Omnichannel’s Next Wave will be Waveless
Not too long ago, retail consumers could obtain products through mail order catalogs, through retail stores via cash-and-carry, through store delivery, and through something new called the Internet which major retailers were just starting to embrace with the concept of e-commerce. These four channels were known as multi-channel fulfillment. Even though this revolution began well over a decade ago, a majority of retailers are still trying to establish a workable balance between e-commerce fulfillment and retail store replenishment. Now add the emergence of omni-channel fulfillment (OCF) and distributed order management (DOM) to the mix, giving customers a dozen or more fulfillment options, and things start to get complicated.
Today, not only can consumers go into a store and do cash-and carry, but they can place an order on the Internet or through their mobile devices, or while on an airplane flight, with the expectation that it can be picked up at a local store. If consumers prefer, they can opt for direct-to-consumer delivery from the retailer’s central e-commerce warehouse. If the retailer has a catalog, the consumer can order via mail order. The consumer can go into a store, and if that store does not have the item they are looking for in stock, it can be shipped over from another store for the consumer to pick up, or it could be delivered to their home that same day. And if that purchased item was scheduled to be delivered to the customer’s home, but now they want it delivered to their office, the item can be redirected for same-day delivery, even while it is in transit.
Internet fulfillment needs to factor in seasonal spikes and continuous order volume growth driven by new-item releases. Thousands of orders per hour of single-item and multi-SKU orders, a wide variety of product cubes, and the customer-driven demand for the lowest cost transportation methods needed to ship direct-to-consumer orders—as these options increase, they are continually raising the bar for logistics executives.
Omni-channel fulfillment is multi-channel, but the number of customer fulfillment options is continuing to grow, with the expanding needs of retail store replenishment added to the mix.
Distribution operations must process a mix of LTL (less-than-truckload) shipments with full-pallet/mixed-case-pallet orders, be able to fluid-load direct to the trailer, and balance the complexities compounded by the growing demand for combined split-case and mixed-case store and distribution center orders. Further complicating the order mix are retailers’ specific shipment compliance labeling and order shipment documentation requirements, and manifesting rules.
Omni-channel fulfillment and distributed order management are essentially the strategy and system of making merchandise available for store replenishment and the customer in many different ways. It is a delivery perspective. Consumers, and stores, want flexibility and they want options. They are requesting different service levels. Speed of delivery, improving the management of inventory, and for customers a better delivery experience, are the factors that are driving omni-channel fulfillment and distributed order management.
Wave Fulfillment Limitations with Omni-Channel
OCF and DOM have emerged as the solution to support the ever-expanding demands of retail customers and store replenishment.
For decades, warehouse management systems (WMS) have been the mainstay for managing inventory and material handling processes within warehouses. The objective of WMS is to provide a set of computerized procedures to manage the movement of inventory and orders within the warehouse, and enable a seamless link to order processing, logistics management and material handling equipment systems within the facility.
For order fulfillment, a WMS is basically a planning tool that is coupled to an execution tool that drives or pushes the distribution processes. The WMS allows distribution executives to determine what work is going to be accomplished, and the sequence of that work, within the content of a fixed wave. The execution or processing of the wave is directed by the WMS by pushing the planned tasks to workers and associated equipment.
Similarly, warehouse control systems provide real-time direction of primarily equipment as specified by a work plan, defined by an upper-level WMS. While some warehouse control systems (WCS) implementations may direct the work efforts of associates, the direction of the work is in accordance with the pre-determined work plan within the context of a wave.
A wave plan is only as good as having the planned-for conditions matching the conditions actually encountered during the execution. Distribution plans rarely execute exactly according to the plan. There are inevitably exceptions, and those exceptions must be addressed during processing.
OCF/DOM demands a faster and more flexible level of fulfillment than what can be achieved with wave processing in a conventional WMS or WCS. It requires a streamlined, interconnected system in play, which fulfills and tracks inventory in real-time throughout the entire distribution center. It needs to be able to facilitate optimized processing by assessing order parameters and delivery options for each order placed, and initiate an optimized solution for fulfillment and delivery in real time. It must include highly-scalable software architecture, providing functionality developed to deliver a higher performance of order fulfillment with process automation—managing material handling systems, robots and other complex automation technologies. Such a control system needs to contain automation modules developed to balance waveless order release and workflow across receiving, picking, packing and shipping processes.