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Hi, Anuar?
How are you?

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Good, good.
You?

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Good.

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A bit tired from the day-to-day, but also
because I’m shopping for a wedding I have

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to go to, and they set up the registry.

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Curiously enough, the registry they set up
is with a company that was a client of

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LIDD not long ago, and part of the project
involved their e-commerce platform.

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And right now, I’m looking and searching
through their page to buy the gift.

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It is becoming more and
more common, isn’t it?

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That it’s by e-commerce, that
it’s always through websites.

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They preselect their stuff.

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It really makes it easier for people who
want to hold their list

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of specific things.

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Otherwise, people will give
you things that you don’t want.

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It happened to me recently.

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Yes, yes, but they won’t let you give them
something cheaper either, but that’s okay.

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And that’s exactly what we’re going to
talk about today, e-commerce, right?

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Yes, yes, correct.

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So, we are going to talk about integrating
e-commerce into your operations.

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We are going to talk about it in a way
that is in the early stage of the

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integration, because that is when you
start to integrate, when you start

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to plan, to make that integration.

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But before we go into it, how about we
talk a little bit more

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about what e-commerce is?

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E-commerce is the purchase and sale of
goods, whether physical, digital or

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services, through digital platforms,
through the Internet and carried out

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by all kinds of people, companies, etc.

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Anything I forgot about
what e-commerce is?

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No, no, exactly that.

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Basically, through the website selling
either services or goods,

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just like you said.

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Right.

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And when we talk about the sale of
services or goods, which the sale of goods

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is the most common for us and the one we
are interested in talking about when it

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comes to e-commerce, there are different
ways of implementing it and there are

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different ways of how it can be handled,
whether the sale is being made to the end

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customer, whether the integration of the
e-commerce platform is to a part or a

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section of your operations, for example,
when you use the digital platforms or a

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part of your platform that you integrated
with your operations and with your other

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systems to be managed by your suppliers or
to be managed by other types of customers,

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not necessarily the end customer.

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Can you think of any kind of
examples for these different cases?

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Yes, there are three that come to mind.

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Let’s say, one of them might be a
manufacturer who is used to sending orders

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to retailers who resell those products.

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Then, as these stores grow and grow and
the demand from retailers continues to

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grow, they see the opportunity
to introduce e-commerce.

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So, in this specific case for such
retailers, instead of running all the

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operations from scratch, without having
any expertise, their additional cost that

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they have to send things to their stores
first and then to their customers, there

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is a way where they introduce e-commerce
from their specific platform, but they ask

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the manufacturer or the distributor who
sends the product to them, to

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send it directly to the customers.

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So, in this case, the e-commerce is
introduced by the specific store, the

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customer, the retailer, but the
distribution and logistics operations are

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carried out by the manufacturer, which
is the same supplier of these retailers.

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That could be an example.

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Maybe also….

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We can talk about the other two examples
of when it is also already dealing when

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the service to the final customer, which
is either when the customer has to go and

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pick up the goods or when they arrive
directly at the customer’s home, right?

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Yes, exactly.

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I know that Walmart specifically does
this, for example, they call it click and

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collect, which is basically, you place
your order online, you go to the website

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and choose your preferred store, your
nearest store, and you say, well, I’m

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going to go pick up my order there, but I
don’t want to waste the time, I don’t want

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to spend the time walking all over the
supermarket, going to pick up the whole

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order and they decide to ask Walmart to
start filling that order so that

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they can just come and pick it up.

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So, that’s another common
example, you could say.

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And the third one that you mentioned,
which is where you buy, and this is

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probably the most common of the cases,
where you buy online and it comes directly

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to the customer, to the end consumer.

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For example, Amazon is a great example,
but let’s say, I can think of a company

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like what we are talking about right now,
which is a small company when it

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introduces e-commerce, not specifically
the existent e-commerce giants.

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So, let’s say, a local clothing store
starts to gain popularity, starts to

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increase demand in the area and then says,
well, now I want to introduce e-commerce

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or I want to expand the
e-commerce branches.

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Then, once you first take it as something
parallel and grow it, there comes a point

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where it is no longer so manageable and
you have to find a way to integrate it

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into your operations and
your distribution center.

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So, in order to make it more efficient and
to continue growing sales, inventory is

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centralized in a distribution center and
the distribution and fulfillment of

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e-commerce orders is carried
out from the warehouse.

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Of course.

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And if it’s ok with you, we are going to
focus on that case because that is what is

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interesting and what we can get the most
out of, what many of those who are

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listening to us, and hopefully are
listening, are considering or are

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the issues that are most important.

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It’s like you mentioned, focusing on
someone who is either starting or thinking

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about starting their project, their
e-commerce journey, developing their

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platform, integrating that operation into
their day-to-day operations, or someone

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who has just started it and is still
tentative or thinking,

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looking for how to improve it.

