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January-February 2020
If the holidays at your household were like most, the gifts were chosen and wrapped with care, and then half were returned in the week after Christmas. Maybe more than half. After all, who among us hasn’t bought four shirts in a variety of sizes and colors with the intent of keeping one and returning three. And why not: Retailers and e-tailers alike have made returns seamless, easy and cheap. At least for the shopper. For the supply chains of the retailer, manufacturer or brand owner, returns are a once-neglected area that is growing into a major focus of supply chain managers who don’t want to see their organizations lose their shirt taking… Browse this issue archive.Need Help? Contact customer service 847-559-7581 More options
Anyone who has shopped at Target lately has probably heard a car horn (honk honk) or car locking sound (chirp chirp), usually followed by some quick footsteps and verbal coaching among store associates. Emitted by a store associate's walkie talkie and audible from aisles away, these sounds mean employees either have a couple of minutes to finish fulfilling a drive-up customer's order or risk hurting their performance metrics (honk honk), or that the customer is en route to the store (chirp chirp).
This is just one example of retail's struggle to keep up with the new fulfillment requirements of today's customers. In this case, it's about fulfilling orders from brick-and-mortar for customers waiting curbside for their orders to be loaded into their cars. The option didn't even exist just five years ago, and it's one of the things that retailers are struggling to do effectively and efficiently. The same companies are up against stiffer competition both online and offline; evolving customer demands; new imperatives around order accuracy and high return rates for online orders.
For help, more retailers are turning to technology, and right at a time when technology vendors continue to introduce new solutions, applications, software and equipment meant to ease their fulfillment pain points. Automation is of particular interest, encompassing solutions designed for use in the store to mobile and piece-picking robots in the distribution center. “Retailers are servicing customers in all different ways, some of which they never even thought of before,” notes Pete Blair, vice president of marketing for Berkshire Grey.
Whether they're shopping in a store or online, customers still expect the goods to be on the shelves, but these days those “shelves” might be on a mobile device, a desktop computer, social media or in a brick-and-mortar store. To capture as many of these sales as possible, retailers have to give consumers a broad range of choices. Then, they have to be able to fulfill those orders as quickly as possible. “Every retailer across all sectors, be it apparel, home goods or electronics, is trying to figure out how to apply automation within their retail networks,” says Mike Khodl, vice president of global solution management at Dematic. “There's a lot of experimentation going on.”
At this point, Khodl says there's still a divide between those retailers adopting next-generation technologies and the ones that are reluctant to test out concepts like goods-to-person picking or collaborative robots in the backroom. “These are technologies that most retail stores have never experienced before,” says Khodl. “So, while there's a clear trend toward using more advanced technology in the retail supply chain, a lot of it is still very experimental.”
Help over the hurdles
Experimental or not, the bottom line is that retailers need advanced solutions to not only help them meet their customers' ever-evolving expectations, but also assist with global issues like a persistent national labor shortage, rising real estate costs and a general decline in brick-and-mortar retail sales. According to a CNBC news report in April 2019, the total market share of U.S. online retail sales for “general merchandise,” which includes department stores, edged ahead of that of brick-and-mortar stores for the first time. Keyed into their customers' pain points, both software and hardware developers are coming up with new ways to help them get over these hurdles and stay profitable.
Following are seven different ways that technology is helping retailers tackle their biggest challenges while also preparing them for what lies ahead.
- Micro-fulfillment that helps retailers meet service level agreements. Thinking back to a time when e-commerce was in its infancy and companies were setting up separate warehouses dedicated to this new sales channel, it was clear that harnessing the e-commerce monster wasn't going to be easy. Fast-forward to 2020 and retailers are still trying to figure out how to do it efficiently, effectively and without losing their shirts in the process. One viable option that more of them are leaning toward is micro-fulfillment, or the placement of smaller warehouses closer to the end consumer. “For most retailers, the operational driver right now is: ‘how do I respond to the same-day, couple-of-hours service level agreements (SLAs) within a specific metro area?” Khodl explains. “This is driving the micro-fulfillment methodology inside retail stores.” To work properly, micro-fulfillment requires back-end automation at the retail level, including automated storage and automated picking. Also critical is the software that drives processes, including order optimization, order prioritization and order consolidation.
