How to organise your fashion fulfilment centre for both B2B and B2C

By Harald Hanaweg & Volker Sadowsky

The challenge of the B2C customer

In the days of B2B retail customers only, fashion fulfilment centres were used to dealing with their own shops or shops of other wholesalers who processed big orders in which numerous pieces moved in single units. B2B fulfilment could be scheduled and coordinated with business and retailers ahead of time. It was predictable and able to be planned in advance.

Along comes the explosion in e-commerce, however, and fulfilment centres – and even distribution centres – are now having to deal with an entirely different fulfilment process. It involves vast numbers of customers who order, for the most part, just one or two items and it’s unpredictable. It also means fashion fulfilment centres are now performing tasks previously managed by retailers, such as distinguishing between item sizes and colours for their B2C order fulfilment.

Then there’s the question of space. By offering greater varieties of items in their online stores than their physical stores, retailers are shifting volumes into the fulfilment centre. Operators must not only cope with the increased numbers, therefore, but require increased space to do so.

Seasonal changes further impact on these logistics. To meet online shopper demands, fulfilment houses are forced to carry new season stock, as well as current season stock, which they were previously relieved of once the current season SKUs moved into the shops. And let’s not forget the onerous task of returns management that e-commerce has also generated.

Managing B2B and B2C in fashion fulfilment operations – simultaneous or separate?

As a result, businesses are having to find ways to manage multiple sales channels to keep their fulfilment activities running smoothly.

For some distribution centres, this means splitting their order fulfilment for B2B and B2C customers. Some major fashion fulfilment centres, for example, have separate distribution centres or areas for e-commerce orders and B2B orders, finding the processes too different from each other to mix. When e-commerce took off, some tried to process the two jointly, only to find the parameters of each requirement too contrasting to optimise.

However, other fashion distribution operations have unified their approach to B2B and B2C fulfilment. They have determined, for example, to process their inbound, overstock and even the order picking simultaneously and it is only at the point of outbound that production is split between the two channels.

Considerations for managing both B2B and B2C

So, what is the best way for fashion fulfilment centres to structure their businesses for both B2B and B2C? What should a distribution centre consider when deciding whether to combine its B2B and B2C fulfilment into one operation or to keep them separate?

The answer will be different for each fulfilment operation, depending on the following factors:

• Existing structures: What processes are already in place?
• Budget: How much can be spent; a fully flexible system costs money.
• ROI: How soon does the ROI need to be realised?
• Resources: Will more operators be needed?

Existing structures

The starting point will differ for companies depending on their current structures, status and where they want to go. Do they have the space to separate their B2B and B2C fulfilment, for example? Or does space suggest a unified approach for B2B and B2C is a better option? Are their customers volatile and changing? It may be that a combined approach is not appropriate but a process that involves more of their resources doing the same thing is more efficient. Fulfilment automation is not a feasible solution unless the fulfilment centre is processing a certain volume.

Budget

Finding the right solution will also very much depend on budget. While automation is super efficient, there is an extra cost if flexibility between B2B and B2C is also core to the business. Some operators, for instance, may not opt to invest in automation and hope to achieve the flexibility needed through their manual resources. But could the price of that flexibility be their running costs, given the resources they will require to deal with both B2B and B2C? Supply chain managers need to take these types of financial considerations into account when considering the right approach to managing both their B2B and B2C fulfilment.

ROI

Another parameter to consider is the ROI. For many fashion operators, the quickest ROI is the most important factor. For a third-party logistics company, for example, the ROI outlook will need to be shorter than its typical three-five year contract period, even if this means a higher total cost of ownership over the course of ten years. For other companies, where the desired ROI cannot be realised on the budget available, it could be that a solution is found in a project implemented in two or three phases. Ultimately, calculations need to be made based on overall investment and operational costs and what is most valued for the fulfilment operator.

Resources

Finally, the question of human resources needs to be factored into finding the right solution. Businesses with multiple sales order channels often prefer not to mix order fulfilment-related activities to keep them running smoothly. But this means fulfilment centres have to dedicate resources to maintain different locations and this is often not cost effective. In addition, how easy is it to source extra resources where the fulfilment centre is located? Finding the manpower is already difficult, let alone the manpower willing to work on short-term contracts to meet the B2C demand. The ideal solution may be that the fulfilment centre has the flexibility of capacity in its systems without changing the need for operators.

By defining these key factors, fashion distribution centres will be infinitely better placed to look at the options for managing their B2B and B2C.

Solutions for managing both B2B and B2C

In recent years, e-commerce has been the driver of success for the implementation of many new technologies such as automated guided vehicles, robots and artificial intelligence. Even older key technologies, such as the pouch sorter system, have been revived to deal with the substantial increase in orders that must be fulfilled.

But none of the technologies can be implemented without the evaluation of the key considerations discussed above and without the experience of a system integrator. Together, these form the basis for pointing the fulfilment centre to the right technologies for the specific solution that best fits its operations.

Conclusion

It can be difficult for fashion fulfilment centres to know how best to deal with both B2B and B2C customers – should they invest in separate processes or try to run an omnichannel B2B-B2C operation? It’s often a question of getting back to basics; working out goals in light of existing infrastructure and processes, fiscal possibilities or constraints and desired ROIs. It also helps to involve the skills of a system integrator, who is expert in knowing the capabilities of all technologies and therefore able to find the right solution for the fulfilment centre.