17 May Omnichannel Warehouses
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 ecommerce purchase, a B2B ordering system – or even by mail order or telephone. Integrating these various ordering and delivery systems requires an omnichannel warehouse.
The Difference between Traditional Warehouses and Omnichannel Warehouses
Traditional warehouses will fulfil orders according to 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 ecommerce orders direct to consumers.
For its ecommerce set-up, a retailer may locate several warehouses across the country, 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 co-operate more tightly. Your supply chain is smoother and more integrated, allowing for better control of costs and greater efficiency. The integration brings increased order accuracy too, boosting customer satisfaction.
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 ecommerce return could simply and quickly be re-allocated 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 software 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.
Disadvantages of Omnichannel Warehouses
Perhaps the only disadvantage of omnichannel warehouses becomes evident for distributors looking to move to that as a model right now.
While not typically difficult, at the moment there is a shortage of available warehouse space and so it will likely take some time to arrange. Brexit has made that harder to achieve too – as everyone is holding more stock than usual at the moment while we wait for more clarity on the process.
Will you move to Omnichannel Warehousing?
If yours is an omnichannel retail operation, instead of running one warehouse per channel, there are distinct advantages to having one or more networked omnichannel warehouses. As long as you get them functioning together effortlessly, and managed with a sophisticated warehouse management system.
Whether you make the change or not will probably be a major board-level decision. If you would like some input into your decision-making process, we’d be pleased to help with network, warehouse and transport analysis. Call us on 020 8819 9071 or get in touch.