Warehouse activities for Omni-Channels
Discuss About The International Journal Engineering Science.
Omni channel distribution is a multichannel method of sales which provides the consumer with an incredible experience of shopping whether he is shopping online from a mobile or computer, through telephonic sales or in a brick and mortar shop. When a shop has instigated the Omni channel methodology of sales, the consumer service department will immediately be able to refer to the past purchase experiences of the customer and analyze his preferences instantaneously. With the help of Omni Channel distribution , the customer can use the computer to verify the stock of the preferred product and management it later through his mobile phone and order the product to be delivered at his chosen location(Carroll and Guzmán,2015)
The Omni Channel distribution has greatly influenced the warehousing operations. With the change in the methods of distribution and storage, the fixed nature of the infrastructure of the warehouse can be seen as the main challenges. So there needs to be a transformation in the internal activities of the warehouse and management of inventory and supply in order to fulfill the demands of the consumers.
For example: In the earlier times, the manufacturers used to set up the regional warehouses to improve the operations and to distribute the products to the consumers ordering the products in bulk quantities which was based on demand patterns and monthly orders. But in the present scenario, with the increase in the online sales, storage and distribution require a different treatment due to unpredictable demand. The products ordered by the consumers should be distributed with enhanced packing and labeling and presented to the consumer by the local courier companies which claim to distribute the product at the ‘last mile delivery space’ (Deloitte ,2015).
As compared to this, the traditional distribution and warehousing operations should be transformed according to the changing demands and it needs to partner up with the local courier companies to satisfy the needs of the consumers. Due to the increased competitive demands, the warehousing and distribution operations need to reduce the lead time and be flexible enough to meet the needs of the consumers and reduce the delivery costs (Martino, 2015).
In order to improve the supply chain operations, there is a need to move away from the traditional warehousing approach. The Omni channel distribution systems allow for better development of the distribution service points and enhanced utilization of space. It will help in promoting the improved route density for further distribution. The Omni channel distribution method has enabled the exchange of products and services from a proximate service point. It has enhanced the level of transparency across the channels and demand patterns of the consumers.
Transforming Inventory Management
In the new operating framework, with the introduction of Omni channels, the warehousing operations have been implemented to supply the products specifying the mandatory details of the products to the consumers and distribution systems are designed as per the volume demanded.
Thus from a warehouse point of view, the online orders shall use more handling space and it puts the requirement to design it in a more comprehensive way. Furthermore, the warehousing operating model can be thought of as inventory service points for handling the fluctuating volumes to fulfill the demands of the consumers who order their products online.
With the increase in the demands of the consumers and their dependency on Omni channel options, there has been a lot of pressure on the warehousing and distribution operations.
As per Fortna (2018) to remove this pressure and enable an organized system of warehousing and distribution, the rules for allocation of inventory should be evaluated. As the demand is unpredictable for the online orders, so it should be analyzed whether the retail shop or the online order is prioritized in the context of inventory allocation. For this an effective order management system should be established to balance the factors such as service levels, order fill rate, delivery time frames and freight costs for making decisions about the allotment of stock and services to the customers (DHL, 2015).
The warehouse management system should keep the level of the stock flexible enough to fulfill the demands of the consumers irrespective of the mode from which the demand comes from. In order to regulate the warehouse management system to align it with the Omni channel distribution mechanism the companies introduce new technologies and procedures to harness various channels like retail and ecommerce. For example: if the manufacturer wants to apply a cross channel pick and sort methodology for retail, the warehouse management system should identify the zones and order breakups appropriately ( Hu¨bner, Holzapfel and Kuhn,2016).
The warehouse management systems should be able to find the right balance between the picking and waving logic. It should be efficient enough to develop procedures for picking the cartons and pallets and the online orders. The warehouse management systems should be able to allocate inventory effectively and they should split the orders amongst the stores and the sales directed towards direct to customer (DC).
Thus for developing effective warehouse management systems to be aligned with the Omni channel distribution mechanisms, the first step is to evaluate the goals and priorities of the organization , the warehouse is associated with. It assists in driving the direct to consumer marketing designs, the slotting, shipping and DC operations.
Streamlined Distribution Systems
Secondly, it should be ensured that there is a good anticipation of the demand of the consumers and available inventory to meet them. There is a need to develop more sophisticated mechanisms so that the warehouse house management systems drive efficiency through the various distribution procedures and they provide maximum returns on capital (Kourimsky and Berk,2018).