- Robotics: No silver bullet. Since the 2008 recession, retail has since morphed into an omni-channel animal that gives buyers what they want, how they want it and when they want it. Given today's labor-constrained environment, that's where robotics, automation, artificial intelligence (AI) and machine learning (ML) come into the picture. “Omni-channel e-commerce is a super labor-intensive process, and it's getting to be a bigger part of every retailer's business and with very few exceptions,” says Blair. By augmenting human workers, robots help retailers work through labor issues and speed up fulfillment and delivery times. “It's less about removing labor from the picture and more about putting robots in place to make the best use of available labor,” says Blair. For example, stores can use robotic order-picking solutions to fulfill in less-than-case and inter-pack quantities. This, in turn, helps retailers ship more frequent, smaller orders while maintaining lower inventory carrying costs. For anyone considering robots in 2020, Blair says it's important to factor in the dynamic nature of the retail supply chain. For instance, robots have been used for years in automotive plants, but most of those solutions can't just be plopped into a warehouse and expected to work. “In the distribution environment, a robot is more than just a robot,” says Blair. “It also requires the vision, software and gripping technology.”
- Goods-to-person order fulfillment solutions. The buzz around omni-channel fulfillment isn't dying down and is, in fact, only getting louder. A fully-integrated commerce approach that gives customers a unified experience across all sales channels or touchpoints, omni-channel has made retailers realize something: servicing end users and fulfilling store orders using the same infrastructure is far more challenging than anyone thought. “This has resulted in us really reshaping the way we go about designing distribution centers (DCs),” says Greg Conner, vice president of global sales for Bastian. A retailer that's fulfilling from a central location, for example, has to be able to group like orders and manage order profiles that look nothing like the ones used for their brick-and-mortar operations. Conner says Bastian is seeing more demand for shuttle technology, goods-to-person options such as the AutoStore picking solution. “Now, these are not the exception; they're the norm,” says Conner, who is also seeing more demand for technology that supports ship-from-store, or the delivery of customer orders directly from a retail location. “This adds a whole new wrinkle on things as companies move from using DCs to using their own stores as fulfillment centers.”
- Technology that meets the new expectations of ever-faster delivery cycles. As he surveys the retail landscape right now, Dan Gilmore, chief marketing officer at Softeon, sees companies investing in automation, hoping that the hardware and software that they're implementing will see them through the industry evolution that most have been caught up in for about 10 years. For many retailers, it's come down to being able to hold on long enough for a competitor to go out of business, or for the industry dynamics to change again. “There's a continued belief by most of the marketplace that shipping should and will be free,” says Gilmore, “and new expectations around ever-faster delivery cycles.” Behind the scenes, retailers are also dealing with less visible challenges, such as how to fulfill an order for a customer who is located only 10 miles away from a physical store, even if that store doesn't have all of the items in stock. That's where DOM comes into play. By providing a rules-based engine it manages the order stream in real-time, figures out where inventory is located in the network, factors in capacity constraints and automates the decision-making process. And because DOM sits on top of a retailer's existing systems, it enables good omni-channel management without displacing solutions that are already in place. “Retailers are getting to omni-channel enablement much faster with DOM,” says Gilmore, “versus just trying to improve their own systems.”
- Solutions that transform manual reverse logistics processes. Thirty-percent of all products ordered online are returned (versus about 9% for offline sales); 92% of consumers would buy again if the product return process was easy; and 79% of consumers want free return shipping. Handled manually in the past, returns processing has become yet another focal point for companies that have to not only receive the returned goods, but also get them back into the supply chain quickly and efficiently. “It can be as simple as workstations, automated conveyors and reverse sorting systems,” says Khodl, “or as complex as a highly-automated system that incorporates pouch systems, robotics and other elements.” He adds that the sheer volume of returns justifies an investment in automation.
