Analysis: The future of supply chain solutions


Supply chain directors need an innovative mindset to meet the challenges posed by the multichannel retail landscape.

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In multichannel retail, where consumer expectation demands increasing choice of delivery and service options, a reactive supply chain that can turn customer promises into reality is critical for retailers. 

The growth of multichannel means retailers are assessing every aspect of the supply chain - stock and inventory management, inbound logistics, shipping, containing, warehousing, distribution, picking, packing, right through to delivery - based on variable customer demand at a granular level, as well as traditional scheduled promotions.

"In the past, the format of sales was to bring product in for launches, stack them up and sell through, but now customers are ordering anywhere and at any time," explains Paul Miller, director of inbound logistics at Shop Direct. "We don't move containers from Hong Kong or China. We move customer orders, we relay these customer orders and bring that information back down the supply chain and to the distribution centre long before the product has landed."

According to Martin Brickell, project manager at supply chain consultancy Total Logistics, now that retailers are multichannel, they need to adapt and innovate in the supply chain to offer the service level required.

"When you add in cross-border and returns, there is complexity in the multichannel supply chain that needs strategic recognition. Supply chain solutions are as unique as each business," Brickell adds.

While pure-plays may be in a stronger position in that they do not have to juggle the disparate supply chain requirements of bricks as well as clicks, a growing number of multichannel retailers including Marks & Spencer and Boots are investing in dedicated ecommerce service centres that can deal with the supply chain processing that online retail requires.

The future is automation

Propelled by the growth of Boots.com, Alliance Boots refurbished and re-opened a £50m automated service centre in Burton-upon-Trent this February to process orders for the retailer's 25,000 ecommerce product lines, Christmas gift ranges and international distribution.

The new facility introduced both very narrow aisle racking systems that can increase storage capacity by up to 50% and shuttle systems, so that units can be moved more flexibly in the Warehouse and up to 900,000 singles a day processed. The scheme also included about 100,000 sq ft of mezzanine space to house a fully automated materials handling equipment system by Knapp. The automated service has increased time efficiency by 65% and improved order traceability through track and trace technology.

M&S is also in the throes of warehouse consolidation and automation. The retailer, which had 110 warehouses, is now focusing on a smaller number of 'super warehouses'. Its first in Bradford opened in 2010, run by logistics firm Wincanton, while its second, a fully automated site at 1 million sq ft in Castle Donington, Derbyshire for general merchandise and ecommerce, is due to open early next year. It will, according to an M&S spokesperson, be "the engine room for ecommerce".

Brickell, who works with clients including Walmart, TK Maxx, Argos and Tesco, explains that retailers are increasingly assessing stock-keeping unit range, volume and sales per SKU to implement the right warehousing and automation infrastructures.

"You need to be going into that level of detail to build automation solutions that are future-proof," says Brickell.  

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This page contains a single entry by Staff published on October 27, 2012 3:25 PM.

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