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Supply Chain Predictive Analytics: What is it?

Supply chain predictive analytics: What is it and how is it shaping logistics?

Predictive analytics has been quietly transforming the logistics industry in big ways over the past decade. Enabling everything from faster delivery times to improved demand planning, using big data for predictive modeling and smarter decision making is here to stay.

In fact, with the acceleration of eCommerce and omni-channel strategies during the COVID pandemic, big data and predictive analytics will play an even larger role in the future. The good news is, everyone stands to gain – manufacturers, warehouses, shipping companies, online retailers, and consumers.

So, what is supply chain analytics? What impact has it already made, and how is it shaping the future?

What is predictive analytics?

Predictive analytics takes historical and current data and analytical techniques to generate predictions about the future. Before recent advancements in artificial intelligence (AI) technology, data scientists relied on statistical models to gain insights into future trends.

Now, predictive analytics systems can generate faster and more accurate insights using AI-driven techniques such as machine learning. As a result, companies are using data to accurately forecast trends and behaviors as far out as months and years into the future. And as close up as the next few days or even the next few seconds.

What industries are using predictive analytics?

From financial services and energy to logistics and manufacturing, every industry is leveraging the power of predictive analytics. The global market for predictive analytics is expected to reach $10.95 billion by 2022, with a CAGR (compound annual growth rate) of 21 percent from 2016 to 2022.

Why is this technology so indispensable?

It provides increased visibility. With vast amounts of data fed into sophisticated statistical models and machine learning algorithms, businesses across the board are benefiting from accurate forecasts and actionable insights.

The impact of big data in logistics

According to a study conducted by the Council of Supply Chain Management Professionals, 98 percent of third-party logistics firms believe data-driven decision-making is crucial to supply chain activities. Of shippers and logistics firms, 71 percent think big data enhances quality and performance.

By feeding reams of data into analytical systems, the logistics industry can leverage real-time visibility to make smarter decisions. Where bottlenecks might arise. How to better streamline fulfillment. Cut costs. Improve outcomes. Ship faster. It’s all in the data.

Big data offers key benefits to the logistics sector:

Forecasting customer demand

With insights on how consumer behavior is likely to shift, warehouses can prevent inventory shortages. Manufacturers analyze big data to learn when they should increase or decrease production to meet expected demand, thereby optimizing resource consumption.

Streamline shipping and fulfillment

Logistics firms integrate road maintenance data, weather data, personnel schedules, and other route data into a predictive analytics system to determine how best to optimize routes. This can help businesses achieve goals such as faster delivery, reduced shipping costs, and even a reduction in carbon emissions.

Better inventory management

Warehouses get a real-time understanding of what’s on the shelves, what’s moving, and how stock levels are changing. This information is used for making smarter labor decisions and ensuring stock levels are always primed to serve evolving consumer trends.

How supply chain predictive analytics is being used today

Warehouses, fulfillment centers, shipping firms, and other logistics companies all over the globe are using predictive analytics to spot patterns, forecast behavior, and, essentially, predict the future. Here are some examples of supply chain predictive analytics in action:

Amazon uses predictive analytics and big data for its innovative fulfillment process known as “anticipatory shipping.” AI determines which items customers are likely to order before they order them. Then, Amazon sends those anticipated items to a specific shipping hub or strategically places them in warehouses, so customer orders are fulfilled much faster.
FoodServiceCo, a leading online food service retailer in the UK, uses IoT technology to collect data on its fleet of drivers. Everything from information on the temperatures inside the trucks to real-time location data is tracked and analyzed, giving fleet managers crystal clear visibility over the entire supply chain. This has helped the company improve routes and shipping quality while drastically cutting down on driver hours. Since using predictive analytics for their shipping fleet, they save 18,000 driver hours each month.
With 46 markets in different regions all over the world, supply chain management for global food giant Nestle is highly complex. The company uses AI, machine learning, and other advanced analytical tools to better predict consumer demand, driving smarter planning decisions and boosting efficiencies.

Emerging trends in how analytics are used in supply chain management

Predictive analytics is now the norm for third-party logistics firms. This is increasing competition as consumers grow accustomed to faster shipping times and better services and as manufacturers and retailers expect more streamlined processes.

Also, eCommerce and omnichannel are growing faster than traditional retail, putting even more pressure on third-party logistics companies to offer quicker, more efficient, and better-optimized solutions.

To compete, firms will have to rely even more heavily on technology and big data. So, what future trends can we expect?

More warehouse automation for picking, packing, and shipping, including the use of autonomous robots
Drones and autonomous mobile robots playing a role in the delivery process
Increased adoption in cloud-based supply chain management software as companies look for ways to boost resilience in the wake of the pandemic
More granular predictive modeling to help firms gain even more clarity on logistics challenges and how to solve them
Segmented supply chain strategies, which is where companies will use a higher service level for certain customer segments or product groupings
Interest in sustainable shipping methods – as pollution becomes an increasingly pressing issue, consumers are likely to prefer buying products from companies that embrace sustainability

The reality is, predictive analytics and big data have improved the logistics industry. They’ve enabled lightning-fast shipping, reduced costs at every stage of the supply chain, and have made the rapid rise in eCommerce feel effortless to consumers.

