Increasing consumer expectations for fast, accurate delivery are driving an evolution in the way retail distribution centers (DCs) operations are conducted. To stay competitive, DCs must adapt to the seemingly unlimited pace of change in e-commerce. The 2017 holiday shopping season was the most recent reminder for retailers about just how quickly this transformation is taking place.
During Cyber Week 2017 (defined as the week after Thanksgiving), there was a 23% year-over-year increase in e-retail distribution in the U.S. In recent years, e-retail distribution volume has accelerated at an incredible rate with no sign of slowing down.
Through it all, consumer expectations keep getting higher. Whether shopping online or in stores, today’s consumers demand more product variety and availability — coupled with faster deliveries and lower costs. As a result, the prospect of order fulfillment is more complex than ever. Orders must be processed at unthinkable rates, creating intense pressure on DCs and their operators.
All of these challenges are prompting DCs to rethink the way they operate and look for new strategies to drive efficiencies across their enterprises. Becoming more “connected” is the first step towards digital transformation and implementing smarter DC operations. Connecting equipment to people and processes enables organizations to collect and analyze information from every part of their operations, and then make real-time decisions to ensure accurate, on-time deliveries.
This is made possible through connecting machine-level sensors in the DC via an internet of things (IoT) framework, and then feeding this information to a cloud-based platform where data can be processed and analyzed. By using these technologies in the DC, retailers can drive greater degrees of autonomy across their enterprises and optimize DC performance on a continual basis.
In this connected DC environment, operators can reduce the escalating complexities of modern fulfillment requirements. The combination of IoT and cloud-based services unleashes the power of machine learning technology, allowing managers to make informed decisions to keep operations running effortlessly, regardless of order volumes and complexities. And, to maximize equipment uptime and achieve reliable performance from every asset, this connected DC framework also enables predictive analytics and health monitoring services.
But, where can retailers go to start thinking about deploying connected platforms in their DCs? With a variety of solutions introduced to the market in recent years, it’s important retailers do their research and carefully evaluate any offerings. Some promise a tremendous suite of functionality, which upon closer inspection is a patchwork of custom software and controls — that in time will likely introduce more complexities.
When making these key technology investments, retailers should look for a reliable, integrated software platform that is designed to actually simplify warehouse execution: one that provides them with the flexibility to get the precise functionalities they need, as well as the abilities to easily scale and extend the system to their specific requirements — without suffering the costs of third-party customizations.
Perhaps most importantly, retailers should seek a connected warehouse execution system that will allow them to evolve and increase levels of automation over the coming decades.
By bringing together sensors, equipment, automation, workflows, workers, orders and enterprise data, distribution centers can become truly connected. They can increase throughput, reduce errors, proactively identify equipment issues, allocate resources on demand, and simplify complex distribution center operations. The results? Workers become more productive, operations become more efficient, and retailers can transform productivity to equal the speed and complexities of dynamic e-commerce and omnichannel requirements.
What’s more, these powerful tools are not just an abstract concept; they are available to retailers today.
Pieter Krynauw is president of Honeywell Intelligrated.
