Best Omnichannel Practices & Trends

Transcription

1 Best Omnichannel Practices & Trends Presented by: Sponsored by: Ed Romaine, Integrated Systems Design Russ Devilbiss, Carter Control Systems 2014 MHI Copyright claimed as to audiovisual works of seminar sessions and sound recordings of seminar sessions. All rights reserved.

2 What Is ISC Integrated Systems & Controls (ISC) members are the Industry s leading suppliers of integrated material handling and controls systems. They supply systems worldwide and in virtually every major manufacturing and distribution sector.

3 Today Defining Omni and Multi Channel and Ecommerce Practices 8 Trends & Their Impact on Us 6 Steps in Implementing Omnichannel Some Examples to Learn By

4 What Is Omnichannel Distribution? Omnichannel retailing is concentrated on a seamless approach to the consumer experience through all available channels.» Wikipedia Ecommerce sales focus on internet channel fulfillment. Multichannel focuses on ecommerce and retail stores. Omnichannel sales focus on the entire opportunity & experience.

5 Omnichannel Success! Customer Care Executive Management Science of ROI All Assets, Channels & Touch Points Work Together Customer Experience Create a Seamless Customer Experience Marketing IT Engagement Operational Excellence

6 US Census Bureau

7 A Look at Our Future

8 Omni-Channel Trends What Customers Want & The Impact On Logistics: 1. Same/Next Day Delivery 2. Lots and Lots of One Line Orders 3. Vast & Seamless Inventory to Choose From 4. Buy & Fulfill As One Not Disjointed By Function, Location or Business Unit 5. Flash Sales 6. Free Shipping & Returns 7. Delivery Time is Key 8. Subscriptions

9 Same/Next Day Delivery Proximity to Customer Moving away from East & West Coast Only Ability to ship from each region What Structure? DC s Stores & DCs Partners & DCs Pop-Up Stores & DCs Depends on Your Business Source: MCM Outlook 2013

10 Store Interaction is Important 62% want to buy items online and make returns in-store 44% want to buy online and pick up in a store Source: 2013 UPS Pulse of the Online Shopper

11 Same/Next Day Delivery Technologies Needed: Software WMS, TMS, WCS, CRM, ERP and More! Hardware Goods to Person Manual Automated Delivery Methods FedEx & UPS Drones Private Fleet

12 One Line Orders Say Goodbye to 3.0 Lines/Order Picking Costs Going Up! New Picking Methods Faster Picking Sortation Issues New Packing Methods More Standard Box Sizes More Statements, Invoices and Documents to Insert More Orders/Boxes To Fill & Ship

13 Vast & Seamless Inventory You Are Expected to Have 101% of Inventory Available At All Times Inventory Decisions: Where Do You Locate It? How Do You Track It? How Do You Fulfill It?

14 Seamless Purchasing to Fulfillment & Returns Call Center Mobile Websites Consumer Stores Flash Sales Mail Order P U R C H A S I N G Retail & E-commerce DCs Factory Outlets Stores Pop Ups Kiosks & Vending Machines F U L F I L L M E N T C H A N N E L S

15 Flash Sales Very Low Price on Specific SKUs for a Specific Short Period of Time Strategic Against Competition Great Way to Blow Out a SKU Important Considerations: Communications Between: Sales, Marketing, Operations is Vital! Moving Flash Sale Items Forward To Be Picked Quickly Understand What Time and Resources Re-Stocking Might Involve (if needed)

16 Subscriptions Returning & Repeat Customers Are Vital Predictable & Recurring Sales & Revenue 41% of Revenue = 8% of Visitors Keeps in Touch With Loyal Customers Earns Word of Mouth Recurring Opportunity to Sell Additional Products Streamlines Operations

17 Free Shipping & Returns Strategic Business Strategy Made Popular By Amazon A Primary Driver of Ecommerce Actions To Reduce Warehouse Costs: Automated Order Picking Always Having More Pickers Than Packers Reduce Shipping Costs Reduce Labor & Inventory

18 Shipping Costs Lose Sales Source: 2013 UPS Pulse of the Online Shopper

19 Warehouse & Stores Are Vital to Sales Source: 2013 UPS Pulse of the Online Shopper

20 Six Steps To Start Success Omnichannel is a Path Not A Destination -- Macy s CEO

21 1. Find Inventory Sharing Opps Look Across The Channels For Commonality in Inventory and Order Profiles Retail Stores Ecommerce Wholesale Manufacturing Spare Parts Kiosks Pop Ups Stores Outlets Example: Inventory: Combining Manufacturing With Spare Parts & Distribution Order Picking: Combine Ecommerce, Retail and Wholesale

