A SPECIAL SUPPLEMENT TO DC VELOCITY S-7
as well. For instance, the study found that 64 percent
had installed demand management software, which
helps companies predict what stock they’ll need in
their stores and DCs. Another 24 percent were using
a demand signal repository to gather information on
stocking needs, and, interestingly, 28 percent claimed
to be using “demand shaping” software, a sophisticated
application designed to stoke buyer interest in products.
Given the popularity of the “common pool of invento-
ry” approach, it was no surprise that many respondents
had invested in “distributed order management” (DOM)
software, which provides visibility into inventory held in
all locations. Fifty-six percent of respondents currently
use DOM applications, while 38 percent plan to imple-
ment the software.
When it comes to inventory visibility, it’s not enough
to have the right software. You also need good data—
up-to-the-minute information on the precise whereabouts of items. That has proved to be a stumbling block
for many operations. Last year’s survey found that most
companies lacked the technology required to generate
accurate data on store inventory.
This year’s study indicated companies had made progress in this area. Fifty-eight percent of respondents had
deployed bar-code scanners—an essential technology
for providing in-store inventory visibility—on the selling
floor and in the backroom. Another 43 percent said they
had installed a real-time inventory location application
for their stores. Still, only 11 percent said they had outfitted their stores with radio-frequency identification
technology, which allows for real-time location tracking
down to the item level.
LEADERS RELY ON SOFTWARE
All in all, the study shows that companies have made
progress toward building the infrastructure required for
omnichannel commerce. But the results also pointed to
what could be termed a great techno-divide between
the top-performing companies and the rest of the pack.
(Top performers were defined as those respondents who
self-reported year-over-year revenue growth and 95 percent or better on-time order fulfillment.)
Top performers had invested heavily in sophisticated
tools and technology. For instance, 100 percent of the
leaders had implemented a WMS to manage their operations, and 81 percent were using demand management
software to help determine future inventory needs. They
had also invested in bar-code scanning equipment,
reverse logistics systems, and inventory optimization
software.
It was another story altogether with their less tech-sav-vy counterparts, which lagged well behind the top performers in a number of categories. (See Exhibit 3.) The
failure to invest in technology could cause problems
for them down the road. For example, the reliance on
paper-based selection methods by many retailers could
hamper their efforts to use store inventory to fill online
orders. As noted in last year’s study, if retailers are to succeed at omnichannel distribution, they’ll need to spend
the time and money to bring their store fulfillment operations up to par with their DC operations.
For distribution centers, the challenge will be to
boost throughput and step up their e-commerce fulfillment game. Although many companies have put in an
RF-based WMS, more will have to embrace this technology. So, despite some progress since last year, retailers
and manufacturers have their work cut out for them if
they want to master omnichannel commerce.
EXHIBIT 3
TOP PERFORMERS EMBRACE
TECHNOLOGY
(Percentage of respondents using the technology)
WMS
Top performers 100
All others 84
Demand management software
Top performers 81
All others 58
Bar-code scanning equipment
Top performers 63
All others 58
Reverse logistics systems
Top performers 63
All others 50
Inventory optimization software
Top performers 63
All others 47
NOT SURPRISINGLY, THE TOP PERFORMERS AMONG THE SURVEY RESPONDENTS ARE ALSO THE ONES THAT HAVE MADE THE
GREATEST INVESTMENT IN SOFTWARE AND TECHNOLOGY.
