34 DC VELOCITY JANUARY 2015 www.dcvelocity.com
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install vertical lift modules or horizontal
or vertical carousels to store items being
collected for an order or outbound cartons
awaiting pickup by a parcel carrier.
Taking this a step further, Webb foresees
a day when the customers themselves will
interact with this sort of automation in an
ATM-like experience. For example, say a
customer has purchased something online
for in-store pickup. Upon arrival at the
store, the customer would swipe his or her
card, and the carousel would spin around
and present the customer with the item.
Actually, that day may be closer than
you think. Baudry reports that Dematic
has some grocery industry customers in
Europe that have installed fully automated
storage and retrieval systems in their stores
that allow consumers to come in and collect orders placed online.
5. HOW WILL THESE CHANGES AFFECT
THE DC?
As more companies look to increase the
efficiency of store employees, Baudry
believes the trend toward store-based order
fulfillment will only accelerate. And there’s
no doubt that changes at the store will
affect operations further back in the supply chain, like those taking place at the
warehouse and distribution center. For DC
operations, one of the likely consequences
will be a push toward smaller but more
frequent shipments to the store.
CHASING THE OMNICHANNEL PROMISE
While the use of stores as fulfillment nodes
may be gaining popularity, the trend is
still in its nascent stages. According to
Tompkins, only a small percentage of
retailers are actively using their storeroom
as an asset; most haven’t even started to
think about it.
Indeed, omnichannel retailing is so new
that retailers are navigating essentially
uncharted waters. No one has figured out a
single right way to address the challenge of
omnichannel fulfillment or can offer basic
guidelines for success.
“I don’t think there have been any best
practices established yet,” Baudry says.
“Instead, as the front end of the business is
recognizing the importance of omnichannel, the supply chain is just trying to catch
up.” ;
companies decide which store or
distribution center to ship the order
from.
Intelligrated’s Webb agrees
that retailers will need two types
of solutions, although his recommendations vary somewhat from
Tompkins’. First, Webb says, they’ll
need an enterprise solution that
can “look” across the network and
determine where to locate inventory based on both financials and
customer service considerations.
Second, they’ll need a DOM solution to help with fulfillment decisions for individual orders.
4. DO YOU NEED MORE
TECHNOLOGY?
Right now, the most sophisticated piece of material handling
equipment in most backrooms is
a hand truck or a shopping cart
that’s used to move merchandise
around, according to Tompkins.
However, as stores take on a larger
order fulfillment role, they might
benefit from incorporating some of
the same kinds of technology and
equipment typically found in warehouses and DCs, he says.
For example, according to DC
VELOCITY’s recent omnichannel
distribution study, 71 percent of
companies that fill orders from
their stores are using a paper-based
method to select items. While this
may work initially, paper-based
selection will not be sustainable as
store-based e-fulfillment activity
ramps up. Eventually, experts say,
retailers will have to upgrade to
voice or radio-frequency identification technology to direct picking.
As volumes swell and stores take
on increasingly complicated fulfillment tasks, Webb predicts that some
retailers will install small-item sorters in the backroom. If the rooms
are large enough, some might even