22 2. Identify Best Operating Model Develop An Operating Model To Exploit The Similarities In Order Profiles Order Routing Order Fulfillment Locations Other Key Fulfillment Processes Velocity of specific SKUs Seasonality of specific SKUs Quantities of specific SKUs per order

23 3. Chart Functions vs. Processes Forget What You Think You Know! Function: List For Each Channel Receiving Quality Control Split Case Picking Full Case Picking Reserve Storage Replenishment Buffer Staging Packing Shipping Returns Many More! Process: List for Each Function Batch Pick Sortation Shoe Auto Doc Insertion Cluster Pick Sortation Tilt Tray Auto Insert Single Wave Print & Apply Semi-Auto Taping Paper Pick Box Erector Many More! You Will See Synergies Between Channels

24 4. Optimize Flow Paths Connect The Flow From The Processes & Functions To Optimize Synergies Use same picking packing and shipping systems for multiple channels Big Data, Social, CRM Meet WMS & ERP! Visibility by combining data in multiple databases into one view! Understand your customers and their ordering preferences and requirements

25 5. Implement Function-Specific Technologies Identify and implement technologies for the pick, pack and ship process The technologies must support your operating model and flow paths Create an analytical criteria matrix to aid in the decision making process

26 Decision Criteria Matrix > Function or Zone Technologies Criteria Factor Weight Factored Value Analytic Winner

27 6. Divide, Conquer & Calculate Omnichannel Is A Path Not A Destination! Use Technology Neutral Partners It Can Take Years Do An ROI Analysis and Start With The Low Lying Fruit Measure & Evaluate Mitigate Risk

28 Real World Examples & Lessons

29 Orders are filled using stores plus storage warehouses and ecommerce fulfillment centers "We started ship-from-store as a test. It has exceeded every expectation. Shipping from stores provides faster delivery of online purchases "at very low cost. Two-thirds of the U.S. population live within 5 miles of a Walmart 10%+ of items ordered on Walmart.com are shipped from stores, and most are delivered in less than 2 days. Delivery distances from stores are much shorter saving on shipping costs

30 Showrooming was killing Best Buy Turnaround started late 2012 when the new CEO s goal was to use their 1,400+ locations as weapons not a cost liability The justification: 1 billion online visits a year 2% to 4% of orders were out of stock in the e-commerce warehouses 80% of out of stock inventory was in its physical stores Pundits predicts ominichannel will generate an extra $5.8 billion in sales and $168 million in profit Best Buy shares have more than tripled

31 "Some people talk about Amazon with their 100 distribution centers, God bless them. We have 2,600 distribution centers," said Gap Chief Executive Glenn Murphy (referring to his stores) GAP launched ship-from-store in Stores have a lot of unsold inventory. Online orders are routed to these locations. This helps reduce: inventory costs and costly discounts of otherwise unsold inventory WHILE increasing sales and customer satisfaction

32 One of the first implementers of omnichannel in Same store sales +3.7% Of which 3.1% came from omnichannel sales! Lessons Learned: Order picking is done in the front of the store with associates who are heavily trained Investing aggressively in RFID for replenishment and will have 50% by 4Q 2014 Inventory in the warehouses and on sales floors are put online to improves sales, reduces waste and shipping costs Gearing up for same day store pick ups and deliveries Returns are now an opportunity to re-sell items quickly for the stores

33 30,000 Pound Gorilla In The Room Amazon ($67B) & Your Competitors They Are Looking For Growth! Will They Enter Your Market? Medical Supplies Small B2B Parts Aerospace Parts Best Defense Is A Good Offense Plan Your Attack! Implement Today! Mitigate Risk! Have Patience! I Want YOUR Business

34 Members of ISC AGiLE Business Media Banner Engineering Corp. BEUMER Corporation Carter Control Systems, Inc. Cinetic Sorting Corp. CubiScan (by Quantronix, Inc.) Dematic Corp. Egemin Automation Inc. Integrated Systems Design Intelligrated, Inc. Intralox, L.L.C. JBT Corporation (formerly FMC Technologies) JDA - The Supply Chain Company Knapp Logistics Automation Lenze Americas Material Handling & Logistics MIAS Inc. MURATEC - Logistics & Automation Division OCS Checkweighers, Inc. Retrotech, Inc. Rockwell Automation Control Systems Schneider Electric SICK, Inc. SI Systems SpanTech, LLC St. Onge Company SWISSLOG Logistics, Inc. System Logistics Corporation TGW Systems Transbotics Corporation viastore systems, Inc. Westfalia Technologies, Inc.

35 For More Information: Gary Forger