Omnichannel Specialist MediaShop Moves Their Supply Chain Management From Reactive To Proactive Approach

Efficient supply chain management plays a key role in MediaShop Group's success in the highly competitive omnichannel business. The industry leader was able to optimise its last mile processes and significantly advance the digitalisation of its supply chain by working with Flexport.

Overview

The MediaShop group of companies sees shopping as an experience, and has followed that philosophy to develop its business into Central Europe's largest omni-channel retailer within just two decades. Online consumers across the 12 markets MediaShop operates will be aware of the Austrian provider's sales-boosting infomercials across multiple shopping channels. The MediaShop Group organises its sales via different sales pillars - from DRTV and e-commerce to social media, wholesale, its own shops and direct marketing. An important key factor for the company's success is a supply chain that functions reliably up to the last mile.

Looking Into The Crystal Ball: Just-In-Time Perfection As The Basis For Success

Reliable and perfectly timed delivery of its goods is one of the most important requirements that Mediashop has to meet. Efficient management of the supply chain plays a key role in this. Patrick Gehrer, Managing Director and Head of Supply Chain Management at MediaShop AG au, explains the logistical tension: "As an omnichannel retailer, we live in a kind of glass ball. In order to operate successfully in the market, we have to predict as accurately as possible what demand will develop on which channel and what quantities we need at what time." For Gehrer, goods must flow effectively. If they don’t get to where they need to be on time, the company could face a possible drop in turnover. Delayed deliveries have a direct impact on the end customer business: from changed resale behaviour to bad customer reviews. Success in the stationary B2B business also depends on a reliable supply chain, as wholesale customers can claim high contractual penalties for late shipments of goods.

Lack of Visibility Preventing Further Development

A large part of the articles that MediaShop sells through its various sales channels are manufactured in China or Indonesia, with last-mile delivery mainly via Munich in recent years. In mid-2019, dissatisfaction with the quality of handling by the logistics partner at the time was steadily increasing at Mediashop. There was a lack of visibility at all levels - both on the status of orders and on SKU information for items already in transit. When problems occurred, there was neither proactive communication nor a structured approach to resolution. In addition, delays on the often crucial last mile became more frequent: Due to the high volume of traffic, the 90-kilometre road route between the Munich rail terminal and the MediaShop warehouse in Augsburg was unpredictable. Delivery dates could no longer be reliably met.

As Managing Director Gehrer puts it, MediaShop was operating its logistics blind at the time: "The risks in a just-in-time-focused supply chain are great. They can only be controlled through a high level of transparency - the more transparent the supply chain processes are, the earlier we can take countermeasures in the event of problems. With its digital approach, Flexport was one step ahead here - and it was precisely this digital core competence that tipped the scales for us to enter into a new partnership. ,"We realised very quickly," Gehrer continues, "that Flexport's digital approach offered us exactly the information availability we needed to take us to the next level as a company."

Greater Flexibility Through a Smart Multi-Carrier Approach

After beating three other competitors with its technological advantage in the test phase, the digital logistics provider has been acting as MediaShop’s main logistics partner since October 2019. Flexport handles all shipments that MediaShop imports on the FEWB trade route by sea freight in an FCL/LCL mix as well as by rail and air freight from the Asian region. With optimised rail routing, Flexport quickly eliminated one of the main causes of the low punctuality rate for the final delivery to the warehouse: delayed shipments. Previously, both the shipment of the containers from Asia and their onward transport after arrival in the Port of Hamburg were organised by a single shipping company under a "carrier's haulage" agreement.

The Flexport team increased the flexibility of this on-carriage process so that today, containers are transported to the nearby central warehouse via different carrier partners and different terminals, including via the terminal railway station in Augsburg. Failure-prone truck transport was then successfully shifted to rail and transit times shortened. The introduction of this more flexible multi-carrier system, removed the dependence on a single shipping company partner, in turn significantly increasing delivery reliability.

Fast and Transparent Communication Via The Platform

All shipment communication is documented centrally and kept up-to-date on the Flexport platform, which is also accessible at any time by a diverse set of company departments. Gehrer explains: "We no longer have to enter this information again in one of our existing MediaShop systems. We can pull individual reports from the platform as needed and are immediately alerted to any deviations from the standard process in the supply chain. This allows us to take action at a very early stage." In the meantime, the MediaShop team regularly uses more than 20 personalized report views to get a holistic overview of the current status of their consignments in transit.

Flexport's Technological Edge Quickly Proves Its Worth

The use of digital technologies, which for the first time provides the e-commerce specialist with a truly holistic data insight, is quickly proving its worth, as Gehrer confirms: "We initially had some reservations for putting our supply chain in the hands of such a young company that simply hadn't been in the market as long as other players. But we really wanted to benefit from the advantages of the Flexport platform and use this technological edge to further digitalise our supply chain. And in retrospect, I can say that without Flexport, we probably wouldn't have managed the challenging phase before Chinese New Year, and subsequent disruption from Coronavirus, so well with another provider, facing up to a fight for every container slot. Flexport actually managed to book enough containers to ship all our items on time, even before the mass global disruption of supply chains. This also earned us praise within the company itself, consistently meeting the increased demand from our customers during the pandemic." Year-on-year, the volume moved with Flexport increased from 1,800 TEUs in 2020 to 2,800 TEUs as of the third quarter of 2021.

Digitalisation Boost For Planning and Forecasting

The detailed process data that MediaShop now has at its disposal has quickly become a critical asset for the company. The information on which all supply chain decisions are based has fundamentally expanded, for example, the company has access to permanent and complete cost transparency, which did not exist in the past. The area of planning and forecasting also received a significant boost through the digitalisation of supply chain management and became increasingly important for the organisation, particularly as an omnichannel expert operating in the highly volatile market situation of recent months. "We were able to free ourselves from previous reactive action patterns thanks to the information advantage provided via Flexport. We are now in a position to act with real foresight. The increased transparency makes us more flexible and we benefit from the comprehensive availability of information at many levels in the company, even beyond logistics. Today we have our supply chain reliably under control across time and country borders," Gehrer concludes.