The ongoing evolution of supply chain software

supply chain softwareCharles Darwin’s theory of evolution, doesn’t only apply to the animal world. It also applies to the business world. In this business world, the same logic applies – survival of the fittest. In order to remain fit for purpose, every business has to be in a state of constant evolution. With current business thinking and methodology, this means that supply chain software, (which businesses depend on globally) has to evolve too.

The real world versus the virtual world of shopping

According to a report in the Wall Street Journal, American consumers stepped up to the mark during March and helped the US retail economy to record the highest boost in consumer borrowing since July 2014; taking the otherwise disappointingly low figure, to a new healthy total for the first quarter of 2015. But with consumer spending set to continue a healthy growth pattern, retail businesses are faced with one particular conundrum. Will consumers return to buying in the “real” physical world, or will they turn instead to the “virtual” world of online shopping?

Although online shopping accounts for a substantial amount of shopping in terms of $ spent, it is still only a fraction of the total shopping spend. But events such as the recent global recession, and the advent of new mobile devices like Tablets and Smartphones, has made shopping online even more popular than ever.

Online shopping spend predictions for 2015 

Although various different figures have been reported, one reliable source (the Center for Retail Research) reports that the annual online shopping spend in the US across 2014 was $306.85 billion. In 2015, the forecast is that it will increase to $349.20, an increase of some 13.8%. Meanwhile Europe has posted even better figures. In 2014, the overall online shopping spend was £132.05 billion, but in 2015, this spend is predicted to rise to £156.67 billion, an increase of 18.4%.

To take advantage of this potential, retailers need to be thinking about getting the latest generation supply chain software in place, and now is the time to do it.

New e-commerce distribution centers for Wal-Mart

US retail giant Wal-Mart is one of a growing number of high profile retailers who have decided to open up their supply chains by building a number of special distribution centers specifically to cope with the increased demand being forecast. They anticipate opening 4 big facilities later on this year, geared at facilitating a tripling of online sales to $35 billion by the year 2018. In 2014 their online sales totaled $12 billion.

Significantly, traditional warehouses are built to accommodate pallet loads of products which are moved about by forklift trucks. An e-commerce distribution centre however, is more likely to handle individual items, much like the sorting facility of a parcel handling operation.

Supply chain software to facilitate “ship-from store”

The 4 new Wal-Mart e-commerce distribution centers will each be 1,000,000 ft² in size, and will each hold 500,000 items. This compares to their more traditional distribution centers which hold somewhere between 30,000 and 50,000 items.

The new e-commerce distribution centre that Wal-Mart opened up last year in Texas, uses a combination of both human labor and robotic labor. This Texan center, plus the four new centers planned for this year, will comprise part of a network for completing online orders alongside the existing 11,centers, plus the 83 Wal-Mart since centers, all of which are designated “ship from store” locations.

Getting the right supply chain software in place is critical if the forecast sales figures are to be achieved. The -coordination of the movements of the millions of parts and transactions that will take place in the new e-commerce “ship-from-store” locations is a mammoth task.

Supply chain software needs to work “on-the-hoof”

Delivering from “ship-from-store” locations is a far more efficient method than the one being used at present. When an order comes in for various components, such as soap, a child’s toy, and a tablet, at present these orders with each be fulfilled from three separate locations. The new e-commerce supercentres will see this type of order handled from one central location. In terms of supply chain software, a Walmart spokesman said that the ultimate goal is that the new breed of software must be able to determine the most efficient way of fulfilling orders “on-the-hoof”.

Enabling the demand-driven retailer vision

As retailers are looking for new ways of becoming demand driven, it is supply chain software that will play a pivotal, enabling role. The demands being put on software are becoming increasingly complex, especially in view of the new omni-channel trending in retail.  On the warehouse floor the challenges are also mounting. We could be seeing a larger deployment of things like “Baxter Robots” across the industry sector.

The survival of the fittest retailers

The evolution of supply chain software has to gather pace to facilitate these new technologies; technologies that envision more picking handlers using new headset technology to speed the process up, backed up by new in-store vision replenishment technology that monitors shelf stock and triggers re-orders. Mr. Darwin’s theory of evolution, while still very relevant, now needs to take place a record speed, in order to facilitate the survival of the fittest retailers.

In your opinion, what should the next step in the evolution process of supply chain software be? Have your say at the feedback section below.

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