Reimagining the traditional supply chain for omnichannel commerce.

By Paul Hill December 7, 2018

Blog 6-2

By Paul Hill, Client Operations Director.

Shoppers expect to browse, purchase and return goods seamlessly across multiple channels. Unfortunately, many traditional retail supply chains are unable to handle this huge demand for speed and convenience. According to metrics from Google, the average UK retailer scores just 52 out of 100 in omnichannel capabilities.

Those that get it right are winning big, though.

Omnichannel commerce evolved to service the demands of online shoppers and offers an integrated, personalised experience across online, in-store and social. This type of retail allows for a constant flow of products between each channel. Omnichannel supply chains, therefore, can have greater strategic value. They can improve sales and encourage repeat purchases among consumers, but they need to be more agile and dynamic than traditional supply chains.

Here are three ways that the traditional supply chain is being reimagined for omnichannel commerce.

Automation optimises stock picking

Omnichannel doesn’t mean automatic savings. It can actually cost more to serve multiple channels. Unless, of course, you’ve got the know-how and technology to bring everything together seamlessly.

One thing that always strikes me when I visit fulfilment and distribution centres is the sheer variety of tasks that must be managed. On the one hand, you have the big bulk items for stores. These items take a fleet of forklifts and materials handling equipment to pick pallets and load them onto delivery vehicles. Then, on the other hand, there are teams of on-foot operatives pulling together single item picks and building orders for individual customers.

The challenge for traditional retailers who want to achieve their omnichannel ambitions, is to blend those operations. Many retailers opt to combine multiple sites that focus on either bulk or individual picking. But, if you have everything together in the same site(s), you need to think smarter.

Instead of bringing the pickers to the stock, why not bring the stock to the pickers?

Automation technology, from batch sorters to auto pick machinery, can help bridge the gap between man and machine to create a more harmonious working environment. The efficiencies can be astounding. On one of the largest operations we’ve been working on recently, a retailer slashed 5km off the typical picker’s daily mileage by using dynamic stock locations and automation to move bulk quantities closer to their pickers. Let’s just hope they can find another way to get their steps in.

Drop shipping picks up speed

Many traditional retailers still process stock from a single location. Even pure-play "we don't do bricks and mortar" eCommerce types are tethered to bricks and mortar somewhere: all of their products are still stored in a physical location before they get to the consumer.

Big retailers can still (just about) make the traditional approach work. They use big warehouses and pick up the slack throughout the supply chain. But the real efficiency gains are being made at the cutting edge of logistics. 

Omnichannel isn’t wedded to one warehouse.

If you have real-time visibility of stock, does it matter where it actually is? Nope. You can have stock in multiple locations, including different warehouses, manufacturers, wholesalers and retailers. 

Every time you sell a product, you can automatically notify the supplier and carrier and move it out directly to the customer. The stock never needs actually to pass through your own warehouse. It still makes sense to keep your fastest moving items in-house, but everything else can be shipped from supplier to consumer if you want. This gives you the flexibility to call off orders and is great for speeding up stock turnover rates.

Drop shipping allows retailers to coordinate stock from multiple locations to arrive in one delivery. The packaging may be different sometimes, but it's a small trade-off for such consumer-focused convenience. Not to mention, painless and profitable logistics. As well as adding value to the consumer by streamlining deliveries, this allows the manufacturer or wholesaler to add value (and margin).

Returns can erode margins—especially in segments like fast fashion—so why not apply the same logic? Does that little black dress really need to go the long way back to source? Or can it be taken the short distance to a dedicated local collection point or supplier/partner before it goes to another customer, retailer or clearance outlet?

This kind of thinking gives traditional retailers the freedom to keep offering the right products at the right price point.

Choice shouldn't be a luxury

Services like Uber Eats and Deliveroo demand a premium for instant delivery and unlimited choice. But in the world of omnichannel, choice shouldn’t be a luxury. Why? Because providing more choice actually saves retailers money—both in terms of logistics and better customer retention.

The ideal for everyone, from retailer to carrier to consumer, is ‘right first time’ delivery. If you can’t flex your delivery times around the modern consumer’s busy schedule, it could take you anywhere between 2–3 attempts to get your parcel into their hands. This way, no one’s happy, not least the accountants.

Sorted exists to make all three parties delighted. We say: get first-time delivery percentages into the high 90s by spoiling the consumer for choice. Allow them to choose any drop-off point; anywhere, anytime. Doorstep, convenience store, neighbour. Tomorrow or a week next Tuesday… If things change, keep the consumer updated and let the carrier know immediately, with products like SortedREACT. Do everything possible to complete the purchasing experience with a seamless delivery experience.

The retailer is delighted because the consumer is delighted. The carrier is delighted because the cost to serve is reduced. Job done.

Omnichannel demands dynamic thinking and flexible logistics. The good news is, there’s no shortage of ways that traditional retailers can step up to the challenge.

Read more about how to optimise the delivery experience in our guide Ecommerce Examined: Assessing the delivery experience.

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