The new era of Omnichannel Distribution - Vargo...
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© 2014 MHI® Copyright claimed as to audiovisual works of seminar sessions and sound recordings of seminar sessions. All rights reserved. Sponsored by: Presented by: Art Eldred, Client Executive - Vargo Carlos Ysasi, VP Engineering – Vargo The new era of Omnichannel Distribution
Transcript of The new era of Omnichannel Distribution - Vargo...
© 2014 MHI®
Copyright claimed as to audiovisual works of seminar sessions and
sound recordings of seminar sessions. All rights reserved.
Sponsored by:
Presented by:
Art Eldred, Client Executive - Vargo
Carlos Ysasi, VP Engineering – Vargo
The new era of
Omnichannel
Distribution
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Why the resurgence on
Omnichannel?
Every dollar spent online
influences $5.77 spent in the
store over the next 10 days
Terry Lundgren, CEO
Macy’s
3
Evolution of the Consumer
1970 1975 1980 1985 1990 1995 2000 2005 2010 2014
4
Evolution of Retail & eCommerce
Supplier
Supplier Distribution Center DC
Supplier Fulfillment Center FC
Distribution Center DC
Supplier Omnichannel DC
Retail Store
Home
Home
Retail Store
Retail Store
5
Distribution Growth & Fulfillment
Service Needs
3
2
4 5
1 6
Distribution Center Growth Fulfillment Center Service Needs
Source: U.S. Census Bureau Source: UPS
6
What does Omni-channel really
mean to the distribution center? Definitions vary, but for purposes of this seminar,
we'll use the term to refer to a retailers' efforts to
integrate their store and e-commerce selling
channels to work seamlessly together inside the
fours walls of a single distribution center.
One Inventory
One Fulfillment Engine
Multiple Order & Product Flows
7
Current State
8
What are the benefits of one
Omnichannel DC? • Speed to Market
• Labor
• Infrastructure
– Inventory
– Systems
– Facilities
– Administration
SPEED
LIMIT
AS FAST
AS YOU
CAN!
9
Combined Order Profile
DTC Retail
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Challenges
• One Inventory
• Information
Systems
• Product
Configurations
• Current
Infrastructure
11
Information Systems Challenges
LMS
WCS
Item
Sorter
Retail WMS
Pick to
Light
Put to
Store
WCS
Shipping
Sorter
Label
Applicator
Case Pick
ERP & Order Management
TMSLMS
WCS
Item
Sorter
eCommerce WMS
Pick to
Light
Put to
Store
WCS
Shipping
Sorter
Label
Applicator
Case Pick
ERP, Order Management, eCommerce
TMS
Order
Management
ERP
Warehouse
Management
System
Intelligent
Warehouse
Control
System
LMS
WCS
Item
Sorter
WMS
Pick to
Light
Put to
Store
WCS
Shipping
Sorter
Label
Applicator
Case Pick
ERP, Order Management, eCommerce
TMS
Intelligent WCS
Order & Inventory Intelligence w/Ability to Balance Work
Across Both Machines and People for All Channels
WORK PULLED TO AVAILABLE PEOPLE & MACHINES
12
Inventory Challenges
Receive Store Fulfillment
Ship
VAS Processing
13
Storage Challenges
Reserve Velocity Based Slotting
All Active
VS
14
Pre-Omni Order Processing
Ord
er
Cut-
Off
Stores 15-24
Ecom
Order Store 7-14 Stores 1-6
Ecom
Order
Retail
ORDER POOL
eCommerce
ORDER POOL
8AM – 10PM 24 Hrs- After 6PM Heaviest
Shipping
Cut-Off
Retail
Wave #4
Retail
Wave #3
eCom Expedited
Wave #2
Retail
Wave #1
Retail
Wave #5
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Omnichannel Processing Engine
“Wave-less” Continuous Processing
Ord
er
Cut-
Off
B2C Orders Retail Orders
Store 1
Pieces 1-50 Ecom
Order Store 2
Pieces 50-76 Ecom Expedited
Order
Ecom
Order
COMMON
ORDER POOL
Shipping
Cut-Off
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Ideal World
What if we combine our
ecommerce & retail
fulfillment operations?
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New Omni-channel Case Study
A
B
C
D
E
G
H
J
K
L
M
N
B
C
B
Receiving
Reserve
Pallet Build
Empty Tote Return
DTC Prepped Ready
Inventory
Retail Ready
Inventory
Unit Sorter Induction
Pre-Sorter
Cross-Dock
Parcel Shipping
DTC Packing Sorter
Put-To-Store
Case Shipping
(TL/LTL)
N
M
H
G
K D
B
L
J
E
E E E E E E E E E
A
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Starts with One Inventory
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Unit Level Processing
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Retrofit an existing operation
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Real Benefits • Reduce Capital
– Buildings
– Automation
– Infrastructures
• Reduce OPEX
– Inventory
– Labor
– Facilities
• Flexibility
– Dynamically react to product flow
• High Margins
– Inventory can Match the Demand
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Omni-channel is here to Stay “It works. There is real ROI in these projects.”
-Mark Seigel, EVP, Ann Inc.
“Macy’s omni-channel strategy is one of three key strategies driving its success”
-Karen Hoguet, CFO, Macys
“Approximately 50 percent of our sales involve online research at some point in
the shopping process. And another key fact is that almost one in every four store
shoppers have previously been on homedepot.com before purchasing in our store.
It’s for this reason that we have dropped the ‘e’ off of e-commerce.”
-Hal Lawton, President, The Home Depot Online Business
Source: Logistics Viewpoints
For More Information:
Speaker: Art Eldred, Client Executive
email: [email protected]
Speaker: Carlos Ysasi, VP Engineering
email: [email protected]
website: www.vargosolutions.com
Or visit MODEX 2014 Booth #3297
NOTE: This ending slide is OPTIONAL. Items that can be included are your
speaker’s email address/home page, the Exhibiting Member Company’s name,
home page and Booth Number.
