Shifting Logistics

Some of the smartest companies out there are making the move toward nimble manufacturing and niche products. They’re removing themselves from the middle of the chain and putting themselves at the front or the back of it, perceiving that the value proposition of being an enabler will only belong to a chosen few – the efficiency machines.

It means making an about-face on a fifty-year-old business strategy, but trend-savvy companies are retreating from choices to use China and other developing nations to manufacture a large number of mass marketable SKUs. Instead, they’re designing and developing their own unique product lines and then built them in their own facilities, many in small batches, on demand.

From customer service to fulfillment, the standard formula for getting product to market and servicing it has changed. What used to serve as a barrier to entry is now a ready-made, pay-as-you-go path for intellectual property to speed into the market. Furthermore, the ability to shift mindshare to differentiating factors, rather than expending it on repeatable processes (like fulfillment, customer service and distribution) allows a greater focus on specialization.

Companies like Shipwire and Amazon exemplify this. Shipwire, an order fulfillment and warehousing solution, helps e-commerce companies stay lean. They’re able to fulfill orders for very small quantities of a wide variety of SKUs. In effect, they can use their core value to complement yours. Send a pallet, a gross or even just a dozen, and Shipwire will take care of the rest. From warehousing through shipping, the entire process is available on demand, so you can send as few SKUs as you like and pay as you go. They have an API that allows you to connect your web store or catalog operation directly to their order fulfillment process, so you can bounce back status to your system to pass through to the buyer, making the entire user experience and customer management process seamless.

For a long time now, it’s seemed that Amazon is one of the ultimate efficiency plays. They stock, store, distribute and fulfill – and they do it smarter and faster than anyone else. They also deliver efficiencies with a solid matching, search and recommendation system that squeezes as much revenue out of a potential customer as possible. Their core value isn’t merchandising or customer experience; it’s their system and process. Recognizing that core value, Amazon now offers direct use of their customer service, warehousing and fulfillment to others. You can add products directly to their database. That connects you with their highly effective matching system and imparts a high level of credibility.

Offering their real core value to the market in this way was a smart move on their part, and one that can benefit you. But with acquisitions of famously customer-focused companies like Zappos, Amazon has also shown an understanding of what’s possible with a completely different model – one that depends on a deeper level of user engagement and more social transparency. Zappos, in particular, cultivated a powerful amount of goodwill and customer loyalty simply by exposing the heart of their corporate culture and showing what was in their DNA. They built a culture of authenticity and alignment, letting customers see that their core values actually drove the way they did business.