There’s a new taskmaster transforming supply chain operations, and it’s the digitally-empowered consumer. This new boss calls the shots, determining what he wants, how he wants it, and when he gets it. And, as physical and digital commerce has converged into a buy-deliver-return anywhere shopping model to please the boss, businesses need to be ready to meet demand, transforming their supply chains to a customer-centric focus.
The need to meet consumer demand for convenience has led retailers to offer both ship-to-store and pickup-in-store options. Many brick-and-mortar retailers are also using their stores as virtual distribution centers, for faster delivery to customers. These changes call for increased coordination and communication with suppliers and tighter control over inbound shipping. These omni-channel retailers will need to use technology wisely for better forecasting of inventory needs, both online and in-store, to prevent stock-outs that disappoint consumers and cost sales. In a nutshell, consumer-driven omni-channel operations are much more complex than when ecommerce and store operations were separate.
What are the implications for supply chain management?
Supply Chain Visibility
Companies will have to get serious about establishing end-to-end supply chain visibility, and its important to extend that visibility to what the customer experiences. Visibility makes it easier to keep customers informed of the progress of their order, which is an important aspect of delivering the right experience.When customers place online orders for pickup, for example, they need assurance the items will be available. If the item is out of stock, can the customer pick it up at another store, or can you deliver it to their door? To make these kinds of decisions your ecommerce system should have access to supply chain execution cost and constraint information.
When physical and digital channels combine, distribution centers will experience big change, as they will no longer be just handling cases or pallet picking for store replenishment. Add to that large volumes of small order picking, in addition to cartonization, parcel manifesting, and parcel shipping. Other considerations include adding automation equipment, and layout changes.
Item-picking in the DC is more labor intensive and requires different skills and training than case and pallet picking. Labor management systems are needed for accuracy and efficiency. In stores, order fulfillment is a new whole new game, requiring new skills, different scheduling, task management, and training.
These are just some of the ways today’s customer is transforming supply chain operations. But companies that achieve end-to-end visibility, develop efficient omni-channel fulfillment, and transform their stores will be the winners.
Image Credit: Ktboo92 (Own work) [CC BY-SA 4.0 ], via Wikimedia Commons. Click on image to view source.
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