilization. In addition, warehouse personnel can leverage this data for activities such as picking route optimization, safer operations, and improved picking cycle times.
Digitalization initiatives may seem like a daunting challenge for small and medium enterprises as they may lack the necessary expertise to decide what is needed. However, Hopstack provides complete end-to-end support that includes the digitizing of processes, integration of databases and software, and full support for customization.
Overall, small and medium operations can leverage Hopstack, an end-to-end digital solution. The solution will improve the operational performance, fulfillment speed, accuracy, visibility, and insight of their operations. An organization's goals are to compete, build resiliency and use its supply chain as a competitive advantage – then it is essential to look at the Hopstack solution.
Talk to our product expert today!
[1] Cost, Capital, and Service Level for the basis for the Supply Chain Triangle. The Supply Chain Triangle forms the basis for strategic implementation within supply chains by showing the interrelatedness of the criteria. Therefore, firms must balance each indicator based on their strategic focus.
[2] Hidden Costs mean costs that erode value from a supply chain. They can be difficult to monitor because they occur within the operations.
