Automation: simplifying the complexity of omnichannel fulfillment

Lisa Henthorn | Apr 7, 2016 14 views 

In an era where Amazon’s two-day shipping reigns, customer demand has skyrocketed, and expectations for rapid order fulfillment have put retailers, and the suppliers of those retailers, on the defense.With countless options for purchase and fulfillment, those who have long sought more efficient ways to distribute goods are turning to cloud-based transportation management systems (TMS) to more easily offer a complete omnichannel fulfillment strategy.

According to the ARC Advisory Group, ecommerce has grown 51 percent over the past five years. Unfortunately, the same ARC survey showed that just 60 percent of respondents currently use a TMS for omnichannel fulfillment, representing a large number of retailers being bogged down by time-consuming manual processes that make omnichannel fulfillment far more difficult and likely reducing customer satisfaction and losing business as a result.

Omnichannel distribution introduces a number of logistical scenarios:
• Online order directly to buyers’ homes
• Online order sent to retail store for in-store pickup
• In-store purchase, out-of-stock “rain-check” – delivery to store or directly to buyers’ homes
• Online order through e-commerce distributor channel (i.e. Amazon)
• Order fulfilled directly to buyers home via a retailer or a vendor’s logistics infrastructure

This list doesn’t even touch on returns and exchanges, not to mention a supplier’s need to rethink their distribution network to respond more efficiently to the retailer; so it’s hard to understand how anyone would still consider using spreadsheets to track and manage all these moving pieces.

Increasingly, retailers turn to a TMS (a Level 5 TMS if they do business internationally) to manage a growing list of complex and time-consuming distribution challenges. Differing rules, workflows and technology must work together seamlessly to successfully distribute in an omnichannel fashion, for example, with the entire process breaking down if one link in the chain is weak. Every supplier warehouse, distribution center and retail location must become a component of a single, tightly integrated inventory.

For consumers, an omnichannel option like in-store pickup is invaluable. In a recent study, Forrester Research found that 42 percent of online shoppers have used click-and-collect. Unfortunately evident over the holiday season, a full 60 percent of “click-and-collect” orders placed on Cyber Monday ran into problems like lack of inventory in the store or incorrect item supplied at the pickup counter – key visibility issues that throw a wrench in any omnichannel distribution strategy.

Fortunately, retailers and their suppliers increasingly use automated cloud technology to determine the most efficient distribution by introducing visibility into inventory status and item location. This provides a more complete picture of the supply chain and answers the bell when retailers ask “should I ship from the warehouse 300 miles away, or locate my customer and let them know their item is on the shelf 10 miles away?”

Ultimately, the execution of a solid omnichannel strategy through a TMS comes down to areadiness upon implementation – making a thorough assessment of who, what, where, why and how logistics are managed today. When executed poorly, customers take their business elsewhere. As ecommerce continues its breakneck growth and the likes of Amazon keep pushing the boundaries of fulfillment, a TMS provides a lifeline for those who want to compete.