Automation may be the single most important issue for distributors across the country as they tackle the escalating costs associated with multi-channel distribution.
A few years ago, analysts predicted that the new realities of multi-channel distribution were bound to trigger increased levels of automation in distribution centers across the country. They were right. In fact, automation has become the "do or die" feature of the quest to effectively manage a growing number of orders coming in from a growing number of sales channels.
The move toward a single inventory serving multiple channels within a single facility has created common flows. (See A Single Inventory for Both 'Bricks & Clicks'?.) Those flows, in turn, have justified higher levels of automation, as well as automation of specific tasks related to the e-commerce segment.
Not surprisingly, the challenges stack up. The range of sophisticated automation and software tools will hardly revolutionize distribution if those involved -- retailers, suppliers, distributors, etc. -- lack the resources or knowledge to implement the systems.
In some instances, the struggle centers on integration: How do you combine the solutions of today with solutions of yesteryear? Systems set up to handle cartons and cases are suddenly expected to process individual units. The customized orders and infinite range of packaging sizes that characterize online shopping have caused manual packaging processes to crumble. Companies have introduced automated packaging, but modernizing the entire chain of order fulfillment is a different story.
"We've seen a lot of automation in order picking, but little change between picking and the dock. It's the Jetsons on one side of the curtain and the Flintstones on the other. That's starting to change," Bill McMahon, director of new business development for Orbis, acutely observed in an interview with Supply Chain 24/7. "The challenge is to design a system that can handle whatever comes at it, without knowing how that might change in the future."
Interestingly, even though a Peerless Research study shows retailers and distributors predict online sales channels will yield the greatest revenue growth by far over the next two years, some appear unprepared for this new reality.
According to one observer cited in Inbound Logistics, only one out of 10 retailers say they have a solid omni-channel strategy. Six out of 10 are studying the issue; the others either have outsourced their e-commerce to a giant like Amazon or have yet to address it.
Establishing a multi-channel distribution strategy is indeed a must for survival or, as one analyst puts it, "Those businesses who get it are pulling ahead pretty fast, and those who don't, well, I don't know how long they'll be around."