How can businesses take advantage of this shift and remain competitive? By partnering with a logistics team that uses advanced predictive analytics to streamline your supply chain.

Combining industry-leading technology with analytical expertise, the logistics experts at FTDI West help businesses make smarter decisions that drive measurable value. Contact us today to learn more.

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Why You Need an Apparel Fulfillment Service

6 Ways Outsourcing Apparel Fulfillment Services Can Benefit Your Online Business

Online consumer spending is higher than ever. In 2020, consumers spent $861.12 billion online with U.S. merchants, which translates to a massive 44 percent increase from 2019. This spending is fueling the e-commerce sector and enabling online businesses that sell clothing, accessories, and other apparel to thrive.

However, apparel businesses aren’t without their challenges. Shipping costs are high, and managing fulfillment for a growing company can be difficult. Shipping alone can account for up to 25 percent of business costs for online retailers. Problems with fulfillment, such as over-packing items or sending the wrong product, can lead to higher costs and reduce customer retention.

This is why so many online merchants use an apparel fulfillment service to handle distribution and logistics. A third-party company will have the technology, processes, labor, and warehouse size to streamline order fulfillment, increase accuracy, and help your business reduce your fulfillment and shipping costs.

What Does a Fulfillment Service Provide?

When you partner with an apparel fulfillment company, all of the tasks associated with preparing and shipping out orders are taken off your plate. Your provider will store, pack, invoice, and ship your products to customers. As a result, you and your team will have more time to focus on growing your business and engaging with customers.

Why Your E-Commerce Business Should Outsource Fulfillment

Let’s look at how working with a third-party fulfillment company can help your apparel business grow.

1. Faster shipping rates

If you are currently fulfilling orders in-house and shipping from your business’s location, your customers are likely waiting longer than they would if you used a fulfillment service. Fulfillment centers have warehouse facilities in locations that make shipping to cities across the U.S. faster. You’ll find that shipping from a centrally-located warehouse can reduce shipping costs and speed delivery times.

2. Smaller operating costs

When you outsource, you’re paying a company to complete some of the tasks you do in-house. If they can do it more efficiently and effectively than you, at scale, you’re going to save money.

This is the primary benefit of working with a fulfillment company. Expenses such as rent costs for the warehouse space, utilities, labor, equipment, and IT management are covered by the fulfillment company, allowing you to save on operating costs. You’ll also be able to cut back on time spent hiring, training, and managing employees that you would otherwise need for picking and shipping.

3. Easier scaling

Companies that manage distribution and fulfillment in-house have to absorb overhead costs even when customer order numbers decrease. And, when orders increase and business starts booming, they have to invest in more labor, equipment, and possibly more warehouse space to handle the surge.

When you outsource, you pay for what you use. This allows you to cut back on fulfillment costs when business slows and increase capacity when it increases.

4. Streamlined inventory management

Whether you sell clothing, footwear, or accessories, you have likely run into issues with high SKU (stock-keeping unit) counts. In the apparel industry, trends change fast, and offering a variety of product colors and styles is all part of the process. So, you may have high SKU counts, seasonal turnover, and other challenges unique to the industry.

To overcome these, you need to have the right technology and processes in place. You’ll also need enough staff to handle the increased work involved.

Most small e-commerce businesses don’t have the capacity to make managing a high SKU count efficient. With a fulfillment company, your business benefits from the resources they have to streamline product picking without having to make a major capital or labor investment.

5. Higher fulfillment accuracy

One of the biggest risks of handling fulfillment in-house is accuracy. If you don’t have the staff on hand to deal with order spikes, seasonal swings in business, or simply fast growth, more mistakes are likely going to happen. Sending the wrong item, packing multiple products by mistake, or missing an item in a customer’s order can create several problems.

Increased shipping costs for product returns or to ship missed items
Lost business if customers decide not to purchase from your business again due to an inaccurate order
More strain on customer service, as customers have to reach out for help to have their order resolved

A fulfillment company that specializes in distribution for the apparel industry has the resources to ensure high rates of accuracy, no matter how fast orders come in. This leads to fewer mistakes, fewer losses, and happier customers.

6. Improved customer experience

Streamlined, accurate fulfillment also frees up your customer service representatives to spend more time with customers who may have other issues or concerns, empowering your business to be there for your buyers. And in the competitive world of online apparel, great customer support can give your business a leading edge.

Poor customer service costs businesses more than $75 billion every year. By providing faster shipping, accurate orders, and reliable customer support, your e-commerce company can be the one that excels at the customer experience. You’ll be the business buyers keep coming back to.

The Right Fulfillment Partner Can Help Your Business Grow

With the right distribution and logistics company, the sky’s the limit for online apparel businesses. At FTDI West, we provide end-to-end fulfillment services for the apparel industry. Our state-of-the-art warehouse and distribution center is centrally located, enabling us to ship your products to customers quickly. We also have a large staff on hand and are more than capable of managing fulfillment for your business, whether you send out one hundred units a day or thousands.

