Logistical operations for omni-channel retailers

It’s important to remember that the seamless experience for which omni-channels are known, has shaped the purchasing experience of a new generation of highly demanding customers. This new generation expect their products to be delivered whenever and wherever they desire. To help meet these expectations it is vital that warehousing and distribution operations of an omni-channel supply chain are well aligned.

Two aspects of the warehousing and distribution operations in an omni-channel retailer ensure that the retailer (or product supplier) can deliver its promises, but also meet the tough challenges related to product returns, which is costly. DHL, a leading global logistics service provider, describes two points for success:

1. A high-performing, cost-effective omni-channel fulfillment network capable of handling smaller quantities in an ever decreasing time-frame. This implies leveraging warehouses as showrooms, retail outlets as distribution and pick-up points,
2. A convenient and flexible delivery system. Again, this would mean utilising stores as fulfilment centres, or micro-warehouses, as DHL call it.

Retail Systems Research (RSR) supports DHL’s views with some facts: Approximately 63% of ‘winners’ (i.e. high-performing order fulfillment companies) claimed they have access to inventory across the entire enterprise, while only 25% of ‘laggards’ (i.e., low-performing order fulfillment companies) were in the same position. Poor visibility “prevented laggards from fulfilling non-store customer orders from store inventory.”

We can see that leading retailers now use converged inventories to optimise enterprise-wide stock levels while maximising availability across channels. Sharing inventory has been mentioned as the ideal strategy in the next three to five years. Read DHL’s views on ‘omni-channel Logistics’, in the interesting links below.

Activity

Refer to the news article “Dark stores’: Coles trials shops with no customers” (Sydney Morning Herald, 2016). Do you think that Coles’ dark store is an effective strategy to fulfil online orders?

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