The Recipe of Success in Omnichannel Retailing Lies in Your Warehouse
Cut-throat competition is the new reality of retail today. To compete with endless aisles, to combat digital disruption and to meet the needs of substantially increasing demanding consumers, retailers need to enable smooth, accurate and timely flow of goods to their store and to their consumers.
Though retailers have adapted to the pressures of competition and omnichannel to some extent. With more choices available at fingertips, consumers demand personalized service, flexibility and wider choices, no matter how they shop. They want their merchandise to be ordered however they want, have it delivered wherever and whenever they want – using myriad of channels encompassing physical stores, websites, web apps on smartphone and tablets, social networks and more. This omnichannel marketplace, combined with dramatically changing trends, diversified return processes and shifting seasonal demands with a razor-thin profit margins – are swiftly changing how retailers are approaching warehouse operations to ultimately provide a superior customer experience.
From order tracking to execution to broader visibility, a WMS is the backbone any omnichannel retail operations.
The first and foremost step to omni-channel retailing in warehousing is integrating all processes under one warehouse management system (WMS) that serves all channels. Short while ago, a leading European sports retailer ‘Decathlon’ refurbished all its warehouses, so they can be utilized for both ecommerce and brick-n-mortar operations. The primary objective is to provide timely delivery of goods to their customers. Earlier they used to have one store warehouse in one region and one warehouse located remotely for e-commerce stock. Now, store and online order stock can be collected from all Decathlon warehouses and sent to any store or delivered at home to fulfill a request, thereby improving the overall company performance while keeping the customers happy. While Decathlon’s online turnover in France is still only approximately 3% of their annual revenue, they saw a 35% growth in online purchases in 2015.
Today, the delivery time of a product is not measured in days, but in hours. Any delay can lead to customer dissatisfaction and significantly affects brand image and consumer trust. However, reality shows that coordinating a logistics operation that can comply in a timely manner with purchases made by consumers in different geographical locations through different channels, is not so easy. In the new warehouse management system, any combination of purchase channel (physical store/online), delivery location (home, store or external delivery points) and inventory (DC/store) must be allowed, in addition to the possibility of reverse logistics being accepted at any company location. Thus, new processes are needed and more importantly, all these flows should work in an integrated manner, with accuracy, speed and operational flexibility. This complexity is even greater when considering retail aspects such as discounts on different channels, on-demand product sales or new aspects strengthened by e-commerce, like the use of its platform as a marketplace and use of company logistics processes for distribution of third-party products. In the past, logistics operations were unique for each channel, thus, there were dedicated DCs or total process division inside the same location, while in the new realm, it makes no sense to divide these activities. This leads to a new role of WMS in the omni-channel context.
WMS should provide smart and integrated management of resources in a hybrid operation to reduce costs, improve service levels and meet customer demands.
WMS integration with store’s POS, ERP, OMS and other retail systems facilitates inventory visibility, traceability, and most importantly accuracy. Stock control and real-time inventory management within the organization is a need of the hour, so WMS must provide integration for online inventory update at receiving and shipping, as well as physical inventory blocking and stock rotation, with a unified inventory management system for distribution centers (DC’s) and stores. Additionally, integration with OMS from sales channels allow total inventory visibility across the supply chain, assigning different orders/requests to inventories at DC’s and stores to seek reducing costs and improving service levels. From a business perspective, having more visible inventory obviously reduces search times and increases productivity.
Picking labor is another extremely significant factor. In fact, a warehouse’s largest operating expense is labor cost. According to the International Logistics and Manufacturing magazine 2017, it can actually consume more than 70% of the average company’s manufacturing budget. Running an inefficient warehouse can adversely affect the operation’s overall costs. The process can be facilitated, and bottlenecks reduced, by automating and streamlining operations. Productivity of resources may be increased by storing more efficiently, allowing for automated information exchanges and directed tasks, reducing the number of handling steps needed in activities, getting rid of paper-based tasks, and implementing multiple order processing. In omni-channel retailing, the order can be automatically transferred from the central order management system through WMS, to the employee’s device. Therefore, it is practically “unseen” even by the warehouse management — the employee can start working on it immediately. The intelligent system would show the most efficient way to pick and pack the order, print necessary documents, and suggest logistics.
But this is just the tip of the iceberg! As the retail landscape continues to grow at such a phenomenal rate, WMS emerges as a key driver of omnichannel fulfilment and thus, indispensable in today and tomorrow’s retail world.
It’s time for you to evaluate your WMS and make it a differentiator. Call us @ 080-41625940 to help you do so.
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