by Carmen Vasilescu
Everyone in the logistics industry is familiar with the term “lead time”.
Lead time is first and foremost a KPI that tracks the length of supply chain processes and operations. That is, it refers to the serving time, which is the exact time between when an order is placed and when it is received and ready for use; In other words, it refers to the time it takes from the time an order is prepared to the time it is delivered from the e-commerce provider to the final consumer.
Meanwhile, in this whole ecosystem, an online store aims to get as little preparation time as possible. To achieve this, freight carriers should monitor the time spent at each stage of the supply chain and identify potential optimization strategies to achieve the shortest possible duration.
Thus, the role of the e-fulfillment service provider is to ensure that the entire flow is dynamic, beginning with the goods reaching the warehouse area and continuing with the listing of products on the site and their delivery to the final consumer, so that the latter reaches the end point, ie the door of the customer who wants to receive the product as soon as possible.
At the same time, an online store needs a better stock rotation, so it often sells products before they are in stock, which necessitates a fast processing time and order preparation from the e-fulfillment provider.
How can lead time be improved?
A logistics company can choose to invest in one of two ways: CapEx * (automation) or OpEx * (human resources). Any investment, especially at the level of automation, necessitates funds with a constant depreciation, implying a fixed cost.
As a result, while budget estimates can be made based on expected volumes, the initial costs will remain constant. So, what should an e-fulfillment provider do? How could it convert fixed costs into variable costs? In a market where demand exceeds supply, the answer to these questions is automation.
Thus, through automation solutions, the speed will be increased tenfold, and the total time from product receipt and preparation in the warehouse to delivery to the final consumer will be significantly reduced. Furthermore, whether we are talking about traditional logistics or e-fulfillment, the implementation of automation in a warehouse aims to streamline productivity through high-performance tools.
Some low-cost productivity solutions are: VoCoVo *, conveyors and platform floor lift.
What are the advantages of automating for the online stores?
- Reducing costly errors – Through systems such as ERP, all available assets and goods can be included, thus eliminating significant errors.
- Improved Customer Service – While monitoring the supply chain, automation provides much better transportation control.
- Improved access to data and real-time freight traffic analysis – All operational, administrative, and management information is just a click away.
- Organizational control – You can keep up with inventory, financial income and expenses, and transportation costs.
* CapEx – Capital expenditures are typically represented by fixed assets such as manufacturing facilities, equipment and machinery, computers, vehicles, and trucks.
* OpEx – Operating expenses are the costs that a company incurs in carrying out its day-to-day operations, such as rent and utilities, salaries, business travel, etc.
* VoCoVo – Wireless communication system for warehouse teams.