Flexibility Is Key As Retailers Reshape Networks Around Consumers

Supply chain company Dematic’s Kim Baudry joined the Omni Talk podcast to provide an update on retail supply chain developments as companies aim to get closer to their end consumer.

Here is a summary of what Kim had to say:

Delivery Time

Baudry noted that many retailers are trying to locate inventory and fulfillment nodes closer to customers based on product delivery time expectations. For example, apparel retailers can be farther away than grocery retailers, who need to offer more same-day pickup or delivery options.

Sortation Centers

One step many retailers are taking is to open more regional sortation centers to gain better control over last mile delivery compared to relying solely on parcel carriers. However, these hubs currently don’t consolidate multi-item orders from different store sources into one box.

Automation

Regarding automation, Baudry said that retailers have taken a more cautious approach to investing in micro-fulfillment centers due to inconsistent e-commerce volumes and operational difficulties transitioning their store teams to the practice. As a result, she is a proponent of a phased path to automation adoption based on volume demand and space constraints.

Software vs. Hardware

Baudry also emphasized the importance of supply chain visibility and planning software in managing omni-channel fulfillment across more nodes. She advised retailers to be thoughtful in how they define their network strategies and attempt to tie them into their end customer service goals.

For 2024 investments, Baudry suggests starting slower with flexible automation like mobile robots while optimizing software. She noted that retailers should find the right solutions for their specific needs and volumes. The key is being consumer-focused and deliberate, not reactive.

The Final 411

In summary, retailers are tweaking distribution networks, balancing automation, and enhancing software to get closer to their end consumers. The ideal strategy will provide flexibility to meet evolving demand while aligning operations to customer expectations.