Manufacturing companies ready to play in the e-commerce world face daunting challenges
When referring to the “manufacturing industry”, we refer to any industry which is involved in the manufacturing and processing of items, and either adding value or creating new commodities. Of course, this accounts for a significant share of the industrial sector, where the final products either serve as finished goods for sale or intermediate goods used in the production process.
When Manufacturing Meshes with E-Commerce
Manufacturing is the chief wealth producing sector of the economy; however, as the industry adapts and changes, manufacturers are facing new challenges daily, such as adding direct consumer sales to their repertoire. This means skipping third-parties like distributors and resellers and embracing the opportunity to add a direct sales channel to their business. Retailers are also calling on manufacturers to help them fulfill orders quicker and at a lower cost by including expanded product options on their website, product options that they don’t personally have in stock, that ship direct from the manufacturer without the retail customer suspecting a thing.
According to Forrester, e-commerce is expected to reach $780 billion and represent 9.3% of total B2B sales in the US, giving us the perception that building an e-commerce front leads to greater sales efficiency, increased revenue, reduced costs and mistakes and greater productivity.
Easier said, than done.
Let’s take a closer look at the top obstacles today’s manufacturers are facing within the shipping and fulfillment department.
Remaining Competitive in a Global Marketplace
At a time when product innovations are flying at a dizzying pace, manufacturers are struggling to keep up. Everyone wants to be the first to release a new concept, and the temptation to skip steps or skimp on quality materials can be overwhelming. Growing competition that consistently promises lower prices and better products are always knocking on the door. Because of this, oftentimes manufacturing can be rather costly; however, manufacturers can look to other areas, such as shipping and fulfillment, in order to cut costs.
The shipping department within a manufacturing company is in charge of shipping finished product to locations specified by the company. Key factors include costs, timing and reliability. All three are tracked and used to onboard carriers that will deliver on time, without damage and at a low cost. If shipping volume is high, they might negotiate for discounts and special rates. The difficulty, however, is accurately and automatically rate shopping these carriers and their services for the lowest possible cost.
Many operating departments that have large international shipping needs often hire specialists to undertake this function since cross-border processes can be extremely intricate. Common roadblocks companies have when it comes to international shipping include shipping costs, limited tracking, customs, duties, fees and taxes, and slow delivery speed. But more and more companies find the value in shipping cross-border to expand business growth, increase margins by selling to other markets, create additional demand by foreign customers and to thin out domestic competition. Instead of hiring a cross-border shipping specialist, clever companies are turning to unique tools within the same shipping software that they use domestically, reducing costs and boosting efficiency.
Many of today’s manufacturers are very particular about customer-facing documentation and labels. In fact, many see their shipping labels as a customer-facing document all on its own. In cases like this, customization can be a pain because many shipping systems don’t provide the flexibility manufacturers need. Today’s manufacturers require the freedom to create custom labels exactly how they want them while staying within carrier compliant constraints. This can be especially useful when performing drop shipping procedures for a retailer.
Traceability and Compliance
For manufacturing companies, production is only the first step. Getting that product to its destination safely and intact can be a make-or-break moment for a manufacturing business. Manufacturers of sensitive goods – such as healthcare items (pharmaceuticals), face unique shipping challenges like regulatory compliance and traceability. Manufacturers must ensure that they have complete visibility into global supply chains so that they can prove not only their own compliance, but also their suppliers’. Regulations often require the ability to track where specific items have been used or to trace materials from an end-item at a customer site back to specific materials used in its manufacture.
Scalability to Accompany Throughput
E-commerce is affecting every industry, not just retail, and in order to keep up with demand, manufacturers need to ship out more parts and products at a faster pace. In order to accomplish this without risking system downtime or critical errors, manufacturers need software that scales from one workstation to an enterprise-wide solution that handles multiple warehouses with complex shipping methods, procedures and custom business rules. It’s important for manufacturing companies to note that speed is an important gauge of efficiency and productivity, so finding a shipping solution that lasts a lifetime, no matter the throughput, is essential.
Accuracy and Performance
Every mis-picked, mis-packed, mis-labeled or mis-shipped order results in an additional cost per shipment or delay in the fulfillment process. That can cost a sale, a profit and a lifetime partnership. Today’s manufacturers are in need of shipping tools that verify addresses worldwide before a label is even generated. Did you know that UPS and FedEx increased their rates for address validation and correction charges between 7.1% - 18.7% this year alone? Custom address validation modules can reduce or eliminate carrier charges for address corrections, allowing manufacturers to improve on-time delivery.
Many key decision makers who are tasked with measuring and managing all line item expenses understand the impact and importance of cost reduction opportunities that are represented by logistics efficiency and logistics-related expenses. This is a critical area for improving corporate profitability. According to the State of Logistics report, “transportation and logistics-related costs as a percentage of sales range from 9%-14% depending on the company and industry.”
Logistics efficiency for manufacturers is more important than ever. It is not the quest for cutting costs that will sustain our manufacturing base, but the investment in efficiency by using technology and improved operations. While tacking on an e-commerce front to your manufacturing business comes with obstacles, the benefits far outweigh the cons. The rise in customer expectations is changing the way the supply chain functions, and nobody is safe.
Shipping software will ensure that your e-commerce strategy is a success by creating better warehouse efficiencies and activating key e-commerce tools– getting orders out the door faster and cheaper.
Are you ready to play in this e-commerce world? You’d better be, or you’ll fall by the wayside.