The marketing and research firm IDC has released its annual list of predictions for the coming business year and it’s topped by a surge in omni-channel fulfillment among manufacturers and retailers.
Omni-channel retailing is when all the available shopping channels are integrated seamlessly, including mobile Internet devices, computers, brick and mortar storefronts, TV, radio direct mail and catalog marketing. Specialized supply chain software is used to meet new customer demands created by technological developments and near-universal access to markets.
By 2016, nearly half of all retailers will invest in some sort of omni-channel retailing, including distributed order management, enterprise inventory visibility, and same-day fulfillment, the IDC predicted.
Following Industry Innovators
Retailers will be following the example of Amazon and other cutting edge, omni-channel retailers. Recently, Amazon CEO Jeff Bazos revealed that the world’s largest web-based retailer was developing unmanned helicopter drones that could deliver packages to customers within 30 minutes of their placing their orders online.
It’s this type of innovation that other retailers will be chasing, according to IDC research director Leslie Hand.
“This is a transformation requiring changes to business processes, company culture and customer orientation — it’s not an overnight event,” Hand told Modern Materials Handling. “That said, it’s been a long time since I’ve talked to a retailer who isn’t on the path to omni-channel capabilities.”
The Future of Retailing Fulfillment
Only about 10% of retailers are positioning themselves to launch omni-channel fulfillment at Amazon’s level right now, but practically everybody is looking at ways to adopt innovative new solutions to planning, fulfillment, supply chain execution and last-mile distribution capabilities they will need to succeed in the wake of rapidly growing technology and access.
“Planning cycles and processes have been rigid for a long time,” Hand said. “Businesses are used to running monthly reports and planning promotions eight weeks or more in advance. Those cycle times need to change to stay responsive to customers.”
As of 2014, about 30% of companies have invested in some sort of distributed order management (DOM), which replaces traditional linear flow production with cross-channel functionality based on real-time inventory visibility. By 2016, that number is expected to grow to 50% or more.
“The need for real-time response in terms of product availability, inventory location, services and mass personalization is creating complexity around serving the customer,” Hand said. “It used to be good enough to drive products to the store and let the customer buy whatever you had. The new dynamic forces retailer to look at stores differently, more as a supply chain node. If I never want to say no to my consumer, then I need visibility to all products and where they might be stored.”
To see the IDC’s other top 10 predictions, click on this link.