My 2021 Supply Chain Buzzword: SCALE
By Esther Kestenbaum Prozan
Recently, Inbound Logistics magazine asked me what I think the supply chain buzzword of 2021 is. I didn’t have to think twice about my answer: SCALE.
Retail continues its radical transformation. It used to be that to have a successful retail business, one had to get on the biggest platforms possible for visibility and the logistics needed to get products to the customer. However, the rise of the direct-to-consumer (DTC) model has changed to meet a new customer and an evolving retail landscape. No longer do brands have to rely on large platforms to sell their products, and many who have switched from wholesale to DTC have found it is better for their overall business as they have more control over the customer journey.
The reason I picked the word SCALE is that DTC brands must be able to do this well in order to compete in the marketplace. Why? Because customer demand fluctuates particularly in today’s disruptive times and DTC brands must be ready. The pandemic has delayed supply chains but customers today don’t care what is going on behind the scenes. They want their products delivered in a timely manner, period.
When it comes to fulfillment, 3PL providers are in a unique position to help DTC retailers fulfill their brand promise by doing just that–getting customers their orders. If the 3PL partner doesn’t have the technology in place to manage B2B fulfillment or isn’t prepared to rapidly expand the fulfillment center space and staff up to fill orders, the brand takes a hit.
For any DTC brand, choosing a 3PL is a huge decision. Order fulfillment is the single biggest cost line item. And the chosen fulfillment provider will be entrusted with all of the inventory and owns the order accuracy, both critical factors in the fulfillment process. This is why scale is critical. A 3PL must be able to ramp up its operations quickly in order to quickly respond to a DTC brands increased demand.