DC Velocity - IdeaBook 2016

Omnichannel commerce is becoming the new norm in retail. Consumers expect highly personalized shopping experiences with the ability to buy and return products interchangeably across all channels. As retailers scramble to align their distribution centers (DCs) to optimize omnichannel processes, they are relying ever more heavily on technology to drive efficiency. One such technology is labor management software (LMS).

“We are definitely seeing more interest in labor man-
agement solutions in the era of omnichannel commerce,”
says Christine Hirtz, territory manager at technology com-
pany HighJump Software. “Retailers are experiencing the
challenges of handling this new complexity of how orders
need to be fulfilled. Driving efficiencies with, and promot-
ing the productivity of, a valuable work force is critical.”
As e-commerce sales rise and retailers offer more buying
options such as “order-online-pick-up-at-store” or “buy-
in-store-and-ship-from-the-DC,” their distribution cen-
ters are picking and preparing an ever-greater number of
customer-ready shipments. The result is an increase in the
labor-intensive and time-consuming processes of “each”
(individual item) picking and order packing.

Until recently, the each-pick, direct-to-consumer business was a relatively small part of a retailer’s overall mix.

Companies could outsource the function to a third-party logistics service provider (3PL) or relegate it to a small area of an existing distribution center. Today, however, these types of orders have reached a critical mass for many retailers. In response to this sea-change, companies are pulling all channels into one distribution center, which allows them to leverage efficiencies associated with sharing the cross-channel labor pool, fixed costs, and inventory.

The distribution center is today home to a new mix of

The omnichannel revolution has
ushered in sweeping changes for DCs
and the people who work in them.
It’s also changing how retailers use
performance-tracking systems.