Many dismiss "omni-channel commerce" as just a new way of describing the "multi-channel" commerce that's been around for over a decade. But there is a distinct difference. "Multi-channel commerce" generally refers to the multiple ways a consumer can make a purchase, i.e., mobile Internet devices, smart phones, computers, brick-and-mortar stores, television and catalog, etc. In "omni-channel commerce," the consumer can experience the brand across multiple channels within a single transaction.
According to IDC Retail Insights, while the multi-channel shopper spends, on average, 15% to 30% more with a retailer than someone who uses only one channel, omni-channel shoppers will spend 15% to 30% more than multi-channel consumers.
Fully leveraging the benefits of omni-channel commerce, in many cases, can require significant investment in systems that enable company-wide inventory visibility and inter-departmental logistics coordination such as advanced point-of-sale (POS) systems, distributed order management and inventory management—not to mention a potential restructuring of the logistics network.
Companies are turning to their distribution centers to bridge a gap. Those that can adapt to efficiently fulfilling the higher number of smaller, more frequent orders that omni-channel commerce requires, while still meeting the demands of the traditional retail environment, will win.
The crux of the omni-channel challenge is that the distribution capabilities required for such an environment represent a significant departure from the distribution capabilities required to support the traditional retail model. The transition from case and pallet picking can be a painful one.
We've identified ten key tactics that successful companies are employing to efficiently support omni-channel commerce in the distribution center:
1: Create a Forward Pick Area
The goal of a forward pick area is to increase SKU-density per linear-foot, and allow multiple picks to be performed with a minimal amount of travel. Without a forward pick area, where unit picking is done from broken cases, a picker would need to travel 32 feet to be able to pick eight SKUs. By storing SKUs in carton flow rack, approximately four cartons of each SKU can be stored in a single lane (assuming a 12" square carton and 48" deep carton-flow). If the carton-flow is configured eight lanes wide by four lanes tall, then approximately 32 SKUs can be stored in eight lineal feet of aisle. This is a 16-fold increase in SKU density. Rather than walking 32 feet, the same eight SKUs can be picked by walking eight feet.
2: Set Up Effective Replenishment
Eventually, the supply of goods in the forward pick area will be exhausted. Effective rules must be set up for controlled replenishment. Types of Replenishment include: visual replenishment (replenishment workers conduct a visual survey of each bin, and replenish the ones getting empty); min/max replenishment (using the WMS or inventory control system to trigger a replenishment); demand-based replenishment (proactively looks at SKU demand for a given day or shift, and triggers a replenishment for SKUs with extra-heavy demand); hot replenishment (pickers can trigger an automatic replenishment of shorted SKUs); top-off replenishment (bins can be proactively "topped off" to their maximum levels to get ahead of schedule).