Retailers need more sophisticated technology to manage inventory in an omnichannel world. Tools that improve visibility and flexibility are at the top of the list.
Victoria Kickham started her career as a newspaper reporter in the Boston area before moving into B2B journalism. She has covered manufacturing, distribution and supply chain issues for a variety of publications in the industrial and electronics sectors, and now writes about everything from forklift batteries to omnichannel business trends for DC Velocity.
For most retailers, striking the right balance between in-store and distribution center inventory levels has become a serious headache due to omnichannel requirements and the need to respond to changing customer demands more quickly than ever before. Such challenges are causing organizations to take a closer look at how they manage inventory, especially if they are using multiple platforms to do so. For many, developing a singular view of inventory and improving flexibility across their networks are keys to managing today's increasingly complex supply channel.
"There are two key disruptors when it comes to inventory management," says Michael Salmasi, co-founder of New York City-based Veea, a platform-as-a-service (PaaS) company that provides a suite of technology solutions for business and consumer needs, including retail. "One is omnichannel or cross-channel fulfillment, and the other aspect is that we are living in a more dynamic marketplace. This is having a huge impact on the way inventory is managed. E-commerce and omnichannel [in particular] have become a huge burden for managing supply chains."
Those disruptors are making forecasting more difficult too—and if your forecast isn't right, your inventory won't be right, adds Patty McDonald, global solutions marketing director, Retail Solutions Division, for Dallas-based Symphony Retail AI, which provides artificial intelligence-enabled technology solutions for retailers and consumer packaged goods (CPG) manufacturers. She says many of the problems surrounding forecasting replenishment and inventory management stem from retailers' tendency to have different platforms and point solutions for managing inventory in different channels, which makes it difficult for them to get a clear view of inventory so that they can make good stocking decisions and, ultimately, provide the best possible customer service.
"You can't do [any of] that if you can't see your inventory," McDonald explains. "It seems simple to say that, but a lot of what we see is that customers manage inventory in different systems. ... If your e-commerce orders come into a separate system from your brick-and-mortar stores, how will you effectively manage inventory across channels? If there is not enough inventory in the warehouse, then you must determine priorities. It requires knowing the total picture."
The best way to improve the picture is to make sure there is a common and real-time view for managing inventory and by implementing solutions that promote the fluid flow of information between systems, say technology providers such as McDonald, Salmasi, and others.
What follows are some ways to make that happen.
TACKLE ONE ISSUE AT A TIME
The advent of e-commerce—and along with it, trends such as buy online, pick up in store (BOPIS) and buy online, return in store (BORIS)—has complicated the inventory management process by increasing the number of channels retailers must manage. Organizations trying to get a better handle on the problem often find themselves wondering where to begin: How do I make sure I have enough in-store inventory to meet BOPIS demands? What is the best way to manage BORIS services?
The key is to tackle one issue at a time, says Nick McLean, CEO of OrderDynamics, a provider of cloud-based order management technology solutions based in Richmond Hill, Ontario.
"It's really about thinking through this in a phased approach," says McLean. "That's the primary advice we would have."
Doing so means first taking a step back and considering basic factors such as the type of business you're in, the products you sell, and your physical location and assets. This allows companies to establish better processes that will then allow the implementation of better technology solutions. McLean points to BOPIS services as an example. It's much easier for a big box retailer to set aside the space needed for such services than it is for a smaller retailer located on the second floor of a mall, he reasons. The big box likely has more inventory space to begin with, will find it easier to set aside space for pickup, and may even be able to add ship-from-store capabilities. A smaller retailer may not have the space for such activities at all, finding it necessary to develop creative solutions to the problem—only offering such services at certain outlets, for example, or reconfiguring space to accommodate packing and shipping activities. Both entities must deal with staffing issues—in the form of scheduling and compensation changes—as workers' duties change.
"These are nuances people are [addressing] as they think through omnichannel and the way they [manage inventory]," McLean says. "And there is no way you can implement these changes in one fell swoop."
