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How e-Commerce is Reshaping Supply Chains
Franklin B
How E-Commerce is Reshaping Supply Chains
Art Eldred
Client Executive, System Engineering
Why the resurgence on
Omnichannel?
Every dollar spent online
influences $5.77 spent in the
store over the next 10 days
Terry Lundgren, CEO
Macy’s
Evolution of the Consumer
1970 1975 1980 1985 1990 1995 2000 2005 2010 2014
Evolution of Retail & eCommerce
Supplier
Supplier Distribution Center DC
Supplier Fulfillment Center FC
Distribution Center DC
Supplier Omnichannel DC
Retail Store
Home
Home
Retail Store
Retail Store
Distribution Growth & Fulfillment
Service Needs
3
2
4 5
1 6
Distribution Center Growth Fulfillment Center Service Needs
Source: U.S. Census Bureau Source: UPS
What does Omni-channel really
mean to the distribution center? Definitions vary, but for purposes of this seminar,
we'll use the term to refer to a retailers' efforts to
integrate their store and e-commerce selling
channels to work seamlessly together inside the
fours walls of a single distribution center.
One Inventory
One Fulfillment Engine
Multiple Order & Product Flows
Current State
What are the benefits of one
Omnichannel DC? • Speed to Market
• Labor
• Profit
• Infrastructure – Inventory
– Systems
– Facilities
– Administration
SPEED
LIMIT
AS FAST
AS YOU
CAN!
Combined Order Profile
DTC Retail
Challenges
• One Inventory
• Information
Systems
• Product
Configurations
• Current
Infrastructure
Information Systems Challenges
LMS
WCS
Item
Sorter
Retail WMS
Pick to
Light
Put to
Store
WCS
Shipping
Sorter
Label
Applicator
Case Pick
ERP & Order Management
TMSLMS
WCS
Item
Sorter
eCommerce WMS
Pick to
Light
Put to
Store
WCS
Shipping
Sorter
Label
Applicator
Case Pick
ERP, Order Management, eCommerce
TMS
Order
Management
ERP
Warehouse
Management
System
Intelligent
Warehouse
Control
System
LMS
WCS
Item
Sorter
WMS
Pick to
Light
Put to
Store
WCS
Shipping
Sorter
Label
Applicator
Case Pick
ERP, Order Management, eCommerce
TMS
Intelligent WCS
Order & Inventory Intelligence w/Ability to Balance Work
Across Both Machines and People for All Channels
WORK PULLED TO AVAILABLE PEOPLE & MACHINES
Inventory Challenges
Receive Store Fulfillment
Ship
VAS Processing
Storage Challenges
Reserve Velocity Based Slotting
All Active
VS
Pre-Omni Order Processing
Ord
er
Cut-
Off
Stores 15-24
Ecom
Order Store 7-14 Stores 1-6
Ecom
Order
Retail
ORDER POOL
eCommerce
ORDER POOL
8AM – 10PM 24 Hrs- After 6PM Heaviest
Shipping
Cut-Off
Retail
Wave #4
Retail
Wave #3
eCom Expedited
Wave #2
Retail
Wave #1
Retail
Wave #5
Omnichannel Processing Engine
“Wave-less” Continuous Processing
Ord
er
Cut-
Off
B2C Orders Retail Orders
Store 1
Pieces 1-50 Ecom
Order Store 2
Pieces 50-76 Ecom Expedited
Order
Ecom
Order
COMMON
ORDER POOL
Shipping
Cut-Off
Ideal World
What if we combine our
ecommerce & retail
fulfillment operations?
Real Benefits • Reduce Capital
– Buildings
– Automation
– Infrastructures
• Reduce OPEX
– Inventory
– Labor
– Facilities
• Flexibility
– Dynamically react to product flow
• Higher Margins
– Inventory can Match the Demand
Omni-channel is here to Stay “It works. There is real ROI in these projects.”
-Mark Seigel, EVP, Ann Inc.
“Macy’s omni-channel strategy is one of three key strategies driving its success”
-Karen Hoguet, CFO, Macys
“Approximately 50 percent of our sales involve online research at some point in
the shopping process. And another key fact is that almost one in every four store
shoppers have previously been on homedepot.com before purchasing in our store.
It’s for this reason that we have dropped the ‘e’ off of e-commerce.”
-Hal Lawton, President, The Home Depot Online Business
Source: Logistics Viewpoints
How E-Commerce is Reshaping Supply Chains
Panel Discussion/ Q &A
Panel Facilitator:
• Art Eldred/ Client Executive, System Engineering
Panelists:
• Pattiann McAdams-Russell, CEO, 2DecadesDigital, LLC, (former
GM/SVP with Bath & Body Works Direct), Columbus, OH
• Andrew Norris, Marketing Segment Manager, UPS, Columbus, OH
• Steve Reade, Director, Distribution Services, DSW Inc., Columbus, OH
