Supply Chain News / eSupply Chain / 3PLs & 4PLs / Warehousing

3PLs: Making the Most of eCommerce

June 27, 2012
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MACS Software (UK) has provided warehouse management systems for 21 years and has been involved in e-commerce right from the start. Here, Tony Liddar, the company's managing director, comments on the ways in which software providers should be helping their 3PL clients compete in an increasingly competitive world.

In recent years the 3PL sector has undergone fundamental changes resulting from the increasing power and capability offered by e-commerce. Today, even companies still classified as SMEs can be processing 10-15,000 orders a day. The rewards for those who get it right can be impressive allowing SMEs to compete head on with the big fulfilment houses and enjoy tremendous growth; but the consequences of getting it wrong are severe with anything but perfection being unacceptable.

Creating the software to handle this type of throughput, whether business to business or business to consumer (dropship) is tricky. Making that software robust and future proof, requires skill and experience. The demands on today's 3PL companies do not allow for compromise. "They have to deliver first time, every time," said Tony. "Not doing so can result in the disproportionate costs of handling returns, being demoted in rank by their principals, being badly scored by consumers on the internet, or even the loss of a client. Get it wrong and you don't get a second chance."

Conversely, time to market is important too. "Many of our clients require us to work fast to meet the needs of a new contract. If they fail to be ready on time, or miss any of their KPIs, they can be fined, or worse. There just isn't time to be developing everything from scratch no matter how unusual the application."

The essentials for an e-commerce WMS are straightforward but must be executed with precision. It must have the ability to merge all the order channels, speed the picking process, ensure zero defect picking, smooth dispatch through interfaces with a variety of carriers, and link the whole process with the incumbent ERP or accounts system. "The key to achieving this, as a standard, is to use experience," explained Tony. "Innovation is always necessary but it must be built upon a solid foundation of tried and trusted methods that will not break down under pressure."

But that's not where the process stops. E-commerce suppliers need the support of their technology partners as well. There's no point in just setting up a system and leaving the client to manage the change. As a company grows it will need to evolve and its IT systems will need to change with it so that it continues to meet its customers' demands. "As a company's throughput grows it's not just the WMS that needs to evolve, other software systems can sometimes feel the strain. We were recently able to make suggestions to a client whose company experienced a system slow down due to their accounts package."

Tony continued to explain that 3PL customers often need to converse on a technical level with their 'down stream' customers' IT personnel and it's often easier for a member of the MACS team to become involved to ensure a quick and robust conclusion. "That way the final customer has confidence that its IT staff will find it easy to work with the 3PL supplier, via MACS if necessary."

Darren Yull is the Head of IT for MSE Group, the global entertainment distributor that handles up to 30,000 orders a day using MACS software. He said that the use of e-commerce systems from MACS had completely changed the way the business works and agrees that it is experience that really makes the difference. "Moving into e-commerce was new for us, so we really appreciated MACS's understanding, flexibility and knowledge. The guys get what we are doing and constantly come up with new ideas to help us."

Tony feels very strongly that e-commerce should not be a bolt-on extra to an existing system, it should be inherent within it. "Having a holistic approach to the strategic development of software is surely the best approach. In my world there is no difference between traditional warehousing procedures and e-commerce. Moving from 100 orders per week to 100,000 orders per week, the management of consolidated orders to individual depots with separate billing addresses, ' dropship' orders, the management of consignment stock and demand forecasting/purchase ordering to multi choice couriers, it's all standard."

But despite the level of sophistication of the 'standard' system the software supplier cannot stand still with its own development. It's a continuous process to optimise the software, predict what the industry will want next and lead the market if possible. Each aspect takes many weeks of development but is essential to ensure that customers stay ahead of the game. "One area we have been working hard on recently is stock valuation," explained Tony. "Some stock, such as CDs and books, becomes obsolete very quickly. Our system offers robust analysis mechanisms that can deal with continual changes in pricing to ensure the seller makes accurate decisions about its sales pricing and margins."

The obligation of an e-commerce supplier is to provide security of outcome. What should happen, must happen, every time. According to Tony Liddar, the way to achieve that is by calling upon experience. Short cuts and quick fixes rarely work.

Source: MACS Software
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