Best
Omnichannel
Practices &
Trends
Presented by:
Sponsored by:
Ed Romaine, Integrated Systems Design
Russ Devilbiss, Carter Control Systems
© 2014 MHI®
Copyright claimed as to audiovisual works of seminar sessions and
sound recordings of seminar sessions. All rights reserved.
What Is ISC
• Integrated Systems & Controls
(ISC) members are the Industry’s leading
suppliers of integrated material handling
and controls systems. They supply
systems worldwide and in virtually every
major manufacturing and distribution
sector.
Today
• Defining Omni and Multi Channel and
Ecommerce Practices
• 8 Trends & Their Impact on Us
• 6 Steps in Implementing Omnichannel
• Some Examples to Learn By
What Is Omnichannel Distribution?
• “Omnichannel retailing is concentrated on
a seamless approach to the consumer
experience through all available channels.”
» Wikipedia
• Ecommerce sales focus on internet channel fulfillment.
• Multichannel focuses on ecommerce and retail stores.
• Omnichannel sales focus on the entire opportunity &
experience.
Omnichannel Success!
Executive
Management
Customer
Care
Science of
ROI
Customer
Experience
IT
Engagement
Marketing
Operational
Excellence
• All Assets, Channels
& Touch Points Work
Together
• Create a Seamless
Customer Experience
US Census
Bureau
A Look at Our Future…
Omni-Channel Trends…
What Customers Want & The Impact On Logistics:
1. Same/Next Day
Delivery
2. Lots and Lots of
One Line Orders
3. Vast & Seamless
Inventory to
Choose From
4. Buy & Fulfill As One…
Not Disjointed By
Function, Location or
Business Unit
5. Flash Sales
6. Free Shipping &
Returns
7. Delivery Time is Key
8. Subscriptions
Same/Next Day Delivery
• Proximity to Customer
– Moving away from East
& West Coast Only
– Ability to ship from each
region
• What Structure?
–
–
–
–
–
DC’s
Stores & DCs
Partners & DCs
Pop-Up Stores & DCs
Depends on Your
Business
Source: MCM Outlook 2013
Store Interaction is Important
• 62% want to buy items online and make returns in-store
• 44% want to buy online and pick up in a store
Source: 2013 UPS Pulse of the Online Shopper
Same/Next Day Delivery
• Technologies Needed:
– Software
• WMS, TMS, WCS, CRM,
ERP and More!
– Hardware
• Goods to Person
• Manual
• Automated
– Delivery Methods
• FedEx & UPS
• Drones
• Private Fleet
One Line Orders
• Say Goodbye to 3.0 Lines/Order
• Picking Costs Going Up!
– New Picking Methods
• Faster Picking
• Sortation Issues
– New Packing Methods
• More “Standard” Box Sizes
• More Statements, Invoices and
Documents to Insert
• More Orders/Boxes To Fill & Ship
Vast & Seamless Inventory
• You Are Expected to Have
101% of Inventory
Available At All Times
• Inventory Decisions:
• Where Do You Locate It?
• How Do You Track It?
• How Do You Fulfill It?
Seamless Purchasing to
Fulfillment & Returns
Websites
Stores
Mobile
Flash
Sales
Consumer
Call Center
Mail Order
Kiosks &
Vending
Machines
Retail &
E-commerce DCs
Factory
Outlets
Stores
Pop Ups
P
U
R
C
H
A
S
I
N
G
F
U
L
F
I
L
L
M
E
N
T
C
H
A
N
N
E
L
S
Flash Sales
• Very Low Price on
Specific SKUs for a
Specific Short Period of
Time
– Strategic Against
Competition
– Great Way to Blow Out a
SKU
• Important
Considerations:
– Communications
Between: Sales,
Marketing, Operations is
Vital!
– Moving Flash Sale Items
Forward To Be Picked
Quickly
– Understand What Time
and Resources
Re-Stocking Might
Involve (if needed)
Subscriptions
•
Returning & Repeat
Customers Are Vital
•
Predictable & Recurring Sales
& Revenue
•
Keeps in Touch With Loyal
Customers
•
Earns Word of Mouth
•
Recurring Opportunity to Sell
Additional Products
•
Streamlines Operations
41% of Revenue = 8% of Visitors
Free Shipping & Returns
• Strategic Business
Strategy
• Made Popular By
Amazon
• A Primary Driver of
Ecommerce
• Actions To Reduce
Warehouse Costs:
– Automated Order
Picking
– Always Having More
Pickers Than Packers
– Reduce Shipping
Costs
– Reduce Labor &
Inventory
Shipping Costs Lose Sales
Source: 2013 UPS Pulse of the Online Shopper
Warehouse & Stores
Are Vital to Sales…
Source: 2013 UPS Pulse of the Online Shopper
Six Steps To Start Success
“Omnichannel is a Path Not A Destination”
-- Macy’s CEO
1. Find Inventory Sharing Opps
• Look Across The Channels For Commonality in
Inventory and Order Profiles
–
–
–
–
Retail Stores
Ecommerce
Wholesale
Manufacturing
–
–
–
–
Spare Parts
Kiosks
Pop Ups Stores
Outlets
• Example:
– Inventory: Combining Manufacturing With
Spare Parts & Distribution
– Order Picking: Combine Ecommerce, Retail and Wholesale
2. Identify Best Operating Model
• Develop An Operating Model To Exploit
The Similarities In Order Profiles
– Order Routing
– Order Fulfillment Locations
– Other Key Fulfillment Processes
• Velocity of specific SKUs
• Seasonality of specific SKUs
• Quantities of specific SKUs per order
3. Chart Functions vs. Processes
• Forget What You Think You Know!
