S-6 A SPECIAL SUPPLEMENT TO DC VELOCITY approach.

The use of paper-based picking in stores stands in sharp contrast to the automated processes found in today’s distribution centers. When respondents were asked what order fulfillment technologies they employed in their DCs, the majority—64 percent—said they used a warehouse management system (WMS) in combination with radio-frequency technology, an approach that allows order selectors to receive instructions in real time as they move about the facility. Still, a third of DCs perform order selection the old-fashioned way, using a paper-based process in conjunction with their WMS. Another 16 percent have deployed a voice-recognition system, while 6 percent were using goods-to-person automation and 6 percent a pick-to-light system.

SEPARATE BUT UNEQUAL?

With well over half the respondents filling both e-commerce and store replenishment orders from a single DC, the question arises as to how they handle these “hybrid” operations. The survey results indicated that most separate the two activities. Fifty-seven percent of respondents said they segregated their e-fulfillment operations from their traditional store fulfillment activities. Eighty-five percent of respondents segregating e-fulfillment reported that they had a separate, distinct area for e-commerce within the warehouse. Along with the physical separation, many respondents said they maintained distinct inventory for e-commerce as well as separate labor forces.

It appears that some use separate technology as well. For instance, among the respondents that used goods-to-person picking systems (roughly a quarter of the survey participants), less than half deployed them for both traditional and e-commerce fulfillment. About a quarter used goods-to-person picking systems solely for traditional fulfillment and another quarter solely for e-fulfillment.

It was a different story, however, when it came to their warehouse management systems. Seventy-one percent of respondents use the same WMS to oversee both e-commerce and traditional fulfillment within the DC.

GETTING THE BIG PICTURE As for what software and technologies the respondents use in their omnichannel distribution operations, most of the survey participants are employing the traditional “supply chain execution” (SCE) applications. These include warehouse management systems, transportation management systems, inventory optimization software, and labor management systems. (See Exhibit 2.)

But respondents are not limiting themselves to the use of SCE tools. They’re using specialized applications

EXHIBIT 1

HOW ARE RETAILERS FILLING
E-COMMERCE ORDERS?
(Percentage of respondents)

Orders are filled through a DC that also handles store replenishment 57 Orders are fulfilled from the store 37 Orders are filled through a Web-only DC 32 Orders are shipped direct from manufacturer or supplier 32

Note: Participants were allowed to select multiple responses.

WHEN IT COMES TO FULFILLING ONLINE ORDERS, THE MAJORITY OF RESPONDENTS RELY ON A “HYBRID” DC THAT ALSO HANDLES TRADITIONAL STORE REPLENISHMENT ACTIVITIES.

EXHIBIT 2

WHAT TECHNOLOGIES DO
RETAILERS USE TO SUPPORT
OMNICHANNEL INITIATIVES?
(Percentage of respondents using the technology)

Warehouse management systems 87 Labor/workforce management software 65 Demand management software 64 Transportation management systems 60 Bar-code scanning on store floor/backroom 58 Distributed order management software 56 Reverse logistics systems 53 Inventory optimization software 51 Real-time inventory location store application 43 Total-landed-cost analytics 36 E-commerce material handling solution for DC 33 Demand shaping software 28 Demand signal repository 24 Cost-of-quality analytics 17 RFID at store 11