Charles Dimov, vice president of marketing for OrderDynamics, adds that once those issues are addressed, companies can begin to tackle the inventory visibility piece of the equation. He points to an OrderDynamics customer that made key changes to its inventory strategy after putting the building blocks in place to accommodate combined online/in-store services such as BORIS and BOPIS. Using a single inventory platform, the retailer could see all available inventory across its network and make in-store inventory visible to shoppers online, helping to drive them to its retail outlets to make their purchase, or to pick it up if purchased online. The retailer eventually added a ship-from-store service option as well. Together, these changes allowed the retailer to keep more inventory in the field, closer to customers, and led to the elimination of one of its distribution centers.
"This is a powerful tactic if used correctly," says Dimov, pointing to both the cost savings and improved customer service levels the project yielded. "There are so many opportunities [available to you] when you have a powerful system in place."
GET THE RIGHT TECHNOLOGY
Technology providers point to distributed order management (DOM) systems as tools that can provide the level of visibility retailers and their suppliers need to better manage inventory. These are order management solutions that address a range of functions, including inventory, order routing, analytics, and shipping. Such systems can unify inventory management across all channels; manage order types and channels all in one place; provide real-time visibility of demand to manage vendor, store, and customer orders; and prioritize tasks and optimize inventory performance, according to SymphonyRetailAI. McDonald adds that such systems make order management "simple, automated, and dynamic," allowing retailers to:
View inventory availability across the supply chain so they can select sources depending on factors that matter most—leadtime, freshness, lower cost, and so forth.
Split multiple product order fulfillment across locations based on availability.
Use product returns in one channel for order fulfillment in another.
"It's so important to have a platform and process that support one [view] of inventory and all the challenges that go along with it," McDonald says. "[You also need] something to manage the forecasting and fulfillment that needs to happen for all of that inventory. You really need a single platform that can simplify all that."
Salmasi agrees, emphasizing the difficulty brick-and-mortar retailers face in today's environment compared with their online-only competitors.
"The expectations that come with e-commerce now come with brick-and-mortar stores," he explains. "They now have to do what they do well and what the e-commerce giants do well. They have to manage both pieces."
Such challenges require a more sophisticated approach to managing inventory and to the technologies used to do so. Order management solutions that incorporate analytics and allow the sharing of information between trading partners can provide the visibility and agility required of today's supply channel, technology providers argue.
"There are a lot of demands on retailers and their suppliers for faster, better [service]," Salmasi explains. "Buy online, pick up in store, buy online and have it delivered the next day—those services put tremendous pressure on the supply chain. Even something as simple as free product returns can be complex.
"In order to do it all well, [retailers] need more sophisticated technology solutions than they've had in the past. They need systems that work together."
E-commerce activity remains robust, but a growing number of consumers are reintegrating physical stores into their shopping journeys in 2024, emphasizing the need for retailers to focus on omnichannel business strategies. That’s according to an e-commerce study from Ryder System, Inc., released this week.
Ryder surveyed more than 1,300 consumers for its 2024 E-Commerce Consumer Study and found that 61% of consumers shop in-store “because they enjoy the experience,” a 21% increase compared to results from Ryder’s 2023 survey on the same subject. The current survey also found that 35% shop in-store because they don’t want to wait for online orders in the mail (up 4% from last year), and 15% say they shop in-store to avoid package theft (up 8% from last year).
“Retail and e-commerce continue to evolve,” Jeff Wolpov, Ryder’s senior vice president of e-commerce, said in a statement announcing the survey’s findings. “The emergence of e-commerce and growth of omnichannel fulfillment, particularly over the past four years, has altered consumer expectations and behavior dramatically and will continue to do so as time and technology allow.
“This latest study demonstrates that, while consumers maintain a robust
appetite for e-commerce, they are simultaneously embracing in-person shopping, presenting an impetus for merchants to refine their omnichannel strategies.”
