The Future of the Fulfillment Center: Is Omni-Channel on the Rise?

Published : November 13, 2014

future-of-fulfillmentThe ever-shifting technological climate between a business and its customers can be highly beneficial. With the right approach and the right tech investments, a business can realize such diverse benefits as greater end-to-end supply chain transparency, increased outreach through social media, and more chances to showcase a new product or service. But technology adoption is not without its pitfalls.

As consumers grow more insistent in their demands for a seamless shopping experience, retailers are confronted with more sophisticated obstacles. Creating a mobile-friendly webpage or opening an account on a new communication platform—which were the most pressing tech concerns just a scant few years ago— are now minor undertakings compared to today’s tricky tech hurdles.

Omni-channel now looms on the horizon of business expectations, both an opportunity and a significant obstacle course for retailers and their fulfillment partners alike.

A Peek Behind the Scenes

In September 2014, consultancy group Capgemini released their 19th Annual Third-Party Logistics Study, the result of surveying more than 770 logistics solution providers worldwide. One of the most telling findings of the study was how omni-channel considerations have put relationships between retailers and their third party logistic providers in flux— following in the same path as the evolution of the retailer-consumer relationship. This finding highlights the ripple effect that cuts a clear path from the end buyer all the way back to the companies providing raw materials.

While this new frontier in sales is certainly changing the landscape, it also hasn’t moved mountains quite yet. The study found that 33% of those surveyed admitted that they “weren’t ready” to handle the increased and unique logistical demands of omni-channel.

With more than a third of logistics providers self-identifying as unprepared to handle it, how viable is omni-channel right now?

The Slow Creep Forward

Big retailers are already making the first tentative steps toward merging their digital presence with their physical one. What began as in-store returns for digitally purchased merchandise has expanded to include location-based phone apps, site-to-store shipping and more— all designed to keep the customer inside a brand. Retail giants heard indecisive customers reassuring themselves they could get that product they had in hand “cheaper on the internet” and positioned themselves to be that solution as well.

This outreach translates into something of a burden for fulfillment centers, however— shipping directly to online customers and including those orders in traditional stock shipments are two very different endeavors. Modifications are often made on the fly initially to keep up with competition, but at the end of the day businesses and third party logistics providers alike are compelled to invest in custom-built solutions for omni-channel solutions. This is because the movement still lacks a “tweakable” program or satisfactory software that adequately responds to omni-channel needs across multiple industries.

As industry news provider SupplyChainBrain notes, proper omni-channel software needs to see into all orders from all channels in real time— a problem that likely leaves fulfillment professionals without the right software and tools to properly oversee in-store operations feeling a bit like they’re herding cats.

Omni-channel is definitely changing the way that sales, logistics and fulfillment centers work together, but it’s still a long road uphill. A smart company will avoid reactionary moves to “keep up” with what essentially only amounts to experimentation on the part of large retailers. It’s far smarter to linger in the background instead, in order to learn from their future mistakes. Above all, open and honest communication with a logistics provider and fulfillment center is vital.

A company can look, feel and act as if all of its channels are seamlessly connected, but if it falls apart at the fulfillment point, they’ll lose valuable consumer trust they may never regain.

Looking for a better order fulfillment solution?   Click here to contact Aero and learn how we can help.

Topics: Supply Chain Logistics

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