Omnichannel is one of the hottest buzz-words in supply chain today, but how far does the concept reach? You hear a lot about how omnichannel impacts retailers, carriers and even some wholesalers… but its potential to disrupt the manufacturing industry may surprise you.
Modern Demands
Manufacturers: if you continue with business as usual, i.e. shipping full pallets of a given item and leaving the complex sourcing and inventory allocation issues to your downstream partners, you do so at your own peril. Today’s customer is everywhere and has a profound impact on the entire supply chain, all the way down to the manufacturing level. As such, consumers have grown to expect an endless aisle of goods that reaches all the way down to you, the manufacturer.
To win in today’s competitive market, businesses must bring on additional items or variations of existing items (such as more sizes or colors) and make those items available anywhere at any time — according to the customer’s increasing demand for personalization and customization. Needless to say, the impact on the manufacturer can be substantial.
Key Challenges
Manufacturers regularly face the need for frequent line changeovers and adjustments to raw materials, but that’s only the beginning. They must also react to more frequent orders of a much different profile, accommodating smaller quantities of more items. Some manufacturers are now even being asked to participate in drop ship programs, which requires the manufacturer to behave like a direct-to-consumer company. Indeed, packaging and shipping one or two items requires a much different mindset and vastly different business processes than preparing a full pallet directly from the line. The result? The number of single SKU pallets decreases and additional complexity results in the pick/pack process, requiring a greater level of planning as well as additional labor for preparing goods for shipment.
Given these changes, it becomes imperative that manufacturers align their robust production capabilities with an efficient supply chain. They must become more flexible in fulfilling orders and ensuring on-time and accurate deliveries to their customers. They also must gain visibility not only into what is happening in the factory but also into distribution centers and across the entire supply chain. Warehousing systems must be capable of tracking all kinds of inventory — including raw materials, works in progress, and finished goods — while also managing new pick/pack operations and shipping methodologies. Transportation movements must be carefully planned to reduce miles for better route planning, trailers must be efficiently loaded even when the contents do not perfectly align and stack like pallets, and appointments and trailer inventory must be managed to minimize congestion within the yard.
Each component should be carefully integrated with one another to orchestrate the supply chain in the most effective manner. Better yet, supply chain solutions that share a common technology platform, common user experience, security and shared data elements such as items and orders provide additional value not possible with a collection of point solutions.
Omni-channel is here to stay and manufacturing will never be the same. To succeed in this new climate, manufacturers will need to be willing to adapt their processes as well as their systems.
Adam Kline is director of product management at Manhattan Associates responsible for driving strategy for the company’s Warehouse Management for IBM i (WMi) and Supply Chain Intelligence (SCI) products.
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