Chain of Thought

Omnichannel: Don’t Get Sick of that Word Yet

When I asked MH&L’s Editorial Advisory Board for their 2014 predictions, I was expecting a wide variety of topics, owing to their diverse backgrounds. I was happy to be surprised. One theme seemed to be a favorite, and lent itself to various takes: omnichannel fulfillment.

This is actually a megatrend with a variety of microtrends attached to it. That’s where the diversity of our board came in handy. It gave MH&L the opportunity to offer you a multi-dimensional overview, including labor and politics as well as business considerations.

Our board’s newest member, David Sparkman, heads David Sparkman Consulting, a Washington, DC-area public relations and communications firm. He is founding editor of ACWI Advance, the newsletter of the American Chain of Warehouses Inc., and used to be director of industry relations for the International Warehouse Logistics Association, which tracks the impact of legislation on the logistics industry. What he predicts leads me to predict that what’s happening on the labor front will make automation a lot more attractive for logistics operations:

“Many people have failed to notice the growing unified assault on logistics employers by a slew of federal agencies,” he says. “Since 2009 these agencies have mounted their own focused assaults on nonunion employers and companies using independent contractors. … With a rough election season approaching once again, the Democrats will need organized labor’s support more than ever. Last year the National Labor Relations Board and several other federal agencies initiated plans to work much more closely together. This includes the Department of Labor, Justice Department, Equal Opportunity Employment Commission and OSHA. If you are a nonunion employer in the logistics industry and you fail to keep up with what is going on in this area, you may be in for a nasty surprise in 2014 when the Feds—and their allies in state governments—come calling.”

Another nasty surprise logistics professionals got came as a bad Christmas present from their parcel carriers. The arctic blast that invaded much of the U.S. before the holiday caused a major supply chain hiccup that delayed on-time Christmas deliveries. That inspired this prediction from Russ Meller of Fortna:

“I believe the 2013 pre-Christmas snags with UPS and FedEx will propel the launch of Amazon Ground Service Parcel Delivery (in time for Christmas 2014),” he says. “Presumably, they'd be better at forecasting their needs and could actually tweak their promises based on capacity issues in their own network.”

Up to this point we danced around the “O” word without actually using it. Well, I’ll let Jim Tompkins of Tompkins International, break the ice. He’s been studying the war of the “Titans” (Amazon and Walmart), and had this to say:

“With Amazon building out their fulfillment centers and Walmart leveraging their distribution center capabilities, they’re making getting closer to the customer more and more important. Fulfillment centers and distribution centers will more frequently be integrated for omnichannel fulfillment, combining stocked and stockless SKUs. Network planning by world class organizations will be based on profit contribution and not cost minimization.”

But Tan Miller, director of the Global Supply Chain Management Program at Rider University’s College of Business Administration, says cost minimization can’t be ignored when it comes to day-to-day logistics operations.

“Retailers and their service providers will quickly develop more rigorous methodologies and decision support systems to help improve strategies and daily operations for omnichannel fulfillment,” he adds. “They will narrow the cost differentials between the various options for serving consumers from a multitude of locations.”

And if Al Will had his way, those locations would start looking for such differentials on their docks. Al is not only a retired Marine logistics strategist, but is currently president of his own consulting firm, PWG Distribution Solutions, LLC. He made a very specific prediction in our January issue (which is now available online):

“The market for telescopic conveyors will continue to grow as developing economies seek alternatives to offset growing labor and safety costs. Employee salaries and workers' compensation costs will continue to rise. Automating loading/unloading operations reduces the potential for errors in load sequencing for the destination, and minimizes the possibility of injury and interrupted supply chain flow.”

He got through that whole paragraph without referring to omnichannel once. Oops, sorry.

(Click here to see a photo gallery of telescopic conveyors at work,)

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