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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.

SC-Orchestration-PL-Impact

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.

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