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Future Trends in Wholesale Distribution—Part 2: Outside-In Omnichannel Fulfillment

Published On: September 26 2013

The TEC Vendor Challenge was in full swing last week, with 2 days' worth of vendor demonstrations from Epicor, IBS, Infor, Microsoft, NetSuite, SAP, and VAI, as well as presentations and dynamic discussions. In part 1 of this blog post series, I provided highlights from the TEC Vendor Challenge on how disruptive innovations are changing the landscape of the wholesale distribution industry. In this second post we recap the panel’s presentation on omnichannel fulfillment, the “Next-Day Delivery” mandate, and what wholesale distributors are doing to deliver exceptional customer experiences.

Bob Heaney, senior research analyst with Aberdeen Group, talked about the need for an outside-in omnichannel fulfillment perspective for the distribution industry.

Customers today are demanding omnichannel order-to-fulfillment processes—the ability to order anywhere, at any time from any device through any channel. Bob talked about how Best-in-Class companies are adopting omnichannel fulfillment capabilities and enterprise resource planning (ERP) extensions to deliver an end-to-end seamless experience to customers.

With the global supply and demand domains becoming much more complex for many enterprises, the need (and necessary infrastructure) for synchronizing these domains globally has become much more complex, with the failure to align demand with supply having more of an impact on profit and loss.

Bob Heaney says, therefore, that it is more necessary than ever before to develop an outside-in collaborative approach to sharing data across the extended enterprise. Other important contributors to success highlighted in Bob’s presentation are having a fully integrated view of all customer information, as well as a complete, auditable system of record.

Omnichannel now means not only that an order can be received through a number of channels, but also that order fulfillment has also become more complicated, involving multiple systems and multiple-to-many partners to complete the order. Customers may receive fulfillment through a store, from the vendor warehouse, or direct to home. This makes it all the more important to assess the supply-side capabilities and requirements of supply chain partners such as suppliers and logistics service providers.

While the ERP system is a necessary foundation, then, companies must look closely at ERP solutions to assess whether, and how, the systems’ capabilities in order and inventory management, fulfillment, and logistics agility support omnichannel order fulfillment. SAP's recent acquisition of hybris is witness to the fact that ERP solutions may need to boost their omnichannel capabilities.

“Next-Day Delivery” Mandate: Building Capability Today

Consumers are, as we all know (well, we are consumers ourselves), continually raising our expectations in our e-commerce experiences.

Bob Heaney sees in this a mandate for companies to be able to provide next-day delivery on all items to any customer and all home or delivery locations. Companies such as AmazonWalmartMacy's, and others are heavily investing in distribution centers and technological and digital process capabilities to offer next-day delivery.

The infrastructure and supporting systems needed to provide next-day delivery should not be underestimated—they involve the physical supply chain, an investment in inventory, and an understanding of postponement strategies, supporting systems and platforms, integrations, and collaborative technologies.

Bob talked about Staples as an example of what a company has to do to deploy a next-day fulfillment structure, and what this means for wholesale distributors in the fulfillment cycle. As Staples makes decisions about where to source the products, where to stock the products, via what mode to ship the products, and how the customers want the products delivered, this presents both challenges and opportunities to wholesale distributors to enhance their capabilities to work with companies such as Staples, Amazon, and Walmart.

Delivering Exceptional Customer Experiences—Sales and Service

Jonathan Gross, vice president (VP) and general counsel with Pemeco Consulting, brought these and other insights to life with some distribution case studies focusing on integration in the enterprise to achieve supply chain maturity.

Given the hyper-competitiveness of many sectors of the distribution industry, relationships and customer loyalty are critical to the success of many distributors.

Jonathan Gross sees the sales and service functions as playing an important role, particularly in the areas of prospecting and sales responsiveness; pricing; order configuration, changes, fulfillment, and tracking; and returns management.

Jonathan talked about supply chain maturity in terms of supply chain integration—data, information, and business processes—and about the importance of maturing from an internal focus to more integration with business partners.

Three case studies that Jonathan presented highlighted insights around ERP integration, real-time visibility, continually updated product data, supplier management, transportation optimization, and value-added reverse logistics services. The case studies brought home many of the insights and learnings from the panel, and invited some good engagement with the TEC Vendor Challenge audience.

To get more information on these and other topics, go to the TEC Vendor Challenge Web site and view the presenters’ slides.
 
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