Ma
te
ri
al
Ha
n
dli
n
g
26 DC VELOCITY NOVEMBER 2019 www.dcvelocity.com
that to a satellite model, the task
becomes easier.”
The ultimate goal is to improve
the customer experience in an era
when that experience needs to be
perfect, every single time. An e-com-
merce study released earlier this
year by contract logistics specialist
DHL Supply Chain found that more
than half of logistics and supply
chain management professionals in
both business-to-consumer (B2C)
and business-to-business (B2B)
markets view the customer experi-
ence as one of the most important
factors in determining the success
of an e-commerce and omnichannel
business strategy. Strong fulfillment
capabilities can make or break that expe-
rience, according to Jim Gehr, president,
retail, for DHL Supply Chain North
America.
“Owning the relationship with the
customer is where the value is,” Gehr
explains, adding that fulfillment is a
“prime route to owning that relationship—fulfilling quickly, efficiently,
and accurately. It’s something that will
increase sales per transaction and create
lifelong customers.”
REDUCING COSTS
Reducing transportation and freight costs
is one of the biggest drivers behind the
satellite or in-market DC concept, according to Ysasi and Eldred, who point to a
criss-crossing of inventory that occurs
in many retail organizations. It’s not
uncommon for retailers to bring product
into the Port of Los Angeles, for example, and then ship it to a regional DC in
Chicago, where it’s unloaded, stored, and
then picked, packed, and shipped back
to the West Coast to fill both store and
direct-to-consumer orders. Strategically
placed mother ships and satellites can
help eliminate those redundancies by
placing the inventory closer to where it
will be consumed in the first place, Eldred
explains.
“Two-thirds of your supply chain costs
are usually in transportation, not facili-
ties,” he says, adding that eliminating an
overlapping leg of the fulfillment journey
can “save you a lot of money.”
Ysasi agrees, adding that “If you can
save that freight cost—to customers and
to stores—that’s a huge win. Many cus-
tomers we’re working with are looking to
reduce that [transportation expense] and
pop up these in-market DCs.”
Deciding how to re-allocate invento-
ry in this model requires considerable
data-mining and use of analytics, but it’s
worth the effort because it can lead to
savings in other areas, Ysasi and Eldred
add. On-boarding new employees—espe-
cially during peak season—becomes eas-
ier in a smaller in-market DC because
the fulfillment processes are less com-
plex. Implementing a smaller DC that
