Omnichannel is driving change. To compete in today’s omnichannel landscape, many companies are reevaluating traditional supply chain practices with an eye toward meeting their customers’ expectations for real-time information, responsive service and fast, cost-effective delivery options.
We recently surveyed manufacturers, retailers, and ecommerce companies about order fulfillment and distribution. Their responses revealed several emerging trends. For a closer look at one interesting shift on the horizon, check out this excerpt from our new whitepaper, Ready or Not: Omnichannel Fulfillment & Distribution…
Trend toward multiple DCs
A major change in order fulfillment may be looming, the survey suggests. Within two years, the number of companies using “multiple DCs with the source of fulfillment determined by business rules for the order” will more than double – up from 23.5 percent to 49.4 percent. Another 28.4 percent will use “multiple DCs, with each primarily serving a specific geographic area or sales channel.” Just 22.2 percent of respondents plan to use a “single distribution center that fulfills orders for all sales channels” (down from the current 40.7 percent).
“The data confirms what we’re seeing anecdotally,” says Perry Belcastro, vice president of fulfillment at Saddle Creek Logistics Services. “There’s clearly a growing shift toward a more customer-focused, multi-site distribution model. Companies are strategically expanding their number of DCs with a goal of getting closer to the end customer, moving products through the supply chain faster and minimizing transportation costs.”
While the distribution model offers a number of advantages, filling orders from multiple sources typically requires additional space, labor, technology and inventory investment. Many companies opt to leverage the resources of a third-party logistics provider with an established distribution network and experienced staff in place, Belcastro says. This allows them to realize the benefits of a multi-node network without the associated overhead commitment.
To learn more about omnichannel fulfillment and distribution trends, common challenges, the role of technology, use of outsourcing and more, read the whitepaper.