• Function: List For Each Channel
•
Receiving
•
Quality Control
•
Split Case Picking
•
Full Case Picking
•
Reserve Storage
•
Replenishment
•
Buffer
•
Staging
•
Packing
•
Shipping
•
Returns
•
Many More!
• Process: List for Each Function
•
Batch Pick
•
Sortation – Shoe
•
Auto Doc Insertion
•
Cluster Pick
•
Sortation – Tilt Tray
•
Auto Insert
•
Single Wave
•
Print & Apply
•
Semi-Auto Taping
•
Paper Pick
•
Box Erector
•
Many More!
• You Will See Synergies Between Channels
4. Optimize Flow Paths
• Connect The Flow From The Processes &
Functions To Optimize Synergies
– Use same picking packing and shipping
systems for multiple channels
• Big Data, Social, CRM Meet WMS & ERP!
– Visibility by combining data in multiple
databases into one view! Understand your
customers and their ordering preferences and
requirements
5. Implement Function-Specific
Technologies
• Identify and implement technologies for
the pick, pack and ship process
• The technologies must support your
operating model and flow paths
• Create an analytical criteria matrix to aid in
the decision making process
Decision Criteria Matrix
>
Function
or Zone
Criteria
Technologies
Factor
Weight
Factored
Value
Analytic
Winner
6. Divide, Conquer & Calculate
•
•
•
•
Omnichannel Is A Path Not A Destination!
Use Technology Neutral Partners
It Can Take Years
Do An ROI Analysis and Start With The
Low Lying Fruit
• Measure & Evaluate
• Mitigate Risk
Real World Examples &
Lessons
• Orders are filled using stores plus storage warehouses
and ecommerce fulfillment centers
• "We started ship-from-store as a test. It has exceeded
every expectation.”
• Shipping from stores provides faster delivery of online
purchases "at very low cost.”
• Two-thirds of the U.S. population live within 5 miles of a
Walmart
• 10%+ of items ordered on Walmart.com are shipped
from stores, and most are delivered in less than 2 days.
• Delivery distances from stores are much shorter saving
on shipping costs
• “Showrooming” was killing Best Buy
• Turnaround started late 2012 when the new CEO’s goal
was to use their 1,400+ locations as weapons not a cost
liability
• The justification:
– 1 billion online visits a year
– 2% to 4% of orders were out of stock in the e-commerce
warehouses
– 80% of out of stock inventory was in its physical stores
• Pundits predicts ominichannel will generate an extra
$5.8 billion in sales and $168 million in profit
• Best Buy shares have more than tripled
• "Some people talk about Amazon with their 100
distribution centers, God bless them. We have
2,600 distribution centers," said Gap Chief
Executive Glenn Murphy (referring to his stores)
• GAP launched ship-from-store in 2012.
• Stores have a lot of unsold inventory. Online
orders are routed to these locations. This helps
reduce: inventory costs and costly discounts of
otherwise unsold inventory WHILE increasing
sales and customer satisfaction
• One of the first implementers of omnichannel in 2012
• 2013 - Same store sales +3.7% Of which 3.1% came from
omnichannel sales!
• Lessons Learned:
– Order picking is done in the front of the store with associates
who are heavily trained
– Investing aggressively in RFID for replenishment and will have
50% by 4Q 2014
– Inventory in the warehouses and on sales floors are put online to
improves sales, reduces waste and shipping costs
– Gearing up for same day store pick ups and deliveries
– Returns are now an opportunity to re-sell items quickly for the
stores
30,000 Pound Gorilla In The Room
• Amazon ($67B) & Your Competitors
• They Are Looking For Growth!
– Will They Enter Your Market?
• Medical Supplies
• Small B2B Parts
• Aerospace Parts
– Best Defense Is
A Good Offense
•
•
•
•
Plan Your Attack!
Implement Today!
Mitigate Risk!
Have Patience!
I Want YOUR
Business
Members of ISC
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AGiLE Business Media
Banner Engineering Corp.
BEUMER Corporation
Carter Control Systems, Inc.
Cinetic Sorting Corp.
CubiScan (by Quantronix, Inc.)
Dematic Corp.
Egemin Automation Inc.
Integrated Systems Design
Intelligrated, Inc.
Intralox, L.L.C.
JBT Corporation (formerly FMC
Technologies)
JDA - The Supply Chain Company
Knapp Logistics Automation
Lenze Americas
Material Handling & Logistics
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MIAS Inc.
MURATEC - Logistics & Automation
Division
OCS Checkweighers, Inc.
Retrotech, Inc.
Rockwell Automation Control Systems
Schneider Electric
SICK, Inc.
SI Systems
SpanTech, LLC
St. Onge Company
SWISSLOG Logistics, Inc.
System Logistics Corporation
TGW Systems
Transbotics Corporation
viastore systems, Inc.
Westfalia Technologies, Inc.
For More Information:
Gary Forger
gforger@mhi.org
www.mhi.org