For the effective implementation of the Omni channel distribution systems, it is essential that the principles of total quality management (TQM) and lean management should be consistent with the former. TQM is a culture of the company which can be analyzed by enhanced consumer satisfaction and through the continuous development of the procedures in which the active participation of all the workers in the organization is needed (Kassem, In’airat and Bakri,2013).
The main ingredients of TQM are statistical and supply control, improvement and quality engineering which help in enhancing the success of the enterprises. The Omni channel improves the visibility and creates transparency in the various supply chain operations of the company and hence applies the principles of TQM in its procedures. It relies on constant communication with the clientele and provides them an insight into the specific location of the product till it is delivered to the final destination (Kumar and Hu, 2015).
The information regarding the location of the product is sent through mails, text messages and other notifications. It assists in improving the consumer services and enhances diversity in the decision making processes of the organization. The five principles of TQM are having a consumer centric approach, having a strategic approach towards improvement of the processes, inspiring mutual respect and teamwork amongst the consumers, focusing on continuous improvements and producing quality work. All these principles are imbibed in the Omni channel supply chain strategies.
It aims to provide customized products to the consumers. In the present era of apps, the retailers and suppliers endeavor to make the shopping experience of the consumers more personable and faster. Through the increased demands form the consumers from the e-commerce sites, the retailers are managing the entire processes from the manufacturing till the distribution of the product to its final destination to enhance the shopping experience of the consumers.
In order to enhance the shopping experience of the consumers, it is required to integrate the consumer data from all the touch points and the shopping options. The Omni channel strategies implement the principles of TQM in this aspect by integrating the data of the clients from the banks, online product rating techniques, sales and marketing and the data retrieved through social media. This data can be analyzed to create better forecasts of demand (EY, 2015).
Implementing Total Quality Management
So, the data created should be utilized amongst various systems across the supply chain. It helps in increasing collaboration and productivity amongst the supply chain practices. Furthermore, the increase in the level of personalization in the product decreases the level of returns from the buyers.
Amazon has implemented the principles of TQM in its supply chain practices. It has applied different logistic processes for receiving the goods, so that it can decrease the stock levels in the distribution centers in order to free up its cash. It uses the SAP Enterprise Inventory Optimization to optimize the levels of its inventory. It is a multiple level approach which helps in defining the equilibrium between the level of service and investment in the inventory with the help of the supply chain. Additionally companies apply the demand sensing techniques to combine the demand forecasting methods with techniques such as Big Data (Deloitte, 2015).
Another managerial strategy which is to be implemented in the Omni channel supply chain system is the lean management principles. Lean management is the approach which enables the organization to apply the principles of continuous improvement in its processes to improve efficiency and quality. The objectives of the lean management are consistent with the Omni Channel supply chain strategies in the following ways. The first principle is to introduce new advancements in the technology to improve the supply chain systems. Some of the examples are workforce management systems through the supply chain management, trading partners interface, consumer order management and consumer relationship management systems (López, Requena and Lobera, 2015).
Apart from this, the transportation yard managing systems should be introduced to manage the freight outside the doors of the warehouse along with transportation management systems.
Secondly, the principle of removal of wastages from the supply chain should be introduced so that only valuable elements exist in the supply chain processes. The wastages pertain to the excessive wait time of the processes, system complexities relating to unnecessary and confusing procedures in the Omni channel supply chain systems. It is also associated with unnecessary transportation of the products and holding excessive spaces for the stock.
Furthermore, the inactive raw material, work in progress and finished goods should not be kept idle and irrelevant human efforts which do not add value to the product should be eliminated. The packaging should be done in such a way which does not allow the damage of the product and the wasteful energy should be excluded from the Omni channel supply chain processes (Mutya et al., 2015).
Benefits of an Omni Channel Distribution System
Moreover, the third principle is related to the decrease in the lead time. The inbound and outbound transportation logistics should be removed so that the waste of overproduction can be eliminated .It can be executed by creating monthly plans of sales, operation, production and inventory .The personnel should work in collaboration to formulate a lean supply chain so that it brings value which is beyond the e expectations of the consumers (Casey, 2017).
Fourthly, with the help of Enterprise Resource Planning Systems the unwanted stock can be pushed into the warehouse. The Omni channel supply systems implement this principle to put a visual control of the flow of materials in the supply chain (Szozda, 2017).
Fifthly , with the help of delivery of the small shipments to fulfill the demands of the consumers assist in the decrease in the level of inventories and the lead time which can allow the company to easily adjust to meet the expectations of the consumers (Savisaari ,2016).