We’re also equipped with industry-leading technology and an experienced team of logistics professionals who know how to help ensure your customers have the best experience possible. We can also work with you to find ways to reduce your shipping and operational costs, while delighting customers with reliable, fast shipping. Reach out today and find out how we can help your apparel business grow.

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What Is 3PL Logistics?

Understanding E-Commerce Fulfillment

Small e-commerce businesses have been on the rise in recent years, especially during the COVID-19 pandemic — e-commerce jumped 6.9% in terms of total retail sales between 2019 and 2020.

‌With brick-and-mortar businesses rendered inoperable, enterprising entrepreneurs adapted to changes in the market and shifted to models that are more suited to a more digital world.

‌The problem?

Those small business operators may not know the most effective way to distribute their goods, leaving precious revenue to be lost in the industrial machine.

‌This article seeks to solve that problem with an overview of third-party logistics in order to present a viable solution to those businesses that create clothing and other small items.

What is Third-Party Logistics?

As organizations grow, they often develop fulfillment and warehousing needs that expand beyond their ability to maintain themselves. Third-party logistics (3PL) is a solution to that problem because it allows companies to outsource at least some of those operations to a vendor that specializes in those services.

‌Business models that include some form of drop-shipping rely on 3PL in order to reduce both costs and liability. These services are often scalable and can be used as needed or as long-term solutions.

Who Needs 3PL Services?

A lot more happens on the back end of e-commerce than the consumer might imagine. Supply chain logistics encompasses a number of functions, any one of which could be reason enough for companies to choose to work with a 3PL provider.

‌To handle the entire burden of logistics internally might require more physical space than a company can afford, or perhaps it’s in the budget but would simply take too much effort to maintain.

‌In most cases — especially for businesses with customers outside of their immediate geographic locations — it’s easier to simply outsource e-commerce order fulfillment to a company with the infrastructure in place to provide a high-quality experience to their customers.

Benefits of Working With 3PL Provider‌

Though we’ve alluded to some of them briefly, let’s take a closer look at some of the benefits that 3PL offers to businesses of all sizes.

Specific Knowledge

Having someone on your side that knows how to manage order fulfillment and logistics of e-commerce is no small advantage. Working with experts in these areas can streamline the entire process from order to delivery with minimal cost.

‌What’s more, shipping across state lines and internationally comes with even more challenges that, if not accounted for, could bring the expansion of an otherwise successful operation to a halt. The guidance of someone who understands the different requirements of diverse governments is invaluable to developing a wider reach.

Adaptability

Whether operators would rather use 3PL providers simply for storage or to outsource e-commerce order fulfillment entirely, they can usually select a level of service most appropriate for their needs. What’s more, there’s no requirement that a certain level be maintained all the time. Some businesses have a cyclical demand for their products, such as those that deal in seasonal clothing or sporting goods.

3PL companies can help them to scale accordingly so that they can continue to serve their customers without a loss in quality of service or a need to hire (and train) a lot of seasonal employees.

Improved Focus

Without worrying about the day-to-day logistical demands of running their operations, most organizations have more mental resources available to focus on core processes. This may lead to improved products, customer service, or simply more streamlined processes that increase profitability. ‌

Customer Experience

All of the benefits of 3PL for the business translate to a better overall experience for the customer as well. Those who place orders can expect more consistent and reliable delivery than is possible with an in-house logistics solution.

‌A key thing to note here is that customers don’t much care about the steps in between — they just see that these businesses offer a reliable service, and they appreciate receiving their orders intact and in a timely manner. This leads to brand loyalty, word-of-mouth marketing, and ultimately more happy customers.

How to Choose a 3PL Provider

Decision makers have to remember that when they decide to work with a vendor — especially one that handles a function as critical as logistics — they are essentially expanding their businesses so that they include the service providers as well.

‌No one would knowingly bring in an unreliable partner, but that’s exactly the risk that many take when they fail to do their due diligence around 3PL providers. There are a few things that anyone can do that can help them make a more informed decision.

Ask for References

There’s hardly a better way to get an idea of what one might expect than by speaking with an existing client. Any red flags should be taken into consideration and weighed against the feedback of others. Hiccups happen in every business and every industry, but a company that has a pattern or reputation of mishandling the relationship should be avoided, no matter how low their prices are. ‌

Check Their Finances

If possible, it’s a good idea to look into prospective 3PL providers’ financial history. The last thing a business needs is to sign up for a vital service only to have the company fall through for financial reasons. There are usually signs of an impending collapse, and the astute observer should catch them before it’s too late.

Check for Compatibility

There are providers that serve companies of every size, so it’s important to choose one that works for a particular business. Companies that work with providers that offer far more capability than they actually need are likely to overpay for their service. Likewise, they should be sure that the vendor is physically able to handle the volume that a given business expects to bring in, even during the busiest times of year.

‌Final Thoughts

Third-party logistics offers business owners the opportunity to increase profitability and efficiency in a single step by outsourcing the work of fulfilling customer orders. The best 3PL providers are in the business of understanding e-commerce fulfillment, allowing business owners and operators to focus on their most important work.