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First if you want, let’s talk about what
are the factors to consider or that impact

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operations when it comes to integrating
e-commerce into your operations?

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Yes, okay.

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I can think of several factors,
but three main ones let’s say.

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Let’s start with the profile of the
shipments, that is, the profile of the

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orders, what size, what type of order it
is, the planning of these orders, how the

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planning is carried out to be able to
complete these orders

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correctly and the delivery.

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Those are the three ways that maybe in
which a different sales channel

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has the greatest impact.

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Here we are talking about companies that
already have another sales channel and

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decide to introduce e-commerce
to their operations.

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So those are, in my opinion, the
three that are most affected.

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Okay, and getting into each of those, you
talked about shipping profiles first,

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shipping profiles do you mean the sizes,
the type of shipment that’s being put

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together, how or what do they
have to consider in this factor?

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Okay, here is as you said, it is the size
of the shipment, the size of the order.

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Commonly, if we take examples, when you
order something on a website or through an

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electronic platform, the order will always
be much smaller than if a store asks

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you to stock the store with products.

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So, the size of the order
is drastically reduced.

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Here we are talking about
one to five order lines.

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When I say order lines, they are different
items that are included within the order.

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Then the sales are no longer in large
packages, but in internal units, either

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the SKUs as such or internal packages that
come inside the boxes

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or also known as cases.

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Then the internal units or
the SKUs as such are ordered.

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Of course, they’re not going to ask you
for the full box of all 30 deodorants.

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Well, who knows, maybe you
do, maybe you sweat a lot.

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And if we move onto the next point, I
think you were talking

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about order planning, right?

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Okay, yes.

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What does the planning refer to?

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Is it in the planning of the order as such
in the physical or is it talking

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about the systems or in what way?

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Well, there are several factors that need
to change when it comes to order planning.

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One of them is the functionality that
your WMS system has within the warehouse.

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One of the very common, very important
questions that always varies from client

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to client is “Oh, should I have one
location for my inventory for this sales

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channel and another separate location for
e-commerce?” And this really varies a lot

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from client to client, because if the
profile of the orders is very similar

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between the assortment to the stores,
because they are small stores that order

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small things, and the e-commerce ones,
that is, if the profile of the orders are

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very similar, you can have them in the
same location, so to speak, but commonly

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they are separated to have a
better management of these.

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And normally there is a tangible
difference between the type of orders, the

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profile of orders that customers have and
the stores, between e-commerce

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and other sales channels.

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So that’s one of the points, the
allocation of inventory to orders and

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the number of items that it requires.

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If you duplicate the positions for each
SKU that you have in different sales

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channels or if you keep only one position
and also the picking

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and how you execute it.

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So that’s usually different for e-commerce
than it is for other

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types of sales channels.

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Which is related to the first point,
which is the shipping profile, right?

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Because it’s different, because the
quantities and the sizes are different,

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the equipment that you’re
going to use is different.

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And when we talk about equipment and
picking, that’s the starting point of what

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you’re going to be interested
in in terms of the orders.

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The last part would be the order
fulfillment, which is also

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one of the points to consider.

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When you talk about last-mile delivery,
the normal or well, normally when someone

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is integrating it at the beginning, it’s
not always that they have

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their own fleet, right?
Yes, I agree.

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The most common thing is that because the
amount of volume is low, you’re still

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coupling different processes, you’re
integrating other complications or other

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levels of detail to different orders and
your operations are normally handled by

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other carriers, for
example, FedEx, UPS, DHL.

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Then they come to collect the orders from
your warehouse and distribute them to the

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end customer, which is like the last mile.

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So, this is important because it also
affects your labor planning, because there

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always has to be someone available to be
able to deliver these orders to the

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carriers, to be able to make sure that all
the orders are ready every time

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they are going to pick them up.

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Sometimes the carriers come once or twice
a day to pick them up at

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a distribution center.

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So, there are different
factors to consider.

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And it’s very important, the service
level offered to the customer.

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Normally when you order something online,
we don’t want to wait a week for it

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to arrive, the sooner the better.

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Usually, it takes 48 to 72
hours for the order to arrive.

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So that type of service offered to the
customer, that commitment made to them

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that “hey, your order will arrive
in the next 48 hours”, must be met.

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And to do that you need to plan what staff
you are going to have in charge of it,

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what carrier are you going to handle it
with, what service they are going to

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offer you, and many other factors.

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That goes hand in hand with having order
within your operations also to avoid

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errors, because then the order arrives, it
may arrive quickly, but did you get what

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you really ordered, is it the right SKU?

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And there are the other two considerations
that we talked about before, that well,

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you have the three main factors that we
mentioned and there are these other two

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special factors, which could be the peak
periods of demand and the reverse

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logistics when talking
about these returns.