Other findings include:
• Apparel and cosmetics shoppers show growing attraction to buying in-store. When purchasing apparel and cosmetics, shoppers are more inclined to make purchases in a physical location than they were last year, according to Ryder. Forty-one percent of shoppers who buy cosmetics said they prefer to do so either in a brand’s physical retail location or a department/convenience store (+9%). As for apparel shoppers, 54% said they prefer to buy clothing in those same brick-and-mortar locations (+9%).
• More customers prefer returning online purchases in physical stores. Fifty-five percent of shoppers (+15%) now say they would rather return online purchases in-store–the first time since early 2020 the preference to Buy Online Return In-Store (BORIS) has outweighed returning via mail, according to the survey. Forty percent of shoppers said they often make additional purchases when picking up or returning online purchases in-store (+2%).
• Consumers are extremely reliant on mobile devices when shopping in-store. This year’s survey reveals that 77% of consumers search for items on their mobile devices while in a store, Ryder said. Sixty-nine percent said they compare prices with items in nearby stores, 58% check availability at other stores, 31% want to learn more about a product, and 17% want to see other items frequently purchased with a product they’re considering.
Ryder said the findings also underscore the importance of investing in technology solutions that allow companies to provide customers with flexible purchasing options.
“Omnichannel strength is not a fad; it is a strategic necessity for e-commerce and retail businesses to stay competitive and achieve sustainable success in 2024 and beyond,” Wolpov also said. “The findings from this year’s study underscore what we know our customers are experiencing, which is the positive impact of integrating supply chain technology solutions across their sales channels, enabling them to provide their customers with flexible, convenient options to personalize their experience and heighten customer satisfaction.”
Transportation industry veteran Anne Reinke will become president & CEO of trade group the Intermodal Association of North America (IANA) at the end of the year, stepping into the position from her previous post leading third party logistics (3PL) trade group the Transportation Intermediaries Association (TIA), both organizations said today.
Meanwhile, TIA today announced that insider Christopher Burroughs would fill Reinke’s shoes as president & CEO. Burroughs has been with TIA for 13 years, most recently as its vice president of Government Affairs for the past six years, during which time he oversaw all legislative and regulatory efforts before Congress and the federal agencies.
Before her four years leading TIA, Reinke spent two years as Deputy Assistant Secretary with the U.S. Department of Transportation and 16 years with CSX Corporation.
Krish Nathan is the Americas CEO for SDI Element Logic, a provider of turnkey automation solutions and sortation systems. Nathan joined SDI Industries in 2000 and honed his project management and engineering expertise in developing and delivering complex material handling solutions. In 2014, he was appointed CEO, and in 2022, he led the search for a strategic partner that could expand SDI’s capabilities. This culminated in the acquisition of SDI by Element Logic, with SDI becoming the Americas branch of the company.
A native of the U.K., Nathan received his bachelor’s degree in manufacturing engineering from Coventry University and has studied executive leadership at Cranfield University.
Q: How would you describe the current state of the supply chain industry?
A: We see the supply chain industry as very dynamic and exciting, both from a growth perspective and from an innovation perspective. The pandemic hangover is still impacting decisions to nearshore, and that has resulted in a spike in business for us in both the USA and Mexico. Adding new technology to our portfolio has been a significant contributor to our continued expansion.
Q: Distributors were making huge tech investments during the pandemic simply to keep up with soaring consumer demand. How have things changed since then?
A: The consumer demand for e-commerce certainly appears to have cooled since the pandemic high, but our clients continue to see steady growth. Growth, combined with low unemployment and high labor costs, continues to make automation a good investment for many companies.
Q: Robotics are still in high demand for material handling applications. What are some of the benefits of these systems?
A: As an organization, we are investing heavily in software that will allow Element Logic to offer solutions for robotic picking that are hardware-agnostic. We have had success deploying unit picking for order fulfillment solutions and unit placing of items onto tray-based sorters.
From a benefit point of view, we’ve seen the consistency of a given operation improve. For example, the placement accuracy of a product onto a tray is far higher from a robotic arm than from a person. In order fulfillment applications, two of the biggest benefits are reliability and hours of operation. The robots don't call in sick, and they are happy to work 22 hours a day!
