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How to solve the omnichannel challenge

Marie Varrasso is a supply chain expert with 25 years delivering large-scale supply chain projects across Australia. Here she shares her knowledge on how to create an omnichannel ready warehouse.

According to Marie, the consumer rules the world. “The consumer is the ultimate disruptor and when it comes to supply chain operations we absolutely have to embrace them,” she says.

The true definition of omnichannel is when a customer can buy from anywhere, whether that be in a store, on a laptop or a PC, or from their phones and tablets. They also want to pick the product up from anywhere, whether that be a store, at their place of work, at home, or sent to a friend and they also want to be able to return it at any of these locations.

“It’s consumers that are driving the desire for a seamless, frictionless experience. But other retailers still don’t offer a full every-channel service. It’s still very much disconnected. To be truly omnichannel the consumer is recognised whatever device they use at whatever point in the purchase journey they are in,” Marie says.

What does this mean for the traditional warehouse model?

The changing needs and demands of the consumer are having a huge impact on the traditional warehouse model. “There is a very real need to innovate, evolve and change to become an omnichannel warehouse,” Marie says.

According to Marie, we need to look at what we know about the market today to be able to adapt. “We know that facilities and labour costs are increasing. We also know that consumers are seeking a faster and more convenient service. On top of that, the nature of e-commerce is putting a lot of pressure on the traditional warehouse. Picking a pallet of goods is very different to picking lots of individual items,” she says.

Along with these challenges, Marie says there is also an increased need for technology such as automated facilities, predictive analytics and artificial intelligence that need to come into the mix.

“Many advances in technology don’t cost the earth to implement, and you shouldn’t be scared to utilise these,” she says.

The framework

According to Marie, the consumer should be at the centre of any plan, and surrounding that is a number of different principles and values (see Figure 1).

Every innovation should start and end with the consumer. “Anyone working in supply chain should spend time in the industry they serve. Supply Chain teams should be encouraged to spend time out in retail and in industry. It is important they understand the value they bring to the organisation and ultimately to consumers, and in order to do that they need to get out of the distribution centre and into retail,” she says.

Empowering people is also high on Marie’s agenda. “Everyone in supply chain should know how their role fits within the larger organisation and how their contribution impacts the bottom line,” she says.

Another key factor to success is to ensure that organisations innovate every day, Marie says. “You won’t get ahead if you don’t practice continuous improvement. It is a basic principle and it needs to permeate across your entire operation,” Marie says.

Small daily changes can have a large impact to an organisation’s bottom line. Marie uses the example of the Toll Altona North warehouse, where the 20-year old facility was transformed into Australia’s first carbon neutral warehouse.

During this time Marie was Director of Supply Chain and Logistics at Nike Pacific. “The distribution centre was transformed through lean principles and continuous improvement and throughput more than trebled across the last 12 years,” she says.

One area that organisations should not overlook is identifying opportunities to collaborate, Marie says. “Find ways to work together and establish wins for all sides of the operation. Sharing assets will become more and more frequent, certainly in the last mile delivery arena,” she says.

Steps to success

The Altona North Toll facility was built more than 20 years ago, and it was a big task to adapt the site to be carbon neutral in 2018.

According to Marie, collaboration between landlord, tenant and client enabled the facility to achieve such a result. “Lean principles, a culture of doing what is right, and collaboration enabled the teams to innovate along the way,” she says.

The facility in Melbourne’s Altona North was the first-ever facility in Australia to achieve a whole-of-building carbon neutral certification under the National Carbon Offset Standard (NCOS).

The site’s energy efficiency program featured upgrades to a 2.5 kilometre long conveyor system which is powered by 145 individual electric motors, and the retrofitting of 1,300 light fixtures with high efficiency LEDs. This has led to a halving of the site’s total electricity consumption, exceeding the greenhouse reductions required by NCOS.

“We offset the remaining greenhouse emissions generated by the building by investing in forest conservation projects in Tasmania as well as in an energy recovery waste water treatment plant in Thailand,” Marie says.

For Marie, success in any supply chain is about knowing your consumer, and thereafter applying a holistic approach to future proofing your warehouse. Technology alone is not the answer, this needs to be balanced with investment in people first and foremost, then all else begins to fall into place.

 

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