CeMAT Insider

Why omni-channel businesses need tailor-made distribution centres

Posted by CeMAT Team on 13-Jul-2016 15:48:17


A lot of businesses today are omni-channel, so they have eCommerce as well as traditional brick and mortar stores. So to Michael Jee, Sales Director at Vanderlande Industries Group, there is no one size fits all solution for distribution centres.

“eCommerce is becoming a huge growth market, and one of the things, apart from the fact that we all need clothing, is the fact that men are spending more online.”One of the underlying reasons for this is the fact that everybody wants their online goods to be delivered faster and faster.

“A lot of the time the client doesn’t understand their own business, which is fine, because we’re there as a tool to find out what works”.

And the reason for this? Changing consumer behaviour that is arising due to omni-channel business. 

Historically, people would go shopping on Saturday or Sunday if they needed something. Now with the growth in eCommerce and the diverse offerings online, you can go shopping anytime. 

The challenge for businesses is making this omni-channel business model affordable and sustainable.

If you’re a business that offers customers the ability to buy online and return in store, you may begin to find this an incredibly expensive task without the right automation of processes.

Michael states that handling returns is very costly to businesses. “The items has to be brought it, identified, taken out of the packaging, put back in packaging that will allow it to be packed and shipped again.” 

So in order to reduce costs, businesses need a system that is custom made to their needs, and according to Michael, mapping out the complexity of your supply chain and customer demand is a difficult process.

“Business ask us: how can we change our supply chain, an how can we reduce the costs?

A business needs to understand customer demands before they begin to change their supply chain. You need to understand the information underlying it, inventory demands, peak periods. Then you can work on the detail by developing your system. 

You don’t want to go into the detail of designing a system and it doesn’t work, so you need to go through individual steps in great detail to understand what will work, and what won’t.

You may have a lot of items like Zalando German eCommerce company that holds over 1 million different SKUs, but something as simple as one piece of equipment could sort the parcels easily and efficiently for you.

“There’s lots of equipment out there and you need to tailor the right solution to the need, not the other way around” Michael states.

“Automating processes within inbound or outbound can save businesses a lot of money in labour costs.

Understanding how your business will grow after 10 years and creating a solution that is scalable is also important to factor into your solution design. There would be no point creating a solution that can’t respond to growth and expansion.”

Customers are very fickle when it comes to eCommerce and if they receive something that is damaged or broken they will most likely not buy from you again.

That’s why businesses such as UK company called NEXT are introducing innovative technologies to create efficiencies. NEXT uses an automated bulk storage system that can split down into miniloads. Saving the business a lot of time when picking and packing.

This system was designed after they gained an understanding of the analysis and seeing where they wanted to go.

Michael closed his presentation by iterating the importance of understanding your business and where it needs the most improvement.

“Get to know your supply chain, all the data sets and vocal points that could be optimised.”

Topics: Supply Chain Management, Logistics Automation, Warehouse