Omni-Channel Fulfillment in a Changing Retail World Presented by: Dave Lodwig Sponsored by: System Manager 2014 MHI Copyright claimed as to audiovisual works of seminar sessions and sound recordings of seminar sessions. All rights reserved.
What You Will Learn In omni-channel fulfillment, all the resources of the supply chain are focused on transparently serving a single shopper who has placed a single order. Traditional warehouses are not designed to handle the omni-channel consumer s orders. To meet the challenges of omnichannel fulfillment, retailers must redesign their distribution processes and add automation equipment to their DCs. Key Takeaways * How to meet the challenges of omni-channel fulfillment * Automation needed to meet omni-channel fulfillment requirements
Agenda What is Omni Channel distribution and how is it different from traditional retail distribution? Order types and shipping channels What do you need to do Omni Channel efficiently?
Omni Channel Retailing Omni-Channel Retailing is the evolution of multi-channel retailing, but is concentrated more on a seamless approach to the consumer experience through all available shopping channels, i.e. mobile internet devices, computers, bricksand-mortar, television, radio, direct mail, catalog and so on.
Retail Supply Chain Evolution Single Multi Cross Omni Seamless? 1970 s-1990 s Retail Orders
Retail Supply Chain Evolution Single Multi Cross Omni Seamless? 1990 s - 2010
Retail Supply Chain Evolution Single Multi Cross Omni Seamless? 2010-2012
Retail Supply Chain Evolution Single Multi Cross Omni Seamless? 2010-2012
Internet users per 100 Retail Supply Chain Evolution Complexity 69 78 51 11 31 1995 2000 2005 2010 2015
Omni Channel Impacts on Retail Distribution Pick any type of order from one inventory and ship it through any channel Order Types Retail Consumer Wholesale Shipping Channels Retail (TL, LTL, and Parcel) Consumer (Parcel) Wholesale (TL, LTL, or customer s carrier)
Omni Channel Impacts on Retail Distribution Order Types Retail Low Medium no. of orders Medium High no. of lines/order Low Medium no. of units/line Consumer Medium High no. of orders Low no. of lines/order Low no. of units/line Wholesale Low Medium no. of orders High no. of lines/order High no. of units/line Shipping Channels Retail Parcel LTL Truck load Consumer Parcel Wholesale LTL Truck load Pick up
The Co$t Of The Complexity Omni-channel distribution creates Omni-Processes Complexity creates more challenges
Key Performance Issues Service levels and on-time shipment Orders received by 12 PM or later shipped same day Inventory accuracy and order fill rate 98+% accuracy Fill rates need to be as high as inventory Order accuracy 99+% every time
Operational Changes Inventory/Customer visibility Real time inventory: Do you have it in stock? Location of inventory: Where do you have it? When can the customer get the product? Service levels Reduced time to ship orders Easy returns Order Picking & Packing Less time to complete orders 100% accuracy every time Forces smaller batches More Value Added Services Shipping Provide more real time info Carrier management
Visibility Whenever Wherever Whatever I want it and I want it now! Where is my stuff? Information systems are omni-channel: Inventory Distribution center inventory Retail store inventory (need to react to ecommerce orders real time) Order completion time When will the order be completed (sometimes time is dictated by consumer) Order completion time Delivery Pick up time and date Carrier tracking information
Inventory Your inventory in all channels must be merged into one Distribution center and retail inventories are not mutually exclusive anymore Is it available on-line? What retail stores have the product closest to the consumer Retailers can leverage their retail store presence and inventory You have to be 100% accurate or consumer will be lost If you manage the inventory right and communicate with the consumer you may be able to hold less inventory
Service Levels Today s consumers want product from any one of your channels as fast as possible The amount of time that you have to pick, pack, and ship an order will only become less over time Today you only have approximately 4 hours to pick, pack, and ship an order Same day delivery will shorten the window more You have more channels to send it through Returns Consumer orders can be sent to your or other retail locations Today they can be sent via parcel carriers, but cost will eventually force these orders to be merged with retail store shipments Need to be dealt with quickly and efficiently Consumer wants credit and or new merchandise right away Resellable product should be returned to stock ASAP
Order Picking Less time to complete orders Can force smaller batches/waves Makes batching more difficult and time consuming (relatively) 100% accuracy every time Errors are inevitable, so you need to account for and manage them efficiently Forces smaller batches Waveless or dynamic wave transition Could a manual operation be efficient enough? Packing Personalization and gift wrap Brand specific boxes and collateral
Shipping Order Picking & Packing Less time to complete orders 100% accuracy every time Forces smaller batches More Value Added Services Shipping Provide more real time info Shipment time stamp Specific carrier and tracking info Multiple accounts (drop shipping with a another company s carrier account) More carriers UPS, FedEx+, USPS, USPS servicers, Regional carriers and couriers Cost reduction Pressure to reduce costs due to free shipping Same day shipping
Automation Efficiencies Inventory Warehouse Control System provides real time up dates Heartbeat of the automated systems: Manages all the data downloaded from Host/WMS Runs all the people and automation to fulfill orders It can provide more granular detail during the fulfillment process The information needs to be given to the Host/WMS for determining consumer information Automated storage and retrieval allows faster access to inventory Service Levels Shorten time to inventory Shorter order cycle times can help shorten response times Benefits smaller batch environments Easier to prioritize orders and send the most important to the front of the line No physical management required
Automation Efficiencies Order Picking Shortens order cycle times More accurate Frees up labor for manual tasks Easier to manage Can be integrated with packing automation to create large labor savings Shipping More flexible and productive Handles the complexities of 3 rd party billing easily
Order Picking Automation Increase the speed of discrete order picking RF, Voice, Pick-To-Light, Batch picking Pick the units for many orders at one time Requires a second step to sort them out into discrete orders (consolidation) The secondary sort can done manually (assisted with automation) or with a unit sorter Put System Used when many orders contain the same SKU(s) Feed the system with full cases or pallets
Order Picking Automation Batch Picking Areas Fast Movers Medium Movers Slow Movers Consolidation Consolidation Consolidation Manual Packing Semi- Automated Packing Automated Packing
Shipping Automation Productive Easily handles 3,000 5,000 packages per hour Handles almost any type of product Cartons, bags, envelopes Shipping software integration Fully automate the rate shopping and manifesting function
Warehouse Control System Move Automation Link Operation Business Receive Put-away Replen Locate Pick Pack Ship Route Sort Balance Optimize Link Connect Exchange Sync Plan Predict Manage Control Dashboard Report Statistics
For More Information: Speaker email: dlodwig@whsystems.com Website: www.whsystems.com Or visit MODEX 2014 Booth 4726