If you are reading this is because you have already read interesting things in this portal or because someone recommended it or because you are going to evaluate the content for the first time. But anyway, sometimes it is difficult to know if we are in front of an expert or, at least, in front of good recommendations.
My recommendation: contrast what you read with your experience and do the exercise of validating the logic of what is proposed to you. One way is to verify "effect-cause-effect", as Dr. Goldratt used to say. That is, if we are told that an effect has a certain cause, we can predict that if that cause existed, another effect should also exist. This is also known in Theory of Constraints as "predicted effect reservation". Let's look at a recent example.
shopify.com portal - report recommendations
I don't think I'm showing here an unknown portal, and it is a source of articles and very finished reports, such as the "The Future of Commerce Trend Report 2022” (download report), que me recomendaron recientemente. Es un reporte de 140 páginas y en la 105 encuentro la segunda recomendación para la cadena suministro: “Redistribuya inventario más cerca de sus clientes”, y en el detalle dice:
Redistributing your inventory to locations closer to your customers reduces costs by keeping merchandise within shipping zones, allowing you to offer same-day or two-day shipments without incurring additional costs, and increases resilience to regional supply chain issues.
If you have a retail business, consider converting stores into mini fulfillment centers. Converting a single retail store into a mini-fulfillment center has the potential to reduce last mile costs by more than 60%. These hybrid retail spaces are also an opportunity to offer curbside pickup and click-and-collect options.
Let's take it one step at a time.
First statement: shipping (incurring a freight cost) to a location close to your customers would allow you to ship (another freight cost) within one or two days, but you say that without incurring additional costs.
Here there are assumptions that would have to be validated for this statement to be correct in both aspects: that it reduces cost and that it reduces time. The assumptions are:
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It takes more than two days to ship an item to the store (mini CD). If this were true, it must also be true that there are no other stores in the area to justify a regional warehouse. But if this is true, it doesn't seem like a good idea to have those few outlets either. That is, the recommendation is based on the fact that there are few customers in that area or that it is far from the main distribution center (DC). If the travel time to the store is less than two days, the shipping to any customer served from that store should also be the same. That is, in terms of time, it seems to me that shipping from the DC is the same as shipping from the store. And if it's for in-store pickup... that's what stores are for in the first place: to shop there!
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And added to the above, why would it cost less to ship to the store than to ship to a location near the store? If the argument is that you can consolidate freight to the store, you have to pay for home delivery anyway. Unless both added together are less than a home delivery from the CD, two freights seem to add up to more than just one, so I don't think it's cost efficient to do the store-as-mini-CD idea either.
Second statement: the store as a mini-CD (...) increases resilience to regional supply chain problems. I assume you mean that using the store as a stocking point for short lead time sales (1 - 2 days) helps mitigate problems associated with frequent stock shortages and overstocks (are there other "regional problems"?). And if the store has high availability of all SKUs, I don't see why a customer would wait a day or two.
That is, since we have problems maintaining availability at a reasonable cost in the stores, let's convince customers to order and wait for shipment from the CD to the store, to be picked up or shipped from the store. That way we don't have the out-of-stock-in-store problem. (But this was precisely meant to solve the lack of in-store availability and is not solved!)
I am an online shopper and wait more than two days, but if I go to a store, I expect to find immediate delivery. I recently looked for some special batteries in a department store and found them on the website. I then went to the physical store to buy them, only to be surprised to find that they are only sold online (I guess you have to read all about it on the website). I made the purchase online, but from another supplier. So it didn't do them any good to use the store as a mini-CD in that case. Besides, it is a "mini-HUB", that is to say that it is a pass-through store, not a stock store.
And the third claim is that you could reduce last mile cost by over 60% by using the stores as mini-CDs. It seems to me that it was established that if it's home delivery, fewer trips reduce cost, not the reverse. But also, if it's home delivery from the store, that's already possible if the store maintains good availability in the first place.
No. The solution to poor availability and surpluses is not to use the stores as mini-CDs (aren't they today without giving them complicated names?). I have already described the solution in other articles and it is simple. For example, I invite you to review Cross Docking: Don't try it at home!.
Conclusion
After analyzing these recommendations, the rest of the report loses a lot of strength. Saying things that seem novel but are the same as always with other words, or are directly wrong, led me to write this alert, and also to be more demanding with myself when making recommendations.
