As more retailers grapple with the challenges of in-store order fulfillment, they're turning to software once used strictly within the confines of the DC.
James Cooke is a principal analyst with Nucleus Research in Boston, covering supply chain planning software. He was previously the editor of CSCMP?s Supply Chain Quarterly and a staff writer for DC Velocity.
Not so long ago, the use of labor management software (LMS) was pretty much limited to warehouses and distribution centers, where it managed the activities of workers who pick, pack, and ship orders. But that's no longer the case. As more retailers begin filling Internet orders from store inventories, they're starting to use the software to oversee those same activities within their retail outlets.
As the name suggests, labor management software is designed to measure individual worker activity—say, item or case picking or putaway—against a preset standard. Traditionally, the systems have measured performance using "time stamps" recorded via bar-code swipes—for instance, when a warehouse worker removes a case from storage, he or she scans the bar code on the box, creating a time stamp for that activity. That allows the worker's actual performance to be compared against a "target time" or benchmark, so that any deficiencies can be identified and addressed. Some of the newer systems rely on signals from real-time location systems, rather than bar-code scans, to track activity. (See "Equipment makers eyeing LMS market?" November 2013.)
Although labor management systems have been around since the late '80s, their use really took off during the economic downturn as companies sought ways to rev up throughput without hiring additional workers. Now, it appears these systems are about to get a similar boost from the omnichannel revolution—the push by retailers to sell merchandise through multiple channels, both digital and physical.
There are a couple of reasons for that. First off, the omnichannel phenomenon has changed the game in retail DCs. Operations that once primarily filled orders for pallet and case quantities are suddenly finding themselves picking a lot more individual items, which is significantly more labor-intensive (and thus, costly). "With the omnichannel push, companies are finding that there are increased labor requirements with the discrete order picking that is the hallmark of direct-to-consumer fulfillment," says Jason Franklin, director of sales engineering at Knighted, an Intelligrated Company. That's led many retailers to turn to an LMS to make their distribution operations more efficient, he says.
The other part of the story is that order fulfillment is no longer the sole province of warehouses and DCs. With the advent of the omnichannel revolution, more retailers are filling orders placed online from their store stocks—which means some store workers now find themselves picking merchandise from the back room or front of the store and packing the orders for shipment. But order fulfillment and shipping has proved a huge challenge for stores, which may not be set up or outfitted to handle these tasks. A recent survey conducted by DC Velocity in conjunction with the ARC Advisory Group found that store fulfillment activities overwhelmingly lack the efficiency and precision of execution found in a DC.
So it's probably no surprise that software vendors like Manhattan Associates and JDA are seeing more retailers employing labor management systems within their stores to manage in-store picking. Typically, the LMS is linked to the store's order management system. "As retailers start to perform new processes within the store in support of omnichannel commerce—like pickup from the store or fulfillment from a store—a bigger percentage of store budget will go to nonsales-type activities and processes," says Peter Schnorbach, senior director of product management at Manhattan. "That's going to drive retailers to want to optimize processes and manage them just the way they do in the warehouse. They want to measure how long it takes to do things. They want to put standard processes in place across all stores in their network."
As retailers seek to bring their in-store fulfillment operations up to DC standards, look for more of them to invest in labor management software to help manage store workers. "The smart retailers are trying to figure out how to establish a repeatable process that they can put into every store," says Schnorbach. "They have to bring the discipline that exists in their warehouse into the store if they want to do this [omnichannel fulfillment] well."
Supply chain planning (SCP) leaders working on transformation efforts are focused on two major high-impact technology trends, including composite AI and supply chain data governance, according to a study from Gartner, Inc.
"SCP leaders are in the process of developing transformation roadmaps that will prioritize delivering on advanced decision intelligence and automated decision making," Eva Dawkins, Director Analyst in Gartner’s Supply Chain practice, said in a release. "Composite AI, which is the combined application of different AI techniques to improve learning efficiency, will drive the optimization and automation of many planning activities at scale, while supply chain data governance is the foundational key for digital transformation.”
Their pursuit of those roadmaps is often complicated by frequent disruptions and the rapid pace of technological innovation. But Gartner says those leaders can accelerate the realized value of technology investments by facilitating a shift from IT-led to business-led digital leadership, with SCP leaders taking ownership of multidisciplinary teams to advance business operations, channels and products.
“A sound data governance strategy supports advanced technologies, such as composite AI, while also facilitating collaboration throughout the supply chain technology ecosystem,” said Dawkins. “Without attention to data governance, SCP leaders will likely struggle to achieve their expected ROI on key technology investments.”
The U.S. manufacturing sector has become an engine of new job creation over the past four years, thanks to a combination of federal incentives and mega-trends like nearshoring and the clean energy boom, according to the industrial real estate firm Savills.
While those manufacturing announcements have softened slightly from their 2022 high point, they remain historically elevated. And the sector’s growth outlook remains strong, regardless of the results of the November U.S. presidential election, the company said in its September “Savills Manufacturing Report.”
