Today’s omni-channel supply chain contains added labor costs and process steps to deal with, the more dynamic and complex picking processes that come with direct-to-consumer orders/shipments. Due to this radical growth from bulk fulfillment to direct to end consumer fulfillment, cost concerns have arisen for profitability.
In a recent study on labor management conducted by the Aberdeen Group, adopting more efficient warehouse and store-level processes was the most-cited pressure (70% overall) for managers to address profitability and reduce operating expenses. This complex omni-channel environment extends from raw material to final delivery and involves profitable coordination of wholesale, retail, and eCommerce all the way through the long tail supplier/manufacturer side.
Added cost and pressure in the labor-intensive convergence of B2B and B2C processes is a critical strategy for enterprises looking to reduce costs and improve operational performance in their increasingly complex and multi-tiered supply-demand networks. And the importance is only amplified for those with global supply chains and partners.
Determining profitable fulfillment requires linking buyers and sellers together with event and cost information, which requires real-time, unified connectivity across processes and enterprises. In the omni-channel world, these interconnected systems and process are undergoing transformation, and labor/profit management must be event-driven if it is to support emerging new logistics formats like DC Bypass or direct-to-consumer shipments.
Key areas of change under new omni-channel fulfillment trends include:
- More challenging and complex fulfillment requirements – eCommerce and multi-channel or cross-channel demand impacts 87% of companies
- Increase in direct-to-store – 65% bypass their own DCs and ship direct-to-store via others (suppliers, 3PLs, break-bulk)
- Increase in direct-to-customer – 61% have direct-to-home delivery models
Such changes are transformational and often require the company to address new inventory and omni-channel fulfillment flows to achieve profitability. To do this, the best practice is to perform “Supply Chain Segmentation” and Cost-to-Serve (CTS) modeling in order to isolate the areas for opportunity and improvement. This, in turn, requires supply chain visibility to events and costs/rates by specific products and customers according to specific fulfill and ship volumes.
In order to achieve such visibility, Best-in-Class companies look to labor management solutions to measure, manage, and plan warehouse labor in order to increase productivity and facility performance in distribution and manufacturing operations.
For a deeper understanding of how these standards support all the facets of labor management, please read the full report.