Retail distribution to see increasing trend toward common inventory pool

In the future, more and more retailers will integrate the distribution operations of their bricks-and-mortar store divisions with their direct-to-consumer business, said Dan Whitnable, an engineering manager at retailer Lands' End. The need for inventory reduction will drive this integration, as companies create a common pool of stock for both types of retail operations.

Whitnable's insights came as part of his keynote address on "Leading Trends in Retail Distribution" at the NA2010 Material Handling and Logistics Show in Cleveland.

As retailers service both types of retail business in their warehouses, the distribution operation will have to change to handle both store and individual shipments, Whitnable said. In fact, distribution operations may have to repackage goods, originally intended for the retail shelves, for individual sales.

Along with accommodating different order types, distribution centers may have to adopt new metrics to measure performance. In the past, retail distribution centers were evaluated on line-item utilization. An integrated distribution center will have to judge performance on an each-based metric, Whitnable said.