From 2021 to 2024, over 995,000 new U.S. manufacturing jobs were announced, with two thirds in advanced sectors like electric vehicles (EVs) and batteries, semiconductors, clean energy, and biomanufacturing. After peaking at 350,000 news jobs in 2022, the growth pace has slowed, with 2024 expected to see just over half that number.
But the ingredients are in place to sustain the hot temperature of American manufacturing expansion in 2025 and beyond, the company said. According to Savills, that’s because the U.S. manufacturing revival is fueled by $910 billion in federal incentives—including the Inflation Reduction Act, CHIPS and Science Act, and Infrastructure Investment and Jobs Act—much of which has not yet been spent. Domestic production is also expected to be boosted by new tariffs, including a planned rise in semiconductor tariffs to 50% in 2025 and an increase in tariffs on Chinese EVs from 25% to 100%.
Certain geographical regions will see greater manufacturing growth than others, since just eight states account for 47% of new manufacturing jobs and over 6.3 billion square feet of industrial space, with 197 million more square feet under development. They are: Arizona, Georgia, Michigan, Ohio, North Carolina, South Carolina, Texas, and Tennessee.
Across the border, Mexico’s manufacturing sector has also seen “revolutionary” growth driven by nearshoring strategies targeting U.S. markets and offering lower-cost labor, with a workforce that is now even cheaper than in China. Over the past four years, that country has launched 27 new plants, each creating over 500 jobs. Unlike the U.S. focus on tech manufacturing, Mexico focuses on traditional sectors such as automative parts, appliances, and consumer goods.
Looking at the future, the U.S. manufacturing sector’s growth outlook remains strong, regardless of the results of November’s presidential election, Savills said. That’s because both candidates favor protectionist trade policies, and since significant change to federal incentives would require a single party to control both the legislative and executive branches. Rather than relying on changes in political leadership, future growth of U.S. manufacturing now hinges on finding affordable, reliable power amid increasing competition between manufacturing sites and data centers, Savills said.
The British logistics robot vendor Dexory this week said it has raised $80 million in venture funding to support an expansion of its artificial intelligence (AI) powered features, grow its global team, and accelerate the deployment of its autonomous robots.
A “significant focus” continues to be on expanding across the U.S. market, where Dexory is live with customers in seven states and last month opened a U.S. headquarters in Nashville. The Series B will also enhance development and production facilities at its UK headquarters, the firm said.
The “series B” funding round was led by DTCP, with participation from Latitude Ventures, Wave-X and Bootstrap Europe, along with existing investors Atomico, Lakestar, Capnamic, and several angels from the logistics industry. With the close of the round, Dexory has now raised $120 million over the past three years.
Dexory says its product, DexoryView, provides real-time visibility across warehouses of any size through its autonomous mobile robots and AI. The rolling bots use sensor and image data and continuous data collection to perform rapid warehouse scans and create digital twins of warehouse spaces, allowing for optimized performance and future scenario simulations.
Originally announced in September, the move will allow Deutsche Bahn to “fully focus on restructuring the rail infrastructure in Germany and providing climate-friendly passenger and freight transport operations in Germany and Europe,” Werner Gatzer, Chairman of the DB Supervisory Board, said in a release.
For its purchase price, DSV gains an organization with around 72,700 employees at over 1,850 locations. The new owner says it plans to investment around one billion euros in coming years to promote additional growth in German operations. Together, DSV and Schenker will have a combined workforce of approximately 147,000 employees in more than 90 countries, earning pro forma revenue of approximately $43.3 billion (based on 2023 numbers), DSV said.
After removing that unit, Deutsche Bahn retains its core business called the “Systemverbund Bahn,” which includes passenger transport activities in Germany, rail freight activities, operational service units, and railroad infrastructure companies. The DB Group, headquartered in Berlin, employs around 340,000 people.
“We have set clear goals to structurally modernize Deutsche Bahn in the areas of infrastructure, operations and profitability and focus on the core business. The proceeds from the sale will significantly reduce DB’s debt and thus make an important contribution to the financial stability of the DB Group. At the same time, DB Schenker will gain a strong strategic owner in DSV,” Deutsche Bahn CEO Richard Lutz said in a release.
Transportation industry veteran Anne Reinke will become president & CEO of trade group the Intermodal Association of North America (IANA) at the end of the year, stepping into the position from her previous post leading third party logistics (3PL) trade group the Transportation Intermediaries Association (TIA), both organizations said today.
Meanwhile, TIA today announced that insider Christopher Burroughs would fill Reinke’s shoes as president & CEO. Burroughs has been with TIA for 13 years, most recently as its vice president of Government Affairs for the past six years, during which time he oversaw all legislative and regulatory efforts before Congress and the federal agencies.
Before her four years leading TIA, Reinke spent two years as Deputy Assistant Secretary with the U.S. Department of Transportation and 16 years with CSX Corporation.