It Takes Software to Thrive in an Omni-Channel World. Track 4 Session 2

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1 It Takes Software to Thrive in an Omni-Channel World Track 4 Session 2

2 Eric Lamphier Senior Director, Product Management Manhattan Associates

3 Abstract Regardless of your spot in the chain, there is a very good chance that channel expansion complexities have been introduced into your inventory management, labor management, order fulfillment, and/or store operations. In this tutorial, we will focus on the latest software being implemented to handle the peculiarities of modern omni-channel distribution. We will discuss the specific functionality that drives productivity and accuracy while gaining inventory leverage and service levels. Takeaways will include the key elements to be mindful of when architecting a successful omni-channel distribution operation. 3

4 Agenda Omni-Channel World Challenges Recommendations Key Takeaways Conference Cloud Questions 4

5 Omni (Channel World) Definitions: All In all ways In all places Everywhere Without limits Channel #2 Channel #1 Channel #3 Shipper / Seller 5

6 Consumer Mobile Devices are a Significant Contributor to E-Commerce Growth dataset: U.S. E-Commerce data from over 100 retailers, 70 million consumers, and $10B in transaction revenue Source: Custora s E-Commerce Pulse Mobile Report 6

7 What does Omni-Channel mean for Distribution? It depends mainly on two important factors: - Your industry / vertical? - Maturity of your channels? 7

8 Omni-Channel Maturity Curve Outsource the New Channel (3PL) & Monitor Growth Merge, but Keep Separate Inventory & Systems, Shared Facility Dedicated Facilities for Each Channel (Retail, Direct, etc) Shared Inventory, Single System, & Common Facility 8

9 Omni Supply AND Demand All points of demand is the easier part All points of supply is the more challenging and more (financially) rewarding part For example: - Fulfillment from stores (multiple flavors) - Drop shipments from suppliers - Selective order routing to the most appropriate distribution point 9

10 Omni Supply AND Demand (cont.) The key is a single view of ALL Supply (Inventory) in the network & ALL Demand (Orders) in the network We recommend a Distributed Order Management (DOM) system as the central hub for tracking & decision making 10

11 So Let s Go Back To: What Does it Mean for Distribution? Our assumptions for today: 1. We will focus on a more mature Omni-channel distribution operation 2. Omni-channel orders are i)_captured, ii)_funneled into a single Order Management system, iii)_evaluated, and iv)_dispositioned based on company objectives 3. Orders are placed into distribution operations for execution 11

12 Omni-Channel Impacts on Warehouse Operations The Basics 1. Receiving - Prioritization - Product Disposition: Flow or Storage? 2. Order Fulfillment - Techniques & Options - Product Handling / Processing 3. Shipping Receiving Fulfillment Shipping 12

13 Omni-Channel Challenges: Receiving Prioritization & General Processing - Inbound shipments will contain inventory required to fulfill orders across all channels Which shipments to receive first? - Receiving SOPs will become more complex and multi-layered in order to serve the subsequent processing requirements How to disposition, sort, and label goods to expedite immediate processing for known x-channel demands? 13

14 Omni-Channel Challenges: Receiving (cont.) Select Channels are best serviced via immediate product flow to outbound processing areas - For example: Retail Store Orders, Lower Echelon Replenishment Orders, and Backorders While other channels are best serviced by optimal product placement (storage) in the warehouse for subsequent retrieval & order fulfillment - What inventory should be routed to channel-specific processing areas based on known demand? 14

15 Omni-Channel Challenges: Order Fulfillment Strategic order selection, product allocation, and efficient task management across channels - Should customer/order priorities be used for more automated & dynamic decision making? Handling unit of measure (UOM), product inspection, and order continuity requirements vary widely based on channel - Which order fulfillment techniques should be used to gain efficiencies for each channel? 15

16 Omni-Channel Challenges: Shipping Selecting the appropriate mode(s) & carriers, including premium services to guarantee service levels, is a known challenge for multichannel shippers The more significant challenge is to unlock the potential that lies in combining x-channel shipments - How to leverage existing assets, routes/shipments, and/or carrier relationships to deliver additional x- channel orders? 16

17 Recommendations: Receiving Deploy a Distributed Order Management solution! - Maintain a single view of ALL supply and demand Implement a combination of Yard Management & Appointment Scheduling! - Integrated with your WMS - Discrete tracking of incoming & on-yard inventory - Prioritize receipts based on known x-channel demand (orders in the WMS) 17

18 Recommendations: Receiving (cont.) Link Receiving directly to Shipping! - Develop an in-line disposition and sorting methodology as part of the receiving process - Allocate discrete inventory to specific channel requirements when demand exists - Product dispositioned to stores and/or downstream nodes should be labeled and staged (or loaded) immediately - Inventory that is not appropriate for flow through allocation should be inspected, re-packaged (as required: for streamlined unit picking), and placed in storage for near-term x-channel demand 18

19 Recommendations: Order Fulfillment Think Channel-specific! Match the best processes to the channel requirements for a Retail Channel: - Consider allocating product as receiving occurs for specific items, routes, and promotional seasonal periods. Let it flow! - Leverage purpose-built capabilities like Put-to-Store functionality for extreme efficiency and superior flexibility This solution combines very efficient inventory retrieval along with unique exception handling when shipping product to retail stores 19

20 Recommendations: Order Fulfillment (cont.) Think Channel-specific! Match the best processes to the channel requirements for a Direct Channel: - Consider an Order Streaming approach that autoallocates a high percentage of the orders for more rapid processing. (No more waving ) - Evaluate when discrete picking & replenishment tasks should be created, what the task boundaries should be, and how tasks should be assigned and/or shared Research is revealing that more real-time task creation paired with automated release and assignment has real advantages! - Study the advantages of automation technologies like unit sortation as well as high density pick cart-based fulfillment 20

21 Recommendations: Shipping Use Routing & Load Planning to build better Shipments! For example: - Combine direct orders, to be picked-up in a store, on existing store routes/shipments - Aggregate direct orders and wholesale orders to create a multi-stop LTL or TL shipment that includes a parcel pool point for drop-off and local processing - Use existing equipment and store routes to complete warehouse transfers that complete x- channel orders 21

22 Key Takeaways All knowing order management solutions are being refined & implemented successfully to enable sophisticated omni-channel strategies Omni-Channel orders are being sourced from an increasing number of inventory locations - With the aim of increasing inventory leverage, improving margins, reducing supply chain costs, and improving customer satisfaction 22

23 Key Takeaways (cont.) Yard Management & Appointment Scheduling capabilities help distribution operations make better decisions in terms of receiving inbound materials Best practices include dispositioning and/or allocating inventory to known omni-channel demand as quickly as possible In the warehouse, inventory can be mixed and shared across channels thanks to smarter WMS capabilities 23

24 Key Takeaways (cont.) Use channel-specific order fulfillment logic like Put-to-Store for retail channel orders or Multi- Order Pick Cart Processing for direct channel orders Build x-channel shipments to take advantage of existing capacity thereby reducing shipping expenses 24

25 Conference Cloud Additional Resources RSR Benchmark report: - Omni-Channel Fulfillment and the Future of Retail Supply Chain Logistics Management article: - Warehouse and Distribution Center Management: Omnichannel distribution Moving at the speed of now RIS News, Roadmap series: - Optimize Order Management for Omnichannel Success Forbes article: - Omni-channel Fulfillment Is The Key Driver Of Growth In The Warehouse Management Market Supply Chain 247 article: - WCS Drives Higher Profitability through Synchronized Pick, Pack & Ship Omni-Channel Fulfillment 25

26 Questions 26

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