For most companies selling online, the only certainty is uncertainty. Many simply don’t know what products – or volume of products – they will be handling next year, let alone three or four years from now. Forecasting is one of their most difficult challenges, as highlighted in the 2019 MHI Annual Industry Report by Deloitte.
This also creates a number of challenges when it comes to ‘peak management’, especially for companies supplying retailers, wholesalers and e-commerce customers. To capitalise on sustained market growth, omnichannel companies will need to make significant investments to manage their logistics flows more effectively.
All traditional brick and mortar retailers involved in fashion and general merchandise have also now moved into the e-commerce sector. At some point, they must decide how to set up a warehousing and supply chain for their retail and e-commerce channels.
By having two dedicated processes, companies would reap the benefits of having systems individually optimised by throughput and order profile per channel. Yet, they would miss out on the synergistic effects of using a single stock.
Many omnichannel retailers would prefer to supply items to both their retail and e-commerce customers from a single stock, seamlessly factoring in peak times throughout the year that are different for each of their sales channels.
The traditional solution to peak management has been manual picking, with the standard approach being to introduce more labour on a temporary basis. However, the reality is that in today’s tough labour market, manual solutions are no longer sustainable.
To meet these challenges, omnichannel companies should think in terms of ‘scenario planning’. At Vanderlande, we engage with our customers on a range of criteria relevant to their business activities. These include growth rates, ‘Black Fridays’, SKU ranges, and maximum or minimum capacity requirements.
There are many considerations that when combined, comprise an envelope of possibilities for each omnichannel retailer. The only certainty may well be uncertainty, but always within realistic boundaries.
More than ever, omnichannel companies require a high level of flexibility and scalability from any automated solution. Before making any significant logistic investment, safeguarding these aspects is crucial.
With separate systems for retail and e-commerce, there will be many times during a typical year in which each system is not being fully utilised. By combining both flows into one system and balancing peaks within it, the system can perform optimally throughout the year.
This is something we expect to see more of in the future – an ‘omni-solution’ in which the advantages of two systems are rolled into one. Peaks will no longer be handled by adding more operators (only), but by cleverly repurposing parts of the automated section of the system.
We look at the full range of possibilities together with our customers, starting with data relevant to their operations. Based on our experience and portfolio of innovative solutions, we then design a flexible and scalable system that can balance a customer’s retail and e-commerce flows, and optimally serve their multiple channels.
Before finalising the design, we use intelligent software to conduct capacity realistic modelling of the future scenarios. In this way, our aim is to provide peace of mind.
We know that our customers don’t have a crystal ball. In the ever-changing markets in which they operate, it’s almost impossible to set a firm target for the future, in which peaks and processes are perfectly – and continuously – harmonised.
But through careful dialogue and scenario planning, and by designing adaptable solutions, we are able to make the unpredictable somewhat more predictable.
What is your opinion about the future of multichannel fulfilment? Leave your answer in the comments below.