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Bringing Distribution Center Science To The Art Of Retail

  • Written by  John Carenbauer, Honeywell Safety and Productivity Solutions

0aaJohn Carenbauer HoneywellBrick-and-mortar retailers today are faced with a hyper-competitive and continuously evolving landscape in which consumer expectations for the ideal shopping experience have never been higher.

To differentiate themselves from online-only retailers, physical stores are offering shoppers new features such as click-and-collect and ship-from-store as well as value-added services such as gift wrapping and personalization. But retailers are finding these services to be time-consuming, inefficient, inconsistent and often unprofitable.

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A survey by JDA Software Inc. revealed that 68% of omnichannel retailers are facing rising fulfillment costs. The biggest challenges, per the survey, were associated with shipping and returns for online purchases and in-store pickup services.

To make these value-added services more profitable, traditional retailers need to look to distribution centers for inspiration. They should evaluate technology investments and process improvements and apply them to their brick-and-mortar storefronts. Most importantly, they need to leverage the data they collect and use analytics to make more timely and informed decisions.

In short, improved results will come from balancing the art of retailing with the science of distribution centers.

The Art And The Science

In today's environment, following years and years of refining the customer experience, brick-and-mortar stores operate more like an art. Most store managers have years of experience — much of it through trial and error — and have cultivated a strategy for running the store.

On the other hand, the distribution centers responsible for keeping store shelves stocked and fulfilling online purchases have invested years in the science of enhancing operations to achieve productivity, accuracy and consistency gains. Modern distribution centers have invested heavily in automation technology, such as shuttles and conveyors, as well as warehouse management platforms and labor management software.

But one of the most important areas of technology investments has been in worker-guided solutions. Distribution centers, unlike the often-chaotic shop floor, aretask-oriented, process-focused environments. Decades ago, operations managers traded paper-based, word-of-mouth processes that were often passed down from seasoned employees for technology that could automate this process and also help collect data, such as voice-directed systems.

In fast-paced DC workflows like picking, these voice systems combine speech recognition software with a headset to help guide a worker through his or her daily tasks. These systems integrate with inventory management and allow the warehouse operators to capture data and manage work processes, which leads to labor optimization, inventory visibility and ultra-efficient streamlined workflows.

Bringing A Voice To The Shop Floor

Unlike the distribution center environment, brick-and-mortar stores are unstructured and often unpredictable. Store associates cannot just focus on one single task and ignore shoppers. Retailers need their associates to have the flexibility to attend to the customer on the shop floor and respond to impromptu demands.

However, many workflows in the brick-and-mortar store can greatly benefit from streamlining and standardization. These processes include order fulfillment, gap scanning, shelf replenishment, inventory management and more.

This is where distribution center technology, especially voice systems, can be deployed to improve store operations and increase customer satisfaction and profitability. By guiding store associates through specific workflows and tasks using a headset with voice direction, stores can drive consistency — and much clearer metrics – in day-to-day operations.

A directed-work approach eliminates the guesswork and risk of human errors for tasks like order picking and preparation, stocking shelves and counting inventory. A retail version of a voice technology system can deliver a massive 20% productivity gain, which is critical as storefronts look to operate with more efficiency.

In addition, stores can capture detailed information about their operations as workers complete their tasks, eliminate paper-based checklists and reduce the reliance on written inventory reports. The ability to capture and analyze that information means that they can make data-driven decisions to help identify areas of improvement and take specific actions to optimize operations.

Making It A Reality

Last year, a large and very successful supermarket chain was looking for technology solutions to address several areas of their operation which they knew needed improvement, and that were affecting their bottom line. As a pilot program, they deployed a software and voice-based system to their workers on the night shift.

The supermarket saw improved accuracy and gained access to more data for better visibility in its operation. In particular, the new depth of data available allowed them to reduce the number of out of stock items on the shelves, and communicate daily inventory levels to central operations much more quickly and easily. The distribution centers providing stock to their storefronts were then able to make far more accurate decisions about the amount of food and beverage to send with each shipment.

For example, with the solution in place the store managers could quickly identify items that were incorrectly included in the shipments they received. Using voice commands, workers could more quickly identify and document shop floor issues, such as missing shelf tags, incorrect setup of marketing displays and new product introductions that might need attention from the next shift.

In addition to managing merchandise, the supermarket wanted to improve labor management, both from a store operations perspective and a worker utilization perspective. With a technology-directed solution for retail workers, the visibility of labor and the ability to analyze worker processes is a key benefit, and this supermarket saw significant improvements.

This benefit is particularly clear for new retail workers. Faced with high employee turnover in the retail sector, stores must ensure new workers know where the products are in the aisle. Using a voice-directed solution to tackle this issue helps new workers in two ways. First, the system directs them to the specific location so they know exactly where to go, helping them learn the aisle layouts and reducing the number of steps they have to take each day. Second, the workers consistently place the correct product in the correct location on the display.

A guided work solution can prioritize specific tasks, such as ensuring promotional items are stocked on marketing displays before aisle shelves. The pilot program gave this supermarket far greater visibility into the processes of their night shift workers and in real time. The store measured data points, such as the length of time that work processes were taking, how many items were put away and the number of over-shipments. Using this data, the store managers could then better align labor hours with shipment volume to prevent understaffing or overstaffing a shift.

Benefits

For retailers, operational visibility and predictability go hand-in-hand. Managers need real-world data to form baselines as to how long certain tasks can and should take, such as better estimates of order readiness for in-store pickup. This data then fuels labor models to build staffing requirements, determining how much labor is necessary to fulfill orders and run normal store operations. Ultimately, this helps avoid overstaffing while ensuring on-time, accurate order fulfillment and an optimal checkout experience.

Retailers can deploy directed work technology using voice for a wide range of tasks on the shop floor and in the stock room to achieve:

  • Improved click-and-collect fulfillment: Associates can provide customers with the error-free orders and seamless experience they demand, from receiving the order to packing and shipping;
  • Inventory accuracy: Store managers need better control of inventory from back-of-store to shelf with system-driven receiving, staging and restocking; and
  • Greater visibility and predictability: Every function of the in-store and back-of-store order fulfillment process and labor efficiency can be tracked and measured to identify how long it takes to perform tasks, allowing store managers to optimize operations and allowing associates to put a greater focus on customers.

Retailers today face more complexity than ever, with expanding inventories, tighter margins and the need to deliver a high-quality customer experience no matter the channel. But greater complexity also brings greater opportunity. By using proven technology that brings “science” into their operations, retailers will be able to improve the user experience and gain a competitive edge.


 

John Carenbauer is the Product Marketing Manager for Honeywell Connected Retail. He previously spent 16 years working for Giant Eagle Inc. and American Eagle Outfitters, where he was responsible for the selection and implementation of key technologies that helped these organizations execute on their core strategies of process improvement, cost reduction and transforming the customer experience.

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