Hence to conclude, it can be said that the application of the lean management and total quality management principles in the Omni channel supply chain systems lead to enhanced consumer satisfaction. It helps in increasing the supply chain visibility and better analysis of the performance of the company. It also assists in better management of risk and reduction of inventory. Additionally, it assists in optimizing the freight charges so that the company can add value and reduce the costs utilizing the most efficient methods. Thus, through the implementation of the various managerial principles, the Omni channel supply chain strategies can help the company to gain a competitive edge in the globalized world.
References
Carroll, D. and Guzmán, I.(2015) The New Omni-Channel Approach to Serving Customers [online] Available from: https://www.accenture.com/be-en/~/media/Accenture/Conversion-Assets/DotCom/Documents/Global/PDF/Industries_2/accenture-new-omni-channel-approach-serving-customers.pdf [Accessed 15th May, 2018].
Casey, L.D.(2017) Addressing Gaps in Supply Chain Technology for Global OMNI Channel Retailers [online] Available from: https://scholarsbank.uoregon.edu/xmlui/bitstream/handle/1794/22562/Casey2017.pdf?sequence=1 [Accessed 15th May, 2018].
Deloitte (2015) Achieving Assurance of Supply in an Omni-channel World [online] Available from: https://www2.deloitte.com/content/dam/Deloitte/global/Documents/Consumer-Business/gx-cb-supply-chain-omnichannel-020315.pdf [Accessed 15th May, 2018].
Deloitte (2015) Omni-channel retail A Deloitte Point of View[online] Available from: https://www2.deloitte.com/content/dam/Deloitte/se/Documents/technology/Omni-channel-2015.pdf [Accessed 15th May, 2018].
DHL(2015) Omni-Channel Logistics. Germany: DHL Customer Solutions & Innovation.
EY(2015) Re-engineering the supply chain for the Omni-channel of tomorrow [online] Available from: https://www.ey.com/Publication/vwLUAssets/EY-growth-in-omni-channel-risks-diluting-consumer-products-and-retail-sector-profit/$FILE/EY-growth-in-omni-channel-risks-diluting-consumer-products-and-retail-sector-profit.pdf [Accessed 15th May, 2018].
Fortna (2018) The Impact of Omni-channel Fulfillment on Distribution Systems [online] Available from: https://www.fortna.com/whitepapers/impact-of-omnichannel-fulfillment-on-distribution-systems-EN%20(final).pdf [Accessed 15th May, 2018].
Hu¨bner, A., Holzapfel, A. and Kuhn, H.(2016) Distribution systems in Omni-channel retailing. Business Research [online] Available from: 10.1007/s40685-016-0034-7 [Accessed 15th May, 2018].
Kassem, A.A., In’airat, M. and Bakri, A.A. (2013) Evaluation Tools of Total Quality Management in Business Organizations. European Journal of Business and Management. 5(6), pp. 41-51.
Kourimsky, H. and Berk, M.V.D.(2018) The Impact of Omni-Channel Commerce on Supply Chains [online] Available from: https://itelligencegroup.com/wp-content/usermedia/WP_hybris_EN_2014_10_V01_CPM.pdf [Accessed 15th May, 2018].
Kumar , R. and Hu, M.(2015) Is Your Supply Chain Ready for the Omni-channel Revolution? Supply Chain Management Review[online] Available from: https://www.atkearney.co.jp/documents/10192/6464222/SCMR1509_OpAdvantage2.pdf/705bfa25-814b-4991-9853-66cf7648d0b2 [Accessed 15th May, 2018].
López, E.A., Requena, I.G. and Lobera, A.S.(2015) Lean Service: Reassessment of Lean Manufacturing for Service Activities. Procedia Engineering. 132 ( 2015 ) ,pp. 23 – 30.
Martino, G.(2015) Supply Chain Management in the Fashion Retail Industry: a multi-method approach for the optimization of performances [online] Available from: https://elea.unisa.it/jspui/bitstream/10556/2203/1/tesi%20G.%20Martino.pdf [Accessed 15th May, 2018].
Mutya, K.V. , Sandeep, R. , Agarwal, L. and Reddy, B.R.(2015) Supply Chain Omni Channel Model Networking and Its Optimization. International Journal of Engineering Science and Innovative Technology.4(5),pp. 41-47.
Savisaari , A.(2016) Supply Chain Effects in Creation of Omnichannel Customer Experience in Grocery Retail [online] Available from: https://pdfs.semanticscholar.org/77a2/74496bf913e644f245e937d73455f2d18a37.pdf [Accessed 15th May, 2018].
Szozda , N.(2017) Industry 4.0 and Its Impact on the Functioning Of Supply Chains. Scientific Journal of Logistic.13(4),pp. 401-414.
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