How Omni-Channel Impacts Labor Management: Part II

Fulfilling omni-channel orders puts more complex demands on labor in stores and DCs than previous operations. As part of our Expert Insights series, Supply Chain Nation asked Ian Hobkirk, Managing Director, Commonwealth Supply Chain Advisors, for his thoughts on what the impact is on labor management. In Part I Hobkirk discussed why omni-channel has such an impact on retail DC labor, retail brands, and integration with WMS. Our discussion with Hobkirk on this important topic continues here.

SCN: With many stores now fulfilling orders directly, why is LMS-type functionality going to be important in the store?

Hobkirk:  The tasks required to pick, pack and ship an order in a store are very different than what most retail workers are used to doing. The store operations and labor management systems that are currently in use in the retail workspace often are not able to handle these additional tasks. To be able to do this efficiently, a labor management system is a great tool at the store level.

A number of big retailers are pushing orders to their stores. This tends to work better for bigger retailers, who have a larger pool of labor available at the stores to support those tasks. At small, mall-based stores, where you only have a handful of workers, there isn’t as good of a business case. It’s tough to ask those few employees to take time out of their day to perform fulfillment tasks.

For those larger format stores where you have more employees, it is really important to do this work efficiently, and in-store labor management systems are an important tool to help do that.

SCN: What other industries are impacted by omni-channel, and what is the impact on their labor management?

Hobkirk:  I would say that omni-channel is still primarily a retail phenomenon, where you have multiple ways of interacting with the consumer. But we are starting to see it in industrial parts distribution where you have a manufacturer who distributes parts to distributors who later distribute those parts to dealers, which are essentially retail locations.

We are starting to see in certain industries where those lines are breaking down a bit. Where you once had a rigid three-tier supply chain in the past, now they are sometimes bypassing the distributors and going directly to dealers, or are trying to consolidate their distributor network. I was just at an auto parts manufacturer that distributes to both distributors and retailers and they are starting to do ecommerce fulfillment on behalf of those retailers.

The way it is impacting consumer goods manufacturers is that their retail customers are asking them to do fulfillment on their behalf. Companies like, Amazon, and Macy’s are asking suppliers to drop-ship orders directly to consumers. The consumer goods manufacturers are sometimes steering away from having their own ecommerce channel because it is viewed as competition to their retailer customers.

Consumer goods companies actually have more challenges in fulfilling orders on behalf of retailers because in addition to all of the ecommerce challenges of pick, pack and ship, they also have the challenge of retail compliance layered on top of that. They have retailer-specific labeling, packaging and those sorts of things.  So the manufacturers are certainly feeling the heat as well. That is really the most difficult form of order fulfillment, when you have an ecommerce order that also has to be retail compliant. There are so many ways to mess it up, and even if you do it right, it still takes a lot of labor. It all tracks back to labor management. If you can build a standard for it and start to track it, then you can start to make improvements.

SCN: Thank you, Ian. Readers can access Part I of Hobkirk’s comments.

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