Successfully reported this slideshow.
We use your LinkedIn profile and activity data to personalize ads and to show you more relevant ads. You can change your ad preferences anytime.

Omni channel fulfilment trends


Published on

Let's put consumer in charge!
- Margin killers in last mile delivery
- Innovations in last mile delivery
- New kids on the block leading the way
- The omni channel challenge in last mile delivery
- Using ICT to put the consumer in charge

Published in: Business
  • Be the first to comment

Omni channel fulfilment trends

  1. 1. The omnichannel supply chain: single view of stock, shipments and returns Walther Ploos van Amstel VU University Amsterdam Hogeschool van Amsterdam March 2015
  2. 2. To hype or not to hype
  3. 3. Supply chains in ‘one day’ • How to build a supply chain? • How to analyze cost of e-fulfilment and support supply chain decisions? • How to manage omnichannel supply chains? • What are future challenges in omnichannel supply chains? • Innovations in omnichannel supply chains Inventory Warehousing Transport
  4. 4. Amazon
  5. 5. Many options for omnichannel fulfilment
  6. 6. Relevant supply chain decisions Inventory WarehousingTransport
  7. 7. Transport decisions Strategic Tactical Operational Modes of transport (long haul versus last mile) Collaboration Outsourcing strategy ICT for transport HRM strategy Risk management Capacity planning Outsourcing plan Purchasing services Purchasing material HRM planning Modal shift Planning trips for pick up and delivery Tracking and tracing Fleet management HRM day-to-day schedules
  8. 8. Warehousing decisions Strategic Tactical Operational Locations (central, decentral and in store) for delivery and returns Lay-out planning Mechanization Collaboration Outsourcing strategy ICT for warehousing HRM strategy Risk management Capacity planning inboud and outbound Outsourcing plan Purchasing services Purchasing material HRM planning Planning inbound and outbound warehouse operations (and loading) Workflow management/shopfloor control HRM day-to-day schedules
  9. 9. Inventory decisions Strategic Tactical Operational Stock locations (central, decentral and in store) for delivery and returns Collaboration ICT for inventory management and data alignment HRM strategy Risk management Trade compliance Service levels and safety stock levels Assortment (phase in/phase out) life cycle management Sales and operations planning Vendor managed inventories and drop shipment HRM planning Ordering Monitoring (PDCA) HRM day-to-day schedules
  10. 10. From ‘managing’ traditional supply chains with 2 to 4% cost-to-serve Inventory WarehousingTransport
  11. 11. To ‘organizing’ supply chains end-to-end with 15 to 40% cost-to-serve Inventory WarehousingTransport Q4 2014 16,4%
  12. 12. To ‘organizing’ supply chains end-to-end with 15 to 40% cost-to-serve Inventory WarehousingTransport
  13. 13. How to build a supply chain? Strategy Balanced scorecard Logistics targets Supply chain Planning and control ICT Organisation
  14. 14. Create value… USP
  15. 15. Operational excellence Customer intimacy Product leadership Processes Core competences Optimize networks Outsourcing Purchasing Standardization Transactional/operational Economies of scale Zero defects OTIFNENC/ cost to serve Utilize capacities End-to-end processes Focus on relationship Economies of scope Customer satisfaction Continuous innovation in processes and services Partnerships in service development Fast and reponsive Control Strict S&OP: tactical and operational focus on efficiency/total landed cost Demand management Collaborative S&OP: strategic, tactical and operational S&OP: tactical and operational focus on maximizing profit during life cycle ICT Support low cost, standardized operations Paperless processes Community platforms Customer-focused ICT (shared ICT platforms) SOA: flexible, plug & play Organization Centralized Product focus Functional specialists Transparent Decentralized Costumer orientation Account management Collaborative teams Centralized Innovators External focus
  16. 16. Understanding the customer journey: fast, in full and fresh
  17. 17. Webstores offer later cut-off times Till 2 pm Till 6 pm Till 9 pm After 9 pm
  18. 18. Webstores offer later cut-off times and shorter lead times Less than 24 hr 2 to 3 days 4 to 7 days More than 8 No information
  19. 19. Shopper segmentation Passive Shopping is a necessary evil. Wants security, simplicity and convenience in service Passionate Shopping is fun, impulse driven. Sensitive for brands, hypes and experiences. Fast, flexible and special delivery services; many options Calculating Focused on savings, well informed, insensitive to brands and hypes. Reliable low cost delivery options Thorough Motivated customers looking for the best in quality and service. Offer options and reliability in delivery services Spontaneous Prepared Needdriven Pleasureseeking
  20. 20. Customer requirements • Segmentation: passive, passionate, calculating and thorough shopper • Options, options and more options: day, time, location, click-and-collect, service provider and in car • Pay for ‘same day’ and ‘your time’ delivery • Safe • Customers in control • OTIFNENC
  21. 21. Designing the supply chain; understanding fulfilment cost
  22. 22. …only in one step of the supply chain. Total supply chain cost range from 15-50% of sales value... Who is in control? Fulfilment cost range from 8-30% of sales value of a product… 22 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Book Fridge Pharma Transport Storage Handling Interest Planning
  23. 23. Different products, different cost patterns, different requirements… Transport and Storage Value density Packaging density Physical Handling Interest
  24. 24. Problems in logistics cost control… • Cost are available per function and/or location, but not per product (group) • Cost are allocated differently in each location (and generally arbitrarily) • Cost data don’t support management decisions