- Technology that enables cognitive intelligence. With the national unemployment rate hovering at a 50-year low, companies across all industry sectors are hitting walls when it comes to finding, recruiting and retaining employees. Retail is no exception. “Whether they're shipping only to their own stores and/or direct to customers, having the right people in the DC to ultimately execute and fulfill is a big challenge for retailers right now,” says Adam Kline, senior director, product management at Manhattan Associates. He says these realities are pushing companies to invest in warehouse management systems (WMS), labor management systems (LMS) and warehouse execution systems (WES) that help them eke the most value out of their available resources. Where WMS handles inventory management, order fulfillment and warehouse resource utilization (associates, robotics and automation), LMS measures how staff is performing against engineered labor standards and provides systematic feedback to employees. Then, WES provides a collaborative layer used to connect various solutions within the warehouse, allowing the “retailer to become much more efficient in terms of fulfillment,” says Kline. Those efficiencies include improved pick density, better workflow orchestration (via a goods-to-person or unit sorter) and optimization of the higher-level intelligence that's stored in the WMS. “When you bring these pieces together into a single solution,” he adds, “it enables an effective, cognitive type of intelligence for the retail environment.”
- Artificial intelligence that breaks out of the “black box.” Able to perform tasks that usually require human intelligence, including visual perception, speech recognition and decision-making, systems infused with artificial intelligence (AI) are gaining in popularity in the supply chain. “We're definitely seeing an uptick in interest in AI,” says Sudhir Balebail, program director at IBM. Some of that interest is being driven by the dynamics of the retail supply chain, and the fact that demand can change from day to day, even hour to hour. Knowing this, retailers are moving away from placing big orders with their suppliers and instead using technology (including AI) to collaborate with vendors, send demand signals, change orders on the fly, and route products closer to their end destinations. When supported by AI, these new levels of collaborative decision-making help retailers streamline their supply chains in a way that Excel spreadsheet-based processes simply can't touch. “When everyone is operating from their own source of truth, it's easy for things to fall between the cracks,” says Balebail, who tells retailers to avoid implementing AI as some kind of magical “black box” that can't be questioned or interacted with. “Transparency in AI is very important. Look for solutions that are transparent and that can explain and justify their results.”
SC
MR
Sorry, but your login has failed. Please recheck your login information and resubmit. If your subscription has expired, renew here.
January-February 2020
If the holidays at your household were like most, the gifts were chosen and wrapped with care, and then half were returned in the week after Christmas. Maybe more than half. After all, who among us hasn’t bought… Browse this issue archive. Access your online digital edition. Download a PDF file of the January-February 2020 issue.Anyone who has shopped at Target lately has probably heard a car horn (honk honk) or car locking sound (chirp chirp), usually followed by some quick footsteps and verbal coaching among store associates. Emitted by a store associate's walkie talkie and audible from aisles away, these sounds mean employees either have a couple of minutes to finish fulfilling a drive-up customer's order or risk hurting their performance metrics (honk honk), or that the customer is en route to the store (chirp chirp).
This is just one example of retail's struggle to keep up with the new fulfillment requirements of today's customers. In this case, it's about fulfilling orders from brick-and-mortar for customers waiting curbside for their orders to be loaded into their cars. The option didn't even exist just five years ago, and it's one of the things that retailers are struggling to do effectively and efficiently. The same companies are up against stiffer competition both online and offline; evolving customer demands; new imperatives around order accuracy and high return rates for online orders.
For help, more retailers are turning to technology, and right at a time when technology vendors continue to introduce new solutions, applications, software and equipment meant to ease their fulfillment pain points. Automation is of particular interest, encompassing solutions designed for use in the store to mobile and piece-picking robots in the distribution center. “Retailers are servicing customers in all different ways, some of which they never even thought of before,” notes Pete Blair, vice president of marketing for Berkshire Grey.
Whether they're shopping in a store or online, customers still expect the goods to be on the shelves, but these days those “shelves” might be on a mobile device, a desktop computer, social media or in a brick-and-mortar store. To capture as many of these sales as possible, retailers have to give consumers a broad range of choices. Then, they have to be able to fulfill those orders as quickly as possible. “Every retailer across all sectors, be it apparel, home goods or electronics, is trying to figure out how to apply automation within their retail networks,” says Mike Khodl, vice president of global solution management at Dematic. “There's a lot of experimentation going on.”