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Okay, yes.

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Peak periods of demand is definitely
something that is very much impacted by

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e-commerce when we compare
it to other levels of sales.

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What I mean here is that if we focus on
the end of the year, there are many

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important dates, there is Thanksgiving,
Christmas, New Year’s Eve, there are

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visits, there are trips, many people take
vacations, go to see their families, which

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for example is my case, now
I am going back to Honduras.

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So here a lot of the demand is
focused on these peak periods, right?

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So, as they focus on these peak periods,
this generates a lot of orders that can

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lead to errors that then lead to possible
refunds and also affects

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the operating schedules.

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We want to make sure that we can meet the
demand for these orders, so you need more

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employees at that time or a more
robust operation at that time.

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And you also sometimes need to adjust
the hours of operation a little bit.

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If you want to supply the customer who
normally works Monday through Friday,

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what about Saturday and Sunday?

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They have time, they’re on the phone, “ah,
I’m going to go in and buy this shirt that

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I saw during the week or this
gift for such-and-such relative.”

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Then the orders pile up.

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Then the weekend is the ideal time for
customers, for those orders to be fulfill.

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And going back to the services we offer
you, the 48 to 72 h service level.

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If it’s ordered on a Saturday, that order
has to be definitely going

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out by Monday at the latest.

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So it also affects the operation
schedules a little bit.

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These peak demand periods
affect the operation schedule.

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And the other thing I was telling you is
that many orders can have either, problems

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when it comes to carrying out the order,
or an error when it comes to filling

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the order that carries the returns.

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And also, maybe it is not the fault of the
assortment of the order as such,

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but the customer’s preferences.

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Sometimes they get goods that either are
not what they ordered or not what they

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expected or when they see it online it’s
not really what they thought

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they were going to get, right?

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I mean, the size, the weight, how it
looked, the quality,

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lots and lots of things.

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I’m sure we’ve all gone
through that thing where…

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It does not fit as well
as the model in the image.

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Exactly.

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In a store, you size it and you say “oh,
yes, it shows off my attributes

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and hides my belly”, no.

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Sometimes when you see it online you say,
“ah, it looks nice” and you put it on

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and say, “no, I don’t like it very much”.

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So you have to have that reverse logistics
process, to be able to facilitate the

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customers, return the merchandise and not
only facilitate the customers, but also

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make sure it’s a simple and
optimal process for operations.

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Whether it’s returned, if they have
stores, specifically returned to the

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nearest stores and then do a pickup of
that back to the distribution center or

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returned directly to
the distribution center.

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And this really varies from client
to client, from process to process.

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So, there’s not like a
specific rule, but it varies.

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And all this is also reflected in the
operation, but also reflected in the

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systems that they manage and that have
sufficient support, or that are solid

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enough to be able to support it
and record it in the correct way.

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The same as you were saying, in those peak
periods, not only is it high periods in

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the short time, but also in the seasonal
periods that, well, I cannot have

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everything in the same aisle, it is going
to be in this peak period when the cold

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starts let’s say, or something like that,
that you are going to have a forklift in

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the aisle and you also have three
employees picking for the e-commerce

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orders and there the traffic
is going to be worse.

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But well, then, if we collect everything
we said now and try to wrap it

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up in a final, concise package.

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We could say that e-commerce, the world of
e-commerce, is becoming more and more

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necessary for companies to include it as a
sales channel, to adopt it, to

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integrate it into their operations.

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Fewer and fewer companies can operate
without having an electronic

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presence, without having that offer.

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They are obviously losing market share,
but all this must be adopted in an

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efficient way, in a sophisticated way so
that the sales channel or the sales line

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that is included can be integrated without
major complications in their day-to-day

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operations, either with their physical
operations or their digital operations,

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with the technologies, with
the equipment they handle.

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I think you mentioned equipment, because
it is not going to be the same equipment

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that I am handling for my large
orders as for my small orders, right?

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Yes, I agree.

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That’s a point that we can talk a little
bit more about, because it’s not only the

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equipment, but also what dictates the
equipment is the profile of the

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order and the size of the order.

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So, if it commonly happens, and as I said,
it varies from case to case, but it

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commonly happens that the equipment that
is used to pick an e-commerce order is

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different than the equipment that is used
to pick a larger order, whether it is for

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a store or for a
distributor of the product.

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So usually, the equipment
that’s used varies a little bit.

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Let’s say e-commerce can sometimes be done
by carrying a cart or a pick cart and you

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use it to pick multiple orders at the same
time and it’s really all

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centered around the same thing.

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We want to look at the most
efficient way to carry orders.

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So e-commerce, because it’s such small
volumes, you commonly fulfill

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multiple orders at a time.

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The employees that do the order
fulfillment, they fill multiple orders at

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a time and the idea here is to make it
more efficient and minimize unnecessary

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walking time for our client.