  25. 25. Location Cost centres Article groups and/or customers • factory • central store • degrouping point • transshipment point • warehouse sales organisation • transport • handling in • handling out • storage • interest • reconditioning Add dimension product/customer Make allocations consistent and comparable Cost reporting in three directions…
  26. 26. Central network Transport Warehousing Inventory Pro’s Economy of scale Consolidation incoming and outgoing flows Purchasing power Economies of scope Cost control Economies of scope Economy of scale Automation and mechanization Lean processes Flexibility Cost control SLA’s controlled Purchasing power Economies of scope Product availability Safety stock Assortment management European S&OP Trade compliance Con’s Distance to the market Unclear responsibilities Complex LSP’s Complex contract management Distance to the market Complex outsourcing Unclear responsibilities Complex contract management Complex ICT Risk management Complex procedures Complex ICT Unclear responsibilities Obsolescence
  27. 27.
  28. 28.
  29. 29. Decentral and instore network Transport Warehousing Inventory Pro’s Close to market: fast Simple LSP's Clear responsibilities Close to market Traffic Simple ICT Risk management Clear responsibilities Close to market Traffic Simple procedures Simple ICT Clear responsibilities Con’s No economies of scope Cost control Contract management No economies of scope or scale Double handling Limited flexibility Limited outsourcing Cost control Supply chain control (returns) No economies of scope Product availability High safety stock Assortment management Obsolescence Data quality Trade compliance
  30. 30. Schuh
  31. 31. Operational Strategic Outsourcing the network: pro’s… • Reduce operating cost • Improve functional and technical quality • Tighten controls • Increase staffing flexibility • Access supplier’s tactical resources • Improve back office services to the business • Focus in-house staff on higher value work • Access supplier’s strategic resources and capabilities • Radical transformation of business services • Help business create new products and services • Help business establish presence in a new market • Commercialization
  32. 32. Outsourcing: blue or green?
  33. 33. Summary: Building the supply chain… • Step 1: Organization • Step 2: External factors • Step 3: Economical factors
  34. 34. Step 1: organizational considerations • Organizational considerations: – business strategy and value discipline – local or central responsibilities for sales, service levels, inventories and forecasting – flexibility – risk attitude • External factors • Economical factors
  35. 35. Step 2: external factors • Organisation • External factors: – Customer requirements – transportation time and cost – perishability/General Food Law – legal and tax issues – ISO28002/risk management • Economical factors
  36. 36. Step 3: economical factors • Organization • External factors • Economical factors: – Cost – Demand variation – Product life cycle and seasonal pattern – Market mediation cost – Tax 0 20 40 60 80 100 120 140 1 2 3 4 5 6 7 8 Overhead Inventory Storage Handling Outgoing Incoming
  37. 37. Managing the supply chain is a USP... Strategy Balanced scorecard Logistics targets supply chain Planning and control ICT Organisation
  38. 38. Variance is our biggest enemy 95%
  39. 39. From operational to tactical planning and control… Supply Planning Demand Planning Order Promising Sales and Operations Planning Materials Planning Production Scheduling Distribution Scheduling Supply Chain Execution/Monitoring SupplierCollaboration CustomerCollaboration SC Network Design Allocation Transport Planning Supply Chain Operational Tactical Strategic OPERATIONAL Sense and respond TACTICAL Predict and prepare
  40. 40. Inventory: fire-and-forget? • Increasing Assortment Dispersion Index (ADI) leads to higher inventory levels • Flow: S&OP changes to product life cycle management ‘predict and prepare’ • Increase clockspeed: senseful ‘sense and respond’ • Most inventory is at your consumers • Data quality: Big Data is dumb… • Collaboration in the supply chain • Coordination as a service (CAAS)
  41. 41. Future supply chains…
  42. 42. More collaboration
  43. 43. Under great pressure
  44. 44. Future last mile concepts: clean, friendly, shared, large scale, local
  45. 45. Bringing logistics back into cities?
  46. 46. Future delivery platforms: Blue chip companies or new kids on the block?
  47. 47. Collaboration in all directions External collaboration (Suppliers) External collaboration (Competitors) External collaboration (Customers) External collaboration (Other organisations) Internal Collaboration Vertical Collaboration Horizontal Collaboration Network Collaboration
  48. 48. From strategy to execution: Integration on all levels… Strategy Balanced scorecard Supply Chain Objectives supply chain plan and control ICT organization Strategy Balanced scorecard Supply Chain Objectives supply chain plan and control ICT organization GLOBAL SUPPLY CHAINS AND PROCESSES: End-to-end solutions for OTIFNENC delivery CROSS CHAIN COLLABORATIVE PLANNING AND CONTROL SHARE AND ALIGN SUPPLY CHAIN DATA GOVERNANCE, COMMON LANGUAGE AND SKILLS ALIGN STRATEGY FIRST: Options, options and more options
  49. 49. Many questions still unanswered… • Local-for-local delivery networks • Peer-to-peer fulfilment/sharing economy • Cross chain European fulfilment retail supply chains • Non-EU cross border • omnichannel product life cycle management • Data sharing and gain sharing models for collaboration • CAAS business model
  50. 50. E-fulfilment Mega loser in omnichannel? • No segmentation • Not balancing cost to serve: inventory, handling and transport • No process management from order-to-euro • Not OTIFNENC • No data alignment in supply chain • Transformation is necessary
  51. 51. Competences: World class people • Architect of a profitable customer value chain • Create successful alliances • Plan and control based on financial data • Use ICT to create excellent processes: ERP, WMS, TMS, EDI, agents, etc • Successfully implement innovations: Train your team as you fight…