Something's happening here
One of the highlights of DCV's annual report on omnichannel distribution is a summary of the findings of our latest survey on the topic, conducted in partnership with ARC Advisory Group. Among other things, the survey looks at the trends and forces driving the omnichannel revolution.
At the top of the list, of course, is e-commerce. In the United States alone, e-commerce grew by an average of 15 percent in each quarter of 2013 and 2014. That's almost double the rate of growth in total national retail spending, according to the U.S. Census Bureau. To state it another way, Internet sales are now pivotal to a retailer's success or failure. For companies accustomed to doing most of their business through traditional retail channels, competing successfully means rethinking their DC operations and logistics networks, many of which were originally built to serve brick-and-mortar stores.
These e-tailers compete not only with other traditional retailers, but also with the online pure-plays like Amazon.com. In 2014, Amazon posted higher sales than the next nine online retailers combined—essentially using its extraordinary product delivery capabilities to wallop the competition.
What makes Amazon such a formidable competitor? One word: technology. No retail company has ever come close to matching Amazon's prowess using tools like predictive software, big data, and goods-to-person systems and hardware to gain a competitive advantage in its marketplace.
While Amazon is often cited as a leading example of a technology-enabled (and technology-driven) business, it by no means stands alone. In a blog post on the website TechCrunch, Tom Goodwin pointed to some other notable enterprises that have deployed digital tools to turn whole industries on their ear. "Uber," he wrote, "has become the world's largest taxi company, yet it owns no vehicles. Facebook is now the world's most popular media owner, yet it creates no content. Alibaba is the most valuable retailer, yet it has no inventory. And Airbnb is now the world's largest accommodation provider, though it owns no real estate."
What all of these companies do have, of course, is technology—to be specific, consumer-interface technology that matches buyers who want something with sellers who have something to offer. As this snapshot of the marketplace makes clear, something interesting is happening here.
And it's not just happening in the consumer world. Some of the same disruptive technologies that are changing our personal lives are making their way into logistics operations, particularly warehouses and distribution centers. Exhibit A would be the tablet computer; Exhibit B, the smartphone. The trend will only gather steam. In an article that appeared in CSCMP's Supply Chain Quarterly ("Seven technology trends shaping the future of material handling," Q4, 2014), Lew Manci of Crown Equipment offered his take on how technology will transform warehouse and DC operations. "In the next 10 years, the intelligence designed into material handling equipment will grow exponentially, as will connectivity between systems and their environment," he wrote. "Tech-savvy workers will operate intelligent machines, working alongside robots and autonomous forklifts in highly automated operations."
In other words, logistics operations are likely to look far different from anything we can even imagine today.
It's time to look at technology in a different light. When we consider the benefits of logistics technology, we must start thinking beyond efficiency, beyond productivity, beyond the ability to help us make better decisions. Today's technology is clearing the path to gaining a demonstrable competitive advantage through logistics. The winners will be those who recognize the opportunity and seize it.