At this point, Khodl says there's still a divide between those retailers adopting next-generation technologies and the ones that are reluctant to test out concepts like goods-to-person picking or collaborative robots in the backroom. “These are technologies that most retail stores have never experienced before,” says Khodl. “So, while there's a clear trend toward using more advanced technology in the retail supply chain, a lot of it is still very experimental.”
Help over the hurdles
Experimental or not, the bottom line is that retailers need advanced solutions to not only help them meet their customers' ever-evolving expectations, but also assist with global issues like a persistent national labor shortage, rising real estate costs and a general decline in brick-and-mortar retail sales. According to a CNBC news report in April 2019, the total market share of U.S. online retail sales for “general merchandise,” which includes department stores, edged ahead of that of brick-and-mortar stores for the first time. Keyed into their customers' pain points, both software and hardware developers are coming up with new ways to help them get over these hurdles and stay profitable.
Following are seven different ways that technology is helping retailers tackle their biggest challenges while also preparing them for what lies ahead.
- Micro-fulfillment that helps retailers meet service level agreements. Thinking back to a time when e-commerce was in its infancy and companies were setting up separate warehouses dedicated to this new sales channel, it was clear that harnessing the e-commerce monster wasn't going to be easy. Fast-forward to 2020 and retailers are still trying to figure out how to do it efficiently, effectively and without losing their shirts in the process. One viable option that more of them are leaning toward is micro-fulfillment, or the placement of smaller warehouses closer to the end consumer. “For most retailers, the operational driver right now is: ‘how do I respond to the same-day, couple-of-hours service level agreements (SLAs) within a specific metro area?” Khodl explains. “This is driving the micro-fulfillment methodology inside retail stores.” To work properly, micro-fulfillment requires back-end automation at the retail level, including automated storage and automated picking. Also critical is the software that drives processes, including order optimization, order prioritization and order consolidation.
- Robotics: No silver bullet. Since the 2008 recession, retail has since morphed into an omni-channel animal that gives buyers what they want, how they want it and when they want it. Given today's labor-constrained environment, that's where robotics, automation, artificial intelligence (AI) and machine learning (ML) come into the picture. “Omni-channel e-commerce is a super labor-intensive process, and it's getting to be a bigger part of every retailer's business and with very few exceptions,” says Blair. By augmenting human workers, robots help retailers work through labor issues and speed up fulfillment and delivery times. “It's less about removing labor from the picture and more about putting robots in place to make the best use of available labor,” says Blair. For example, stores can use robotic order-picking solutions to fulfill in less-than-case and inter-pack quantities. This, in turn, helps retailers ship more frequent, smaller orders while maintaining lower inventory carrying costs. For anyone considering robots in 2020, Blair says it's important to factor in the dynamic nature of the retail supply chain. For instance, robots have been used for years in automotive plants, but most of those solutions can't just be plopped into a warehouse and expected to work. “In the distribution environment, a robot is more than just a robot,” says Blair. “It also requires the vision, software and gripping technology.”
- Goods-to-person order fulfillment solutions. The buzz around omni-channel fulfillment isn't dying down and is, in fact, only getting louder. A fully-integrated commerce approach that gives customers a unified experience across all sales channels or touchpoints, omni-channel has made retailers realize something: servicing end users and fulfilling store orders using the same infrastructure is far more challenging than anyone thought. “This has resulted in us really reshaping the way we go about designing distribution centers (DCs),” says Greg Conner, vice president of global sales for Bastian. A retailer that's fulfilling from a central location, for example, has to be able to group like orders and manage order profiles that look nothing like the ones used for their brick-and-mortar operations. Conner says Bastian is seeing more demand for shuttle technology, goods-to-person options such as the AutoStore picking solution. “Now, these are not the exception; they're the norm,” says Conner, who is also seeing more demand for technology that supports ship-from-store, or the delivery of customer orders directly from a retail location. “This adds a whole new wrinkle on things as companies move from using DCs to using their own stores as fulfillment centers.”
