Omni-Channel’s Ripple Effect on Transportation

When Transportation Optimization and New Shopping Behaviors Collide

One needs to go back to the early 2000s to see green shoots of modern omni-channel retail. While web-based e-commerce began in the late 90s, consumer and retailer appetites didn’t get whetted for omni-channel experiences until the early part of the last decade. Indeed, by 2002, Best Buy was saying more than half of its customers were checking its website before coming to the store.

It was a prescient move for Best Buy to present its store inventory online. This level of inventory visibility delivered a new shopping experience for Best Buy’s customers. Customers could feel immediate gratification by picking up products purchased online, on the same day from a local store.

For other retailers following Best Buy’s lead for same-day pickup for in-store inventory, things were fine in the transportation kingdom. A consumer retrieving an item at the store didn’t create waves for outbound supply chain operations. Since the chosen item was fulfilled from existing store inventory, the effect on outbound transportation was likely minimal.

Then, new players began appearing, in rapid succession, on the direct-to-consumer commerce stage: social media, smartphones and an explosion of fulfillment options, like same-day delivery, free shipping, etc.

Today’s consumers have access to a rich array of goods from across all of a retailer’s inventory and can choose from numerous fulfillment options after clicking the buy button. For retailers, direct-to-consumer fulfillment is causing purpose-built store replenishment DCs some frustration. This is because omni-channel behaviors have changed demand patterns. Direct-to-consumer demand is foisting more outbound, direct-to-consumer fulfillment responsibilities on the shoulders of strained DCs.

Left unchecked, changing demand patterns can have a negative effect on transportation costs. To start to contain some of these costs, one needs to survey what’s really happening.

Start With Visibility
Omni-channel commerce fulfillment is, in a word, complex. The complexity stems from all of the options available to get a single item to the customer and how demand can shift at a moment’s notice. Demand can escalate without warning, for instance, when a hot item goes viral on social media.

The place to start is by assessing visibility in at least three key areas:

  • Intercompany transfer of shipments to a distribution center or store location
  • Routing for omni-channel commerce fulfillment
  • In-transit shipping messages and event management

Intercompany transfer visibility is an obvious need. If you ship something from one DC to another, it helps to know what’s on the truck and its expected arrival date. This is especially true if in-transit inventory is made available to omni-channel shoppers.

Finally, a window into third party, in-transit shipping messages and event management visibility is critical for taming the outbound beast. When you ship to your own stores using your own fleet, the challenge to receive shipping messages is minimal. Complications arise once a shipping company sends product via a third-party carrier. Without exchange of data, retailers stand to lose visibility once a product leaves the dock.

Customers need visibility, too. They want to know when their stuff will arrive and to be made aware of any issues during the product’s journey to its destination.

Get in Sync
While visibility is important, it’s also critical to synchronize data across the multiple systems that play a role in the orchestration of omni-commerce:

  • Distributed order management (DOM) – System of record for all customer orders and transactions, regardless of channel
  • Warehouse management system (WMS) – Governs incoming and outbound stock positions, labor, etc.
  • Transportation management system (TMS) – Handles inbound and outbound transportation operations and route modeling

Why is synchronizing and coordinating these systems important? Functions and data sources are entwined. And if they’re not, they should be. Coordination among systems drives a “single version of the truth” for data and gives supply chain leaders complete visibility into the ebbs and flows of transportation, stock and fulfillment. With DOM, information about the customer and orders is added to the mix, rounding out the information that transportation analysts need.

A TMS that is integrated with DOM and WMS offers more information, which can then be leveraged to make better decisions and optimize outbound transportation, whether a shipment is a full truck load for a store or a single item delivered to a customer’s home.

Bring the Future Forward
Omni-channel buying behavior and trends aren’t going away. In fact, e-commerce, as a percentage of all retail sales, has increased year over year and shows no signs of slowing. Visibility – through integration with other systems – places enterprises on a firmer footing so they can make better business decisions about direct-to-consumer and other fulfillment options.

One approach to visibility and synchronization is to use a single platform for critical commerce functions (DOM, WMS and TMS) as noted above. A single platform can keep everything, and everyone, in alignment. And with everything in sync, retailers have the flexibility and information they need to get on the path to optimized transportation operations.

gregg-lanyardGregg Lanyard is director, product management for TMS at Manhattan Associates. He is responsible for driving strategy, roadmap, and marketing for all transportation solutions. He manages customer, partner, and analyst relationships, and supports Manhattan’s sales and services organizations.

Prior to joining Manhattan, he was senior principal product strategy manager at Oracle for nine years, responsible for defining and executing the strategy for Oracle’s Transportation Management solution. Prior to Oracle, Gregg served in senior product management roles at both Manugistics and CombineNet.  At Manugistics (now part of JDA Software), Gregg spent 12 years helping the company grow its industry leading transportation solution, as both a consultant and senior product manager.  At CombineNet (now part of SciQuest) a strategic sourcing software and solutions provider, Gregg served as Director of Product Management.

A graduate of Penn State University’s Business Logistics program, Gregg has over 20 years of experience working with logistics professionals to implement and design transportation management systems. He resides in Pittsburgh, PA with his wife and two children.

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