Designing Outbound Logistics Strategies to Meet Omni Channel Demand

  • 26 July 2016
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Designing Outbound Logistics Strategies to Meet Omni Channel Demand

The evolution of the Omni Channel

Alongside capacity and efficiency considerations, flexibility is the core of WBS’s approach to the design and optimisation of logistics strategies geared to serve multiple – or omni channel – supply chains. In the past 20 years, the Internet has revolutionised the way in which businesses operate. It’s certainly raised customer expectations to “pick, click and receive” their orders often within 24 hours. To keep pace with the market and fulfil customer demand, businesses therefore need the operational agility to become faster and more flexible in order to serve, retain and increase their customer bases. 

This continually evolving scenario therefore greatly impacts – or should impact – upon any business’s design of factory, distribution centre, transport network and entire supply chain infrastructure. If it doesn’t, links within their supply chains will inevitably break. The need to change distribution and warehousing models to strategically and practically accommodate evolving, multiple channels is paramount, whether from blueprint design or customisation of existing infrastructure.

Understanding your Omni Channel and forming effective strategies

Customer experience: What are the drivers?

Generally, your business or consumer customer will judge your service by their last order from the moment they placed it, until it’s delivered to their door. They’ll judge you on choice, price and speed of service.

The internet opens up diversity of buying opportunities and by its nature, opens up the supply chain to vulnerability. Underlying all of this is the fact that customers want (and deserve) choice. This diversity of choice inevitably creates a need for multiple product lines that therefore require sophisticated systems for storage and stock management.  

The internet is one driver; another is International trade. Manufacturing is no longer “king” in the UK because of the increasingly widespread trend of globally situated manufacturing depots, with supply chains for imported goods. Equally, the laws of importing and supply planning dictate that units should be inbound in high volume, with months of stock brought in to safeguard against delays in shipping, for example. If there is no buying strategy, that is, strategy aligned to evidential data of customer experience, your supply chain links are destined to break.

Design for distribution

When devising strategies to ensure that your service – and your warehouse infrastructure – meets customer demand, remember that your supply chain is just that; a series of links that must work together. If one link fails, so will your service.

  • Order profiling. Know how your customers order; what they order, when they order and even why they order specific products. Understanding ordering history and future potential is the key to optimising the way that your warehouse picks packs and delivers. In WBS’s experience, data that isn’t tracked via sophisticated software doesn’t accurately reflect customer activity. 
  • Data capture. Collecting customer experience data is paramount to understanding the demand that your warehousing infrastructure needs to meet both now and in the future. People and consumer requirements change daily and any operation requires sophisticated analytical and management tools in order to be able to track, capture and analyse empirical data.
  • Data analysis. When you’ve collected your data, analysing it will give you a vital picture of what stock and manpower management elements either positively or negatively impact your business.  Streamlining process and people management will also protect you from under- and over-stocking and give you the agility and ability to meet demand. The result will be a successful supply chain in terms of your business, your suppliers and your customers. 

Tradition vs future vision: Will your warehousing/distribution traditions live up to future customer demand?

Does your warehouse type really fit with the multiple channels that you’re serving? It sounds obvious but in our experience, many don’t. A common practise is to focus completely on what is inside a warehouse, rather than what is outside… the Omni Channel. This is a rigid rather than flexible approach which could negatively impact upon your supply chain.

There is always room for improvement in any existing warehousing operation. That may lie in the location, shape of building, stock source points, product weights, storage heights, people management/deployment, or unmeasured processes that may be impeding the effective flow of inbound/outbound goods and ultimately generating rising wastage and negative bottom line realities.

Getting the design for distribution right from the outset optimises the operation and eliminates the opportunities for waste to occur.

Relating your Omni Channel strategies to your warehouse design

It all comes down to flexibility of design – and continual customer experience monitoring – to ensure that your operation is geared toward any changes in buying trend and to deliver faster, leaner and simpler supply chain performance.  

Business operating models.

  • Internet. As above, online ‘click, pick and serve’ is a high demand, fast-track channel element that requires optimum response. To keep pace, your warehousing distribution model has to be agile in terms of order processing and stock replenishment.
  • Store networks. Stores have a different mentality. They usually put more stock in shops than is required; then replenish to cover for a week spanning several stores via HGV drop offs to distribution points. 

    Supermarkets, for instance, have multiple factors to consider. The mix of fast-moving consumable goods (FMCGs) is by nature problematic: food, ambient, chilled/frozen; clothes, electrical, etc. involving multiple sets of manufacturers all coming into the supply chain. The respective lifecycles of the food elements require highly accurate assessment of temperature during inbound and outbound storage to eliminate risk of contamination. 
  • Wholesaler networks. Effectively the ‘middle man’ between other carriers or service providers, it’s often easier for a manufacturer to sell direct to wholesaler than being in a complex supply chain. However, your wholesaler may well have its own complex Omni Channel challenges and this too should be considered.

So in warehouse terms, fast-moving goods need to have floor-based storage for quick movement. Does your warehouse have the floor space for the volume of FMCG stock? What about the number of doors – and design capacity – for inbound/outbound stock within your warehouse: can they cope with the throughput? Again, it sounds simple but if mismanaged, as we often see, it leads to phenomenal stock and revenue wastage.  

Commercial proposition: Customer-centric warehousing.

Designing a warehouse that has your customer at its heart is the single most important element of operating a successful supply chain. Does your supply chain work for or against your business plan? Are you matching your internal warehousing operation to customer demand and other externals such as suppliers and transport network? Knowing what is happening externally with your suppliers, customers and transport network, and internally with your people and stock is the second most important element. Linking external and internal factors is vital to having secure links in your supply chain.

Equally, know your numbers. By working to the globally-efficient Pareto 80-20 Rule will indicate best-fit approach as to where to focus effort and resources, for instance. In our experience, many retailers make the error of trying to be “all things to all men” in terms of stock variety and availability. Understanding your commercial proposition and how it works through your supply chain will transform your effectiveness as a business and your customer service levels. 

People culture and organisational development. Again, flexibility is vital here in terms of the balance of permanent and temporary manpower you require support your warehousing operation and meet customer demand. Factoring in seasonal demand of product aligned to that manpower is equally key. With influx of temporary labour comes the challenge of multiple language access in order to understand plant and machinery instructions and fellow workers. 

How WBS’s expertise will add value to your Omni Channel strategies  

Converting strategy into your Omni Channel blueprint – How to take a multi-channel approach.

Once you understand your Omni channel and have built strategies around operating and serving it, the next step is to apply these to your end-to-end operation.

Strategy first, followed by measurement of data capture in order to validate the feasibility of strategy for all elements of your supply channel. WBS models the throughput of a warehouse, calculates the average, the peak requirement even down to assessing the correct number of doors for inbound/outbound flow that a warehouse requires. It’s ultimately down to flexibility and flow of goods, deployment of manpower, stock control and waste management – depending upon the shelf life of your stock. 

The next steps 

Our experience is vast and ranges from 

  • Designing pick faces to re-designing and designing automated and mechanised facilities. 
  • Consulting on customer-run warehouses or supporting third-party logistics firms.
  • Designing, building and managing warehouses throughout their lifecycles.

Contact the WBS Group Team today for a review that will analyse your warehousing and distribution network’s current capacity, costs, supply chain speed, flexibility and deliverability.

Our in-depth systems knowledge and experience will help you see where your business is in the short-, medium- and long-term, and also improve your existing or design a new warehouse, with order management systems that will position your customer as the central driver to your operation, optimising your supply chain and transforming the way that you deliver.

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