- Technology that meets the new expectations of ever-faster delivery cycles. As he surveys the retail landscape right now, Dan Gilmore, chief marketing officer at Softeon, sees companies investing in automation, hoping that the hardware and software that they're implementing will see them through the industry evolution that most have been caught up in for about 10 years. For many retailers, it's come down to being able to hold on long enough for a competitor to go out of business, or for the industry dynamics to change again. “There's a continued belief by most of the marketplace that shipping should and will be free,” says Gilmore, “and new expectations around ever-faster delivery cycles.” Behind the scenes, retailers are also dealing with less visible challenges, such as how to fulfill an order for a customer who is located only 10 miles away from a physical store, even if that store doesn't have all of the items in stock. That's where DOM comes into play. By providing a rules-based engine it manages the order stream in real-time, figures out where inventory is located in the network, factors in capacity constraints and automates the decision-making process. And because DOM sits on top of a retailer's existing systems, it enables good omni-channel management without displacing solutions that are already in place. “Retailers are getting to omni-channel enablement much faster with DOM,” says Gilmore, “versus just trying to improve their own systems.”
- Solutions that transform manual reverse logistics processes. Thirty-percent of all products ordered online are returned (versus about 9% for offline sales); 92% of consumers would buy again if the product return process was easy; and 79% of consumers want free return shipping. Handled manually in the past, returns processing has become yet another focal point for companies that have to not only receive the returned goods, but also get them back into the supply chain quickly and efficiently. “It can be as simple as workstations, automated conveyors and reverse sorting systems,” says Khodl, “or as complex as a highly-automated system that incorporates pouch systems, robotics and other elements.” He adds that the sheer volume of returns justifies an investment in automation.
- Technology that enables cognitive intelligence. With the national unemployment rate hovering at a 50-year low, companies across all industry sectors are hitting walls when it comes to finding, recruiting and retaining employees. Retail is no exception. “Whether they're shipping only to their own stores and/or direct to customers, having the right people in the DC to ultimately execute and fulfill is a big challenge for retailers right now,” says Adam Kline, senior director, product management at Manhattan Associates. He says these realities are pushing companies to invest in warehouse management systems (WMS), labor management systems (LMS) and warehouse execution systems (WES) that help them eke the most value out of their available resources. Where WMS handles inventory management, order fulfillment and warehouse resource utilization (associates, robotics and automation), LMS measures how staff is performing against engineered labor standards and provides systematic feedback to employees. Then, WES provides a collaborative layer used to connect various solutions within the warehouse, allowing the “retailer to become much more efficient in terms of fulfillment,” says Kline. Those efficiencies include improved pick density, better workflow orchestration (via a goods-to-person or unit sorter) and optimization of the higher-level intelligence that's stored in the WMS. “When you bring these pieces together into a single solution,” he adds, “it enables an effective, cognitive type of intelligence for the retail environment.”
- Artificial intelligence that breaks out of the “black box.” Able to perform tasks that usually require human intelligence, including visual perception, speech recognition and decision-making, systems infused with artificial intelligence (AI) are gaining in popularity in the supply chain. “We're definitely seeing an uptick in interest in AI,” says Sudhir Balebail, program director at IBM. Some of that interest is being driven by the dynamics of the retail supply chain, and the fact that demand can change from day to day, even hour to hour. Knowing this, retailers are moving away from placing big orders with their suppliers and instead using technology (including AI) to collaborate with vendors, send demand signals, change orders on the fly, and route products closer to their end destinations. When supported by AI, these new levels of collaborative decision-making help retailers streamline their supply chains in a way that Excel spreadsheet-based processes simply can't touch. “When everyone is operating from their own source of truth, it's easy for things to fall between the cracks,” says Balebail, who tells retailers to avoid implementing AI as some kind of magical “black box” that can't be questioned or interacted with. “Transparency in AI is very important. Look for solutions that are transparent and that can explain and justify their results.”
SC
MR
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