Balancing B2B and B2C – the modern supply chain fulfilment challenge

Following Manhattan Associates’ Manhattan Exchange 2018 event in Amsterdam last week, Manufacturing & Logistics IT spoke with the company’s Senior Director – Product Management, Adam Kline, about the changing supply chain landscape and how state-of-the-art software, mobile devices, automation and robotics solutions can leverage major benefits for today’s warehouses and distribution centres.

In addition to the high demands placed on warehouses and distribution centres from bricks and mortar retail stores, an increasingly high percentage or goods are now being delivered directly to end customers as a consequence of the huge growth in popularity of the e-commerce model. So, when it comes to ensuring warehouses or DCs can rise to this two-tier challenge – each model with its own distinct supply chain processes – is it better to split the two disciplines into separate areas within a single building, dedicate separate sites to one process or the other, or can the two processes work efficiently in tandem?

“If you're purely an e-commerce web front then clearly your supply chain is going to look a lot different to the more traditional type, but nevertheless they still have their own very unique supply chain challenges,” explained Manhattan Associates’ Adam Kline. “Then there are the brand owners; the footwear companies, the apparel companies the fashion companies etc. These own-brand companies have traditionally thrived on supplying their goods to the large ‘big-box’ retailers. Of course, this is something they continue to do; however, they now have to be much more agile and nimble in the way they supply those orders because customer-to-customer demand has really changed in the wake of digital and e-commerce.”

Kline made the point that, even at the retail store, the e-commerce trend has propagated back to the way many retailers order from the suppliers. “Add to that the fact that those brand owners are fulfilling orders directly to the end customer as a separate channel and that channel is growing exponentially for them,” he said. “So, the onset of e-commerce has affected not just those that you would expect – the pure-play e-commerce companies and maybe some retailers – but it goes back to the suppliers and even back to the manufacturers.”

In the case of some of the home improvement retailers, Kline explained that when a customer goes online to place an order, that’s often not going to be fulfilled out of the retailer’s own distribution centre. “Often it will be passed directly to the manufacturer, to the supplier, and that company will fulfil it via drop ship order,” he said. “That drop ship order looks a lot different to the traditional way they have fulfilled orders; which was in large order quantities.”

So, the way to fulfil each of these orders within a distribution centre is clearly considerably different to the way these companies have been used to shipping things – in full-pallet quantities. “The e-commerce model and the effect it has right through to the beginning of the supply chain is definitely one of the major challenges in modern warehousing,” said Kline. “Individual customers can place orders 24 hours a day seven days a week wherever they are just by using their smartphone. Every time they place an order, the recipient of that order, the shipper, has an opportunity to either win or lose that customer; in some cases forever. If customers have a bad experience and something ships late, often they will never come back. So, it’s a constant battle to aim to win the business of those end customers because they can be a lot more more fickle than the traditional retail stores.”

So much for some of the current macro supply chain challenges. What if we zoom in a little and consider what that means within a distribution centre? “I think we passed the inflection point now,” said Kline. “Whereas once it was largely the case of managing e-commerce on its own, companies are now recognising that there is real synergy in bringing B2B and B2C all under one roof. If you consider real estate costs and all the infrastructure that is required, it certainly makes more sense for many companies to do things this way.”

However, the model of shipping large bulk orders to a retail store or a network of retail stores as well as shipping to individuals out of the same distribution centre can bring its own set of challenges. “Of course, those two flows look very different to each other; for example, in terms of the way packing is done,” Kline pointed out. “So, managing those flows at the labour level can be challenging.” He added that another key challenge is labour. “Warehouse workers are increasingly difficult to find – once upon a time you could quite easily hire a group of new people for peak season. Now, more inexperienced warehouse workers are being hired than five years ago.”

Enabling technology

So, how can these modern warehousing challenges be met from a technology perspective? Looking at the labour challenge first, particularly with regard to managing peak periods effectively, Kline makes the point that the need to be able to skill-up a workforce quickly is critical. “In the recent past the devices that workers used in the warehouse could be pretty bulky; with small screens, a text-heavy graphical interface and with the bulk of the device taken up by a physical keyboard. Now, if you look at the best devices that are being built and leveraged today – Zebra and Honeywell devices, for example – the vast majority are touch-based, and they look and feel much like the smartphones we are all used to using every day. This means warehouse workers can get comfortable with these devices a lot quicker and enjoy a better all-round user experience.”

Similarly, this year Manhattan Associates has re-imagined the user experience completely and has delivered the execution workflows on those new mobile applications with large touch targets and item imagery to make it very clear what the user should pick. “There are very clear areas on the screen that pull your focus and point out what should be demanding your attention at that moment,” explained Kline. “We have also provided the ability to overlay training messages and the ability to allow the device to benefit from text-to-speech capability very easily. So, leveraging the new devices in a very intuitive way to drastically reduce training and on-boarding time has been a huge area of investment for us and we have made significant strides down that path.”

Also, in terms of automation – not only in terms of the sheer quantity and scope of automation now being used in distribution centres but also the variety of different styles and levels of sophistication involved – warehousing is seeing a massive growth in that area. However, this demands a level of synergistic management in order for the various siloed systems to work efficiently together. “A DC might have a put wall built by one manufacturer and then maybe start to bring in some collaborative picking bots by the likes of Locus Robotics or Fetch Robotics etc. – this can result in major improvements in terms of warehouse efficiencies,” said Kline. “However, there can also be a significant challenge there because each of those providers has a control system that manages their automation, but the control system can be very much siloed to their own solutions.”

Therefore, what warehouses need, according to Kline, is a layer that sits above all those different control systems and provides a level of orchestration. “That’s what Manhattan Associates’ Order Streaming does,” he explained. “Order Streaming is our waveless picking solution, and in conjunction with our Warehousing Execution System (WES) that we built directly within our WMS, it provides the connectivity to the various warehouse control systems. It provides heartbeat messages to check whether a piece of equipment is on and able to conduct certain tasks, or whether work needs to be re-routed elsewhere. It manages and monitors the capacity of each piece of automation and it works well not only with those automated resources but also contemplates and optimises the flow of work allocated to human resources. In that way it fuses man and machine inside the distribution centre and provides a holistic layer of orchestration above that.”

Kline concluded: “We have invested more in supply chain, specifically warehouse management, with this recent release than we ever have before and that really shows in the innovation we are able to bring to market and our commitment to continue to deliver meaningful user experiences and innovative technology to our customer base.”