The pace of technological change is matched only by pace of developments in supply chain thinking. So perhaps it’s time to re-examine the IT strategy, says Malory Davies.
The rise of omni-channel and the growth of mobile devices means that IT systems did a great job just a few years ago may well need to be upgraded or even replaced. Not only that, the economy is actually growing again so that there is also pressure to respond to that growth.
“The market is still uncertain,” says Alex Mills of Chess Logistics Technology. “But we think it is likely that investment is on the upturn due to the appearance of a recovering economy and a measure of confidence among businesses that the worst at least is over.”
And Simon Sterland of Snapfulfil says: “According to our client base, an increased consumer confidence is beginning to translate into a sustained increase in sales, which is creating a short term demand for headcount/FTE and this in turn is creating an interest in IT system investment across our business verticals.”
And Sterland points out that multi-channel retailing has inevitably changed the nature of the supply chain as retailers respond to consumer demand to embrace all available shopping channels (i.e. mobile devices, tablets, brick-and-mortar outlets, click and collect and so on).
“In some cases this will require retailers to implement specialised supply chain strategy software as retailers and brands have to redefine and re-configure their supply chain strategies to match this shift in consumer demand. The systems to handle these new channels need to be fast and reliable, and very often need to communicate to multiple data sources in real time. Creating a strong data flow, built around resilient component systems is key and many software vendors can help their prospective users to design these new business structures, benefitting from their experience and knowledge of other businesses overcoming the same challenges.”
“Improving supply chain visibility becomes very important where web operations are integrated with other channels such as store or wholesale distribution,” says Pierre D’Arbost, managing director of MNP.
“A web order or wholesale order is sold stock whereas a store replenishment order is for stock that may or may not be sold in the short term. As such there is a need to have clear visibility of all stock and demand in the supply chain, together with rules-based rationing processes, to maximise sales. The progress of an order through the supply chain also becomes very important when managing channel orders such as web or wholesale. It is a key part of customer service to provide the order placer with accurate and detailed information about the progress of their order, within the fulfilment process and afterwards with the carrier, and this is only possible using a modern Order Management System and WMS designed for this purpose.”
And Chris Pass of BCP says: “Key to success [in omni-channel]is business-wide transparency – stock availability, stock location, delivery data and the whole spectrum of orders that are being placed – through all channels – and using that information, alongside accurate forecasting, sophisticated pricing matrices, and rigorous fulfilment operations to deliver a seamless omni-channel experience for customers at a cost which is economical for the business. That’s where a truly integrated solution like Accord comes in. Attempting to stitch together lots of disparate systems for this purpose is difficult – if not impossible.”
Craig Sears-Black, UK managing director of Manhattan Associates, says: “The IT shopping list for both online and bricks-and-mortar retailers is being dictated by the habits of consumers. According to recent research by One Poll and Manhattan Associates, 83 per cent of shoppers say reliable delivery options make them a more loyal customer. As such, legacy systems are creaking under the pressure of retailers’ need for real-time stock updates and visibility, a greater number of delivery options, and floods of data waiting to be analysed. In figuring out what services to offer and what enabling systems and infrastructure are required to meet customers’ evolving needs, retailers just need to remember that while earning customer loyalty and boosting sales are important, it is profitability which is key to long-term success.”
“Increasing the efficiency of inventory management across stores and warehouses, ensuring a visible pool of stock is accessible to those selling on the shop floor and a building a next generation, channel-less retail platform that meets service and profitability goals, are all top IT priorities over the coming year. At the moment 26 per cent of retailers struggle with real-time visibility and 37 per cent have experienced out-of-stock situations. The retail environment isn’t static, it will continue to evolve as more retail channels are developed and consumers’ expectations continue to grow. Retailers must develop a back-end fulfilment capability that is future-ready if they wish to remain open for business”.
Chris Pass of BCP says: “Always true as the key challenge, as ever, is to match stock to demand as efficiently as possible to minimise business costs while giving customers the best possible service – an increasingly complex task as the diversity of sales channels and fulfilment options expands.
“Efficient purchasing and stock control procedures supported by sophisticated demand forecasting and business analytics that allow easy access to meaningful data are critical, as is a powerful warehouse management system. Voice technology continues to lead the way here in improving performance and, undoubtedly, adoption will continue to increase in the coming year.
BCP has always offered wall-to-wall voice WMS, covering all operations from goods receiving right through to dispatch, and most of our customers use it to reap productivity and accuracy benefits across the warehouse, says Pass, pointing out that other vendors are now following suit, expanding voice to cover other operations and operators will take advantage of this.
