Omnichannel commerce is becoming the new norm in retail. Consumers expect highly personalized shopping experiences with the ability to buy and return products interchangeably across all channels. As retailers scramble to align their distribution centers (DCs) to optimize omnichannel processes, they are relying ever more heavily on technology to drive efficiency. One such technology is labor management software (LMS).
"We are definitely seeing more interest in labor management solutions in the era of omnichannel commerce," says Christine Hirtz, territory manager at technology company HighJump Software. "Retailers are experiencing the challenges of handling this new complexity of how orders need to be fulfilled. Driving efficiencies with, and promoting the productivity of, a valuable work force is critical."
As e-commerce sales rise and retailers offer more buying options such as "order-online-pick-up-at-store" or "buy-in-store-and-ship-from-the-DC," their distribution centers are picking and preparing an ever-greater number of customer-ready shipments. The result is an increase in the labor-intensive and time-consuming processes of "each" (individual item) picking and order packing.
Until recently, the each-pick, direct-to-consumer business was a relatively small part of a retailer's overall mix. Companies could outsource the function to a third-party logistics service provider (3PL) or relegate it to a small area of an existing distribution center. Today, however, these types of orders have reached a critical mass for many retailers. In response to this sea-change, companies are pulling all channels into one distribution center, which allows them to leverage efficiencies associated with sharing the cross-channel labor pool, fixed costs, and inventory.
The distribution center is today home to a new mix of activities such as each-picking, packing individual orders for parcel shipping, more quality checks on order accuracy, returns, and value-added services such as gift-wrapping. All of this requires more labor. Labor management software can be an effective way to drive greater levels of productivity from the work force to improve omnichannel's profitability.
"The retail industry has always been a heavy user of LMS primarily because of the high level of process uniformity in the distribution center, the high number of employees, and the reliance on seasonal workers during the holidays," says Chuck Fuerst, director of product strategy at HighJump. "The shift to omnichannel is changing the reasons why retailers need labor management and in many cases, magnifying the need for it."
Retailers that had used rudimentary standards without the help of an LMS find themselves needing a more formal program and system. Those companies already using a sophisticated approach and system for labor management are realizing the need to change and expand how they use it. Below are a few examples of how the omnichannel distribution center concept is changing how retailers use labor management software:
The advent of omnichannel commerce has created a more complicated supply chain. It is becoming more important to measure labor efficiency at the point of order fulfillment—whether at the store or in the DC. Labor management software will continue to be a key enabling technology to allow retailers to operate profitably in this new environment.