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I mean, we don’t want to go 10 times
to the same location for that product.

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If we know that 10 orders, this is the
product that sells the most in e-commerce,

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we know that 10 orders are going to carry
that product, then we want to carry those

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10 orders at the same time, maybe 10 is a
lot that we carry five orders at the same

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time and grab that product, and if the
products are repeated a lot, then we are

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already close, we don’t have to go back
and forth, for the next order,

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to come and go again, and again.

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It’s inefficient and we are
looking to optimize this.

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So it is really with the employee
who is doing the picking.

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Exactly.

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And as you mentioned before, there are
fewer and fewer companies that can

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compete without offering e-commerce.

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I mean, people sometimes don’t want to
leave their house, they want to pick up

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their phone and buy from their phone
and have it delivered to their door.

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So, this is something that keeps growing
and growing and it is a factor that in the

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future I doubt that demand will decrease,
if anything it will continue to increase.

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So, final thoughts would be plan, plan,
plan, plan and then plan some more, which

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is not only in the sense of how my
platform is going to work, if I’m going to

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use something that’s already built, I’m
going to build it on top of another

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00:21:54,065 –> 00:21:59,800
system, or if it’s something that I’m
going to do from scratch because of the

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type of orders and the type of operations
that I manage, and what I have to look at

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in the planning, what is the fundamental
thing and what do you have

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to take the most time for?

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00:22:12,685 –> 00:22:18,090
For you, what would be the thing that
you better make sure that you do?

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00:22:18,120 –> 00:22:23,420
Well, design the plan and keep optimizing
it until you reach something ideal.

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E-commerce is usually different from other
sales channels, so don’t underestimate the

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difference, because that difference is
going to be reflected in the operations

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00:22:34,865 –> 00:22:40,000
and if you don’t make the right changes to
the operations, it becomes very

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inefficient to run the
e-commerce operation.

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So, that is very, very important.

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Coordinate with other departments.

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00:22:47,885 –> 00:22:53,120
Just as you offer certain specific
products on the e-commerce platform, you

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00:22:53,145 –> 00:22:58,640
have to make sure that the operations
team, the distribution team and the sales

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00:22:58,665 –> 00:23:04,400
team, for example, are aligned, because if
they are not connected and they are not

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00:23:04,425 –> 00:23:09,560
talking to each other, they don’t
understand their needs and what they are

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00:23:09,585 –> 00:23:14,500
offering, there is a disconnect and
that can lead to a lot of problems.

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And third, and in my opinion one of the
most important, is to define the needs and

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expectations of the customer, because
really the planning and how the

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00:23:25,105 –> 00:23:30,320
integration of e-commerce into their
operations is carried out is what will

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00:23:30,345 –> 00:23:34,260
define whether it is going
to be a success or a failure.

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00:23:34,285 –> 00:23:39,240
So, if the customer’s needs and
expectations are not defined, it is not

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possible to know the infrastructural and
technological changes that need to be

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carried out so that this sales
channel can be executed efficiently.

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So, in my opinion, these are the most
important points to

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consider on a large scale.

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00:23:56,285 –> 00:24:01,400
Which is exactly what we also focus on for
these projects where we have to

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support a client in the integration.

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That is what we have seen a lot.

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00:24:06,360 –> 00:24:11,120
But well, I think we can end it there
Anuar, thank you very much for

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00:24:11,145 –> 00:24:13,090
your time and your comments.

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00:24:13,120 –> 00:24:18,160
Hopefully whoever has listened has found
it useful as points to consider

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00:24:18,185 –> 00:24:20,090
or as general knowledge.

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00:24:20,120 –> 00:24:25,660
And if there is anything else, we are
here for any comments and to serve you.

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00:24:25,685 –> 00:24:27,180
Excellent, we’ll stay tuned.

335
00:24:27,205 –> 00:24:32,780
Always a pleasure, Jorge, have a good
weekend and good luck finding the gift.

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00:24:32,805 –> 00:24:34,960
Ok, see you later.

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00:24:50,800 –> 00:24:57,640
When you are talking about decreasing
optimizing travel time, you said

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00:24:57,665 –> 00:25:01,900
the customer’s customer, didn’t you?

339
00:25:01,925 –> 00:25:09,000
Yes, the truth is that, to see it
in this way, I think it went well.

340
00:25:09,600 –> 00:25:11,140
You know what the good thing is, güey?

341
00:25:11,165 –> 00:25:14,040
That the two of us can easily talk about
any kind of bullshit without

342
00:25:14,065 –> 00:25:15,570
knowing anything for a long time.

343
00:25:15,600 –> 00:25:17,050
Yes, yes, yes, yes, yes.

344
00:25:17,080 –> 00:25:20,000
We realize that one of
us did something stupid.