”The rise of omni-channel has had an impact on the WMS market,” points out Pierre D’Arbost, managing director of MNP. “With the game-changing omni-channel world though, many companies realised that their traditional WMS simply wasn’t fit for purpose and we have seen strong demand from three sectors:
l 3PL or 4PL companies who are moving more into fulfilment as the market for these services expands
l Retail companies using an existing WMS that can’t support omni-channel efficiently
l Direct order companies that have grown rapidly and now need a WMS to manage the scale of their operations.
And he points out that: “In parallel with this, there is continued strong demand for Order Management Systems to link to the omni-channel world and manage payments, carrier integration, inventory management and order control.”
One of the growth areas in IT has been cloud computing. It started out as a cheap way for small companies to access sophisticated technologies. But, it is increasingly being used by large organisations as well.
Last month, for example Oracle released Oracle Transport Management Cloud and Oracle Global Trade Management Cloud to meet the growing demand. Derek Gittoes, vice president, value chain execution product strategy, said users were increasingly looking to use cloud versions of these applications. Gittoes made it clear that these are not cut-down versions of existing on-premises software but have the full functionality of the existing versions.
Sterland points out: “Software as a Service models have been gaining traction and momentum fast, allowing businesses of all shapes and sizes to ‘subscribe’ to the software they need to improve their operations/ visibility/control without needing significant sums for investment or long term borrowing. Saas allows specialist providers like Snapfulfil to focus on the ‘Service’ aspect of their offering and their clients to focus on the essential aspects of generating new customers/ sales for their warehouse to fulfil,” says Sterland.
Jan-Paul Boos, senior vice president, EMEA at Kewill, says: “Cloud is the future of logistics management and there are good reasons for it. In the fast moving industry, operational planning and communication are essential for successful partnerships across all levels. But companies don’t often have the budget or resource to invest in large scale IT projects in-house. And this is where a hosted cloud-based service comes in. Cloud computing gives businesses the flexibility to add new capabilities and amend existing processes without upfront capital investment and long-term commitment. Built on a SaaS platform, it gives greater flexibility for mid-sized and growing small businesses in particular to innovate in a cost effective manner.”
Alex Mills points out that “cloud” does not always need to be SaaS – for example, the benefit of hosting applications in the cloud rather than on a local server is unclear. It doesn’t necessarily make the software run any better and there may be issues with “uptime” or general service availability.”
Ultimately, says Kewill’s Jan-Paul Boos: “IT investments must always deliver against business objectives. For those working with retailers, the focus will be on delivering omni-channel operations and creating an efficient management of inventory.”
SUPPLY CHAIN VISIBILITY: Visible benefits for inventory
The importance of supply chain visibility is highlighted by Stephanie Miles, senior vice president, commercial services at Amber Road, the global trade management specialist. A survey published by the Aberdeen Group earlier this year, found that 85 per cent of respondents indicated that they intended to increase their current level of end-to-end visibility. Top performers use a control tower approach, it said.
Miles points to the growth in international trade, particularly developing markets, which is making the job of logistics increasingly complex. And she highlights the use of control towers to provide better management of inventory with improved visibility.
Amber Road’s strategy has been to develop a global trading network with pre-established connectivity to hundreds of trading partners. Secure data communication enable supply chain partners to share information, distribute reports, and receive alerts on milestones that are critical to the timely delivery of goods. This enables them to reduce cross-border trade risks while improving supply chain responsiveness.
Drop shipping is growing in importance. Miles points out that this can reduce the amount of inventory held, but it is important that the process is seamless to provide the right customer experience.
BRING YOUR OWN DEVICE: Decisive devices
The development of the smartphone has given rise to the “bring your own device” phenomenon where companies can simple provide staff with an phone app rather than a dedicated device. But the BYOD route has cons as well as pros.
Simon Sterland of Snapfulfil says: “Despite some of the obvious financial advantages of a BYOD strategy (it can also bring increased employee satisfaction and increased flexibility) many early adopters of BYOD/consumer unit strategies are now reporting lower overall productivity as employees are more easily distracted and consumer units do not stand up well to the conditions in a busy warehouse operation.”
And Alex Mills of Chess says: “We’re not sure to what if any extent this practice will gain traction in the logistics sector, particularly at shop floor level. At Chess we can’t think of many instances where a device owned by an individual would be “transferrable” to the workplace, particularly if that workplace were something like a distribution warehouse. Most consumer computing devices are inappropriate for this sector, although this doesn’t preclude managers at a senior level being able to use their own iPad for example to view system reports or analysis.”
BCP’s Chris Pass says: “To enable businesses to take advantage of the opportunity offered by real time data and mobile computing solutions providers have to develop dedicated versions of their software which work on mobile devices – with the same level of functionality and integrity for all users. This is more complex than you might be led to believe. Rudimentary things that don’t deliver much are straightforward, but to develop software that’s effective is more difficult.”
Originally printed in Logistics Manager 10/2014