If you’d have said the phrase “omnichannel warehouses” five years ago, pretty much no-one would have known what you were on about. Even just a couple of years ago the concept was only just emerging.
While providing an omnichannel shopping experience has been a reality for much longer than that, it is only recently that supply chain commentators have begun to discuss omnichannel warehousing.
And that’s because omnichannel operations work best with omnichannel warehousing.
What is an Omnichannel Warehouse?
An omnichannel warehouse fulfils orders to all customers, regardless of which channel they purchase through.
So, the same warehouse will send goods to wholesalers that might order via a B2B interface; to stores that may automatically be replenished according to sales made; direct to end-customer homes and offices from online orders; and to stores or third-party outlets for customer collection.
These orders may have been received via an app, an e-commerce purchase, a B2B ordering system – or even by mail order or telephone. Integrating these various ordering and delivery systems requires omni channel fulfilment.
The Difference between Traditional Warehouses and Omnichannel Warehouses
Traditional warehouses will fulfil orders according to the channel. So a large operator may have a dedicated facility for fulfilment to wholesalers, a separate facility for sending goods to stores, and yet another for despatching e-commerce orders directly to consumers.
For its ecommerce set-up, a retailer may locate several warehouses nationwide, so that orders can reach customers as quickly as possible. Yet, for store replenishment, a centrally located operation may be preferable.
So if you’re running an omnichannel sales operation, this can mean many different warehouses. Perhaps several regional warehouses that each service a cluster of stores, and a separate one for your online sales.
With many sales channels though, an omnichannel warehouse is becoming the logical choice.
Benefits of Omnichannel Warehouses
Having an omnichannel warehouse brings improved working between your outlets. Your shops, your online operation, and your order fulfilment all cooperate more tightly. Your supply chain is smoother and more integrated, allowing for better control of costs, greater efficiency, and improved inventory management. The integration brings increased order accuracy too, boosting customer satisfaction and enhancing the customer experience.
Omnichannel warehousing can also allow you to deliver more quickly and to offer more delivery options to your customer. You can handle click and collect, for example. This does require that customer outlets also act as mini warehousing operations – because returns need to be temporarily stored, as do goods for collection.
When you consider that returns can run to 30% of orders, then it’s clear how beneficial an omnichannel warehouse can be. Returns that come into a warehouse that serves all channels can easily be replenished into stock. So an e-commerce return could simply and quickly be reallocated to in-store stock. With separate warehouses for each channel, that would instead mean transferring stock between facilities, which would add unnecessary costs and delays.
And with this kind of operation, running a sophisticated warehouse management system will mean that you will always know the precise, real-time location of stock, orders, and returns.
Customer-centricity is an additional bonus. If your customers can order online, collect from a store and return via a local shop, then your offering can compete with the likes of Amazon for speed and convenience, improving the overall shopping experience and increasing sales.
Disadvantages of Omnichannel Warehouses
One downside of switching to omnichannel warehouses right now is the lack of available space. This isn’t usually a big issue, but with warehouse space being scarce, it might take a bit of time to set up. Brexit has also made this more challenging, as companies hold more stock while waiting for clearer guidelines.
However, adopting an omnichannel fulfilment strategy can make your order process smoother, manage inventory better, and ensure efficient picking, packing, and shipping. This leads to faster deliveries and a great customer experience. Omnichannel warehousing is set to be the go-to solution for both online and physical stores, meeting today’s high consumer expectations.
Technology Used in Omnichannel Warehousing
Warehouse Management Systems (WMS)
A crucial tool in omnichannel warehousing is the Warehouse Management System (WMS). These systems keep track of inventory in real-time, following each item from its arrival in the warehouse to its delivery to the customer. Advanced WMS platforms can handle tasks across multiple channels, giving the clear oversight necessary to manage complicated operations. They help with picking and packing orders, shipping, managing returns, and predicting future demand.
Automation and Robotics
To meet the growing need for speed and efficiency, many omnichannel warehouses are using automation and robotics. Automated storage and retrieval systems (AS/RS) help quickly and accurately pick items from storage. Robotic sortation and conveyor systems make sorting and packing easier. These technologies increase throughput, reduce human error, and lower operational costs.
Internet of Things (IoT) Devices
The Internet of Things (IoT) enhances the connectivity and intelligence of modern warehouses. IoT devices like RFID tags and sensors help track inventory levels, environmental conditions, and equipment performance in real-time. These devices provide important data. This analysis can improve warehouse operations, decision-making, and inventory accuracy.
Artificial Intelligence and Machine Learning
Artificial Intelligence (AI) and Machine Learning (ML) are transforming how omnichannel warehouses work. AI algorithms can analyze past data to predict demand patterns, optimize inventory levels, and create efficient picking routes. Machine learning models can identify trends and anomalies. These insights help improve operations for better efficiency and customer satisfaction.
Transport Management Systems (TMS)
A strong Transport Management System (TMS) works with the WMS to manage and optimize the transportation of goods. These systems provide real-time visibility into shipment movements, allowing for better route planning, load optimization, and carrier selection. Integrated TMS platforms ensure timely deliveries, enhancing the overall customer experience.
Will you move to Omnichannel Warehousing?
If you run an omnichannel retail business, consider the benefits of using networked omnichannel warehouses instead of separate ones for each channel. The key is to integrate them seamlessly and manage them with an advanced warehouse management system.
Deciding to make this shift is likely a major decision at the board level. If you need help evaluating this option, we’re here to assist with network, warehouse, and transport analysis. Contact us at 020 8819 9071 or reach out for more information.