Building a Multi-Node Fulfillment Network

In today's uncertain economy, brands need to take on a customer-centric strategy as they strive to "meet customers where they are" and enhance the customer experience. When it comes to creating a multi-node fulfillment network, geography, and a third-party logistics (3PL) partner matter.

In the fall of 2022, we opened a second West Coast Distribution Center (DC) in Las Vegas. Its ideal location provides easy access for drivers and is within 20 miles of the airport. We chose this region after eliminating other areas based on land costs, the type of workforce in place, and proximity to ground and air transportation. We opened our first facility in the area during the online shopping boom that occurred as a result of the pandemic but quickly outgrew that space.

Building from the ground up, we were able to design the layout of this facility to optimize eCommerce fulfillment with a mix of stations for pick, pack, and ship solutions. Now we have some 150,000 square feet of wide-open space to not only personalize packages for our customers but to enrich the experience for our employees as well. In a tight labor market, keeping employees happy is crucial.

All about Location

With brands selling products across multiple channels and the need for reliable shipping to support digital purchases, the single-DC strategy is increasingly becoming a thing of the past. Brands need a tactical approach to support consumer desire to choose from a variety of delivery options, including alternative options such as buy online, pick up in-store (BOPIS), ship from store, curbside pickup, and more.

The key question is - how do we get orders out the door and into the hands of customers as quickly as possible? Brands are no longer beholden to a single hub and are getting creative about how they meet consumer demand. For instance, the SkinCeuticals brand under L’Oréal USA had a loyalty redemption program that needed a fulfillment provider. Customers had redeemed points for merchandise, but the company did not have a viable order fulfillment solution for the program. The answer was a pop-up DC run by PFS. With minimal set-up time and utilizing corporate staff, we completed and shipped the orders in one day.

Having the agility to utilize a smaller format when needed will pay off. Retailers are using their stores as well as traditional and non-traditional fulfillment spaces to support multi-node fulfillment operations. To do this effectively, they need complete visibility of all inventory across omnichannel operations like stores and DCs.  

Then they can determine the best multi-node strategy for their business – maybe that is operating multiple locations 12 months out of the year, only during peak season, or some other variation. Leveraging distributed order management (DOM) technology to route orders to alternative facilities for the fulfillment, brands can keep track of where SKUs are located and how much is available for sale at each location.

When brands can diversify their direct-to-consumer (DTC) operations, they are in a better position to navigate disruptions such as supply chain bottlenecks, weather issues, labor shortages, and transportation costs.

Striving for the Perfect Order

There is no doubt that eCommerce sales remain strong. According to Digital Commerce 360, eCommerce revenue exceeded the $1 trillion mark in the fourth quarter of 2022 (Q422) for the first time. In fact, according to U.S. Department of Commerce figures released in February, eCommerce sales grew more than 6 percent in Q4 2022 to more than $299 billion compared with $281.58 billion in Q4 2021.

To build on this eCommerce momentum, speed, and accuracy are essential. An experienced 3PL partner understands consumer expectations for shopping timelines, and they work with their carrier partners large and small to get the product to the customer within the indicated timeframe.

In the past, consumers were not bothered when it took seven to ten days, or more, to receive an online order. Those days are long gone. Brands are expected to communicate with customers effectively about when their package is going to arrive and make good on that promise.

Partnering with a 3PL can help brands manage their multinode network more efficiently – enabling them to provide a reliable experience for their customers from the moment an order is placed to when the package arrives at the doorstep.

“Retailers are using their stores as well as traditional and non-traditional fulfillment space to support multi-node fulfillment operations. To do this effectively, they need complete visibility of all inventory across omnichannel operations like stores and DCs”

Courting Consumer Engagement

Consumers are more tech-savvy these days and the bar for customer expectations continues to be set higher. Statistics show that stock availability is one of the main factors in customer satisfaction.

Brands want to be able to leverage experience, infrastructure, and location to meet consumer demand. So how do they get inventory closer to consumers? More and more brands are outsourcing their geographic expansion to broaden their reach, increase the speed of delivery and boost customer satisfaction.

When outsourcing, it’s important to pick a provider that can scale to perform during your busiest time. A skilled 3PL offers scalable infrastructure and a diversified fulfillment network that all work together to ensure success year-round and especially during the critical peak season.

Customer satisfaction is more important than ever in this uncertain market and having the right partner to manage your multi-node fulfillment network through the pick, pack, and ship process can help brands deliver a memorable customer experience that breeds loyal customers.

An enhanced customer experience goes beyond shipping timelines. There is a tangible experience to opening an aesthetically pleasing package. An experienced partner works to capture the essence of a brand through packaging and understands the importance of attention to detail. Another way to gain a competitive edge is through sustainable fulfillment practices. The multi-node strategy also enables brands to reduce their carbon footprint by shortening last-mile delivery.

Having the support of a 3PL allows brands to free up in-house resources to focus on what they do best – product development, marketing, and concentrating on their customers – allowing the back-office operations to deliver on those promises through customer experiences that inspire loyalty.