The supply chain model of the 1970s mainly involved local suppliers and physical retail stores, where goods went straight from the suppliers to the retail stores. In the 1980s, retail distribution centers popped up. Suppliers shipped goods to the centers which functioned much like airline hubs, and retailers then distributed goods to individual stores in the region. Imported goods were added to the mix in the 1990s, which created the need for retail import centers.
When a significant number of customers started to shop online in the 2000s, an entire second logistics network emerged to deal with the increase in shipping since online customers received their items at home rather than taking them home from physical stores. The e-commerce supply chain model involved e-fulfillment centers, parcel hubs, sorting centers, parcel delivery centers, and local depots for urban logistics to get packages to their final destinations.
Competing in the Age of E-Commerce
Free shipping is often expected by customers, but speed of delivery is the current way that online retailers find the fiercest competition. It used to take days or weeks for customers to receive remotely-ordered items (“Oh, the Wells Fargo Wagon is a-comin’!”), now it isn’t unusual for online purchases to arrive in one or two days.
The high level of coordination and rapidity it takes to process orders from manufacturer to ground, air or rail transportation, then to a warehouse or distribution center demand state-of-the-art processes in both software and physical movement strategies. Logistics for e-commerce goods require four aspects:
- Distribution centers need to be at least 500,000 square feet and operate around the clock.
- Sorting centers are needed to sort packages by zip code.
- Parcel delivery centers and last mile delivery services are needed.
- Online shopping carts need to integrate with the transportation management system.
Having these things in place ensures on-time delivery, improved efficiency, cost reduction, improved customer satisfaction, a clear view of the supply chain, and improved communication.
E-Commerce Distribution Centers
Today’s e-commerce retailers compete by using distribution points in the following ways:
- They look to locate distribution centers close to major rail hubs, airports and highways.
- They establish multiple distribution centers closer to end consumers.
- Online retailers use a third-party logistics company to warehouse, distribute, transport and perform port drayage services for retailers.
Third-Party Logistics Companies
E-commerce has become so simplified for the consumer and shop owner that the common person can set up an online “store” in one or two days. There are ready-made online stores, complete with shopping cart features, that one can download. The store owner can then make a few customizations, upload their catalog of products or services, and be ready for business. Even freight charges can be finely tailored using collected data from buyers.
AliExpress products are shipped from China, so they do not spend much time in American warehouses. In other situations, however, the owner purchases inventory and has it stocked in third party warehouses in the US, where the items remain until they are picked for order fulfillment.
The owner “fulfills” orders online, but a logistics company does all of the work from that point onward to get the items picked, packed, and shipped to customers. Besides fulfilling orders, the hands-off, armchair business owner manages his inventory selections and suppliers, answers customer questions, and watches his profits grow!
Most port services or Third Party Logistic (3PL) companies offer barcodes or other similar methods of digital identification for goods stored in designated areas that are monitored around the clock. When goods are picked for order fulfillment, they are scanned, and the business owner back home sees in real time what is going on with his inventory and customer orders.
Port City Logistics is a 3PL group located at the Port of Savannah in Savannah, Georgia. Situated close to interstate highways 95 and 16, PCL stocks many different types of goods in a two million square foot, high-security facility. As part of the dependable services of the United States’ fourth busiest port, our experienced specialists pick, pack, ship, transport, and offer both import and export port drayage of products with speed; we take care of all logistics savannah needs.