Q: SDI Element Logic offers a wide range of automated solutions, including automated storage and sortation equipment. What criteria should distributors use to determine what type of system is right for them?
A: There are a significant number of factors to consider when thinking about automation. In my experience, automation pays for itself in three key ways: It saves space, it increases the efficiency of labor, and it improves accuracy. So evaluating which of these will be [most] beneficial and quantifying the associated savings will lead to a “right sized” investment in technology.
Another important factor to consider is product mix. With a small SKU (stock-keeping unit) base, often automation doesn’t make sense. And with a huge SKU base, there will be products that don’t lend themselves to automation.
With any significant investment, you need to partner with an organization that has deep experience with the technologies that are being considered and … in-depth knowledge of the process that is being automated.
Q: How can a goods-to-person system reduce the amount of labor needed to fill orders?
A: In most order picking operations, there is a considerable amount of walking between pick faces to find the SKUs associated with a given order or set of orders. Goods-to-person eliminates the walking and allows the operator to just pick. I have seen studies that [show] that 75% of the time [required] to assemble an order in a manual picking environment is walking or “non-picking” time. So eliminating walking will reduce the amount of labor needed.
The goods-to-person approach also fits perfectly with robotic picking, so even the actual picking aspect of order assembly can be automated in some instances. For these reasons, [automation offers] a significant opportunity to reduce the labor needed to fulfill a customer order.
Q: If you could pick one thing a company should do to improve its distribution center operations, what would it be?
A: Evaluate. Evaluate the opportunities for improving by considering automation. In my experience, the challenge most companies have is recognizing that automation is an alternative. The barrier to entry is far lower than most people think!
Toyota Material Handling and its nationwide network of dealers showcased their commitment to improving their local communities during the company’s annual “Lift the Community Day.” Since 2021, Toyota associates have participated in an annual day-long philanthropic event held near Toyota’s Columbus, Indiana, headquarters. This year, the initiative expanded to include participation from Toyota’s dealers, increasing the impact on communities throughout the U.S. A total of 324 Toyota associates completed 2,300 hours of community service during this year’s event.
The PMMI Foundation, the charitable arm of PMMI, The Association for Packaging and Processing Technologies, awarded nearly $200,000 in scholarships to students pursuing careers in the packaging and processing industry. Each year, the PMMI Foundation provides academic scholarships to students studying packaging, food processing, and engineering to underscore its commitment to the future of the packaging and processing industry.
Truck leasing and fleet management services provider Fleet Advantage hosted its “Kids Around the Corner Foundation” back-to-school backpack drive in July. During the event, company associates assembled 200 backpacks filled with essential school supplies for high school-age students. The backpacks were then delivered to Henderson Behavioral Health’s Youth & Family Services location in Tamarac, Florida.
For the past seven years, third-party logistics service specialist ODW Logistics has provided logistics support for the Pelotonia Ride Weekend, a campaign to raise funds for cancer research at The Ohio State University’s Comprehensive Cancer Center–Arthur G. James Cancer Hospital and Richard J. Solove Research Institute. As in the past, ODW provided inventory management services and transportation for the riders’ bicycles at this year’s event. In all, some 7,000 riders and 3,000 volunteers participated in the ride weekend.
After years in the military, service members and their spouses can find the transition to civilian life difficult. For many, a valuable support on that journey is the U.S. Department of Defense (DOD) SkillBridge program. During their final 180 days of service, participants in the program are connected with companies that provide them with civilian work experience and training. There is no cost to those companies while the service member continues receiving military compensation and benefits.
Both sides benefit from the program. “We’re proud to work with SkillBridge to give back to our military veterans for the bravery and sacrifices they’ve made for all of us,” Troy Pederson, director of training and development at LiftOne, a Hyster-Yale dealer and established SkillBridge employer, said in a release. “In the last year, we’ve helped 10 SkillBridge interns transition from military to civilian life, and the value and positive impact of the program can’t be overstated. At LiftOne, we’ve gained so much from the experience and diverse mix of technical and leadership skills of our SkillBridge candidates.”