Analysis reveals that multiclient fulfilment can help realise cost savings in comparison to dedicated fulfilment models. However, in order to fully leverage the potential advantages offered by the multi-client fulfilment model, changes are needed to service offerings, commercial structure, warehouse operations, and technology, according to an article titled ‘The promise and challenge of multi-client fulfillment for e-commerce’ on the McKinsey & Company website.
Fulfilment operations include a single-client model, in which operations are customised as per clients’ requirements and a multiclient model that is preferred by large e-tailers. 3PLs could immensely benefit from a partially integrated multi-client fulfilment model, authors Tom Bartman, Julian Dragendorf, Scott McConnell, John Murnane, and Isabelle Pan wrote in the article.
Multi-client fulfilment operations typically have a larger footprint, which enables e-tailers to reduce lead times and allows them to compete with market leaders that offer two-day and same-day deliveries. These operations can also reduce e-tailers’ costs as overheads such as labour, automation, and real estate can be shared with other e-tailers. Additionally, they can offer more flexibility than single-client operations as they do not provide long-term commitment to 3PLs.
Economies of scale make savings of between 7 and 9 per cent possible and assist e-tailers to take more customers in a shorter period of time without increasing their square footage. One can achieve such savings through several steps such as demand smoothing, site scaling, automation, and final-mile savings. According to the article, around 90 per cent of logistics experts are of the opinion that e-fulfilment leads to profits of around 5 to 10 per cent. Multi-client fulfilment and the resultant savings could increase e-commerce profitability twice or thrice.
“To successfully implement a multi-client approach, one may require making certain changes to a 3PL’s real estate, service offering, commercial structure, and operations; new and flexible technology for supporting front and back-end operations and end-to-end connectivity will likely be needed as well,” the authors wrote.
Fibre2Fashion News Desk (NB)