Order fulfillment in the increasing complex and fast-paced omnichannel retail world has become a key to success for companies—but it’s also a constant challenge.
The e-commerce explosion and on-demand economy has redefined the roles of retailers, manufacturers, logistics providers and transportation firms, and these business are adapting their operations to suit the new omnichannel fulfillment environment.
To determine how these companies are planning to advance, Zebra Technologies, working with research partner Qualtrics, surveyed more than 2,700 professionals around the world in transportation and logistics, retail and manufacturing for its “Future of Fulfillment Vision Study.”
Among the key takeaways was that consumers’ new expectations around omnichannel have impacted fulfillment, delivery and returns as companies look to do everything quicker.
The study, according to Jim Hilton, manufacturing and T&L global principal at Zebra, “shows that companies are turning to digital technology and analytics to bring heightened automation, merchandise visibility and business intelligence to the supply chain to compete in the on-demand consumer economy.”
Though most companies are aware that consumers have an ever-quickening expectation for delivery times, there are still many companies that can’t fulfill that demand. Despite that, only a minority of respondents think they have attained omnichannel fulfillment capability, but are aware of the need to enhance their operational efficiency with investment in technology that enables greater fulfillment capabilities.
The survey found that reducing backorders was the biggest challenge to reaching omnichannel fulfillment for one-third of respondents, followed by inventory allocation and freight costs.
Among retailers, 76 percent said they use store inventory to fill online orders and 86 percent said they plan to implement buy online-pick up in store in the next year. Retailers are investing in retrofitting stores so they can double as e-commerce fulfillment centers and are shrinking selling space to accommodate those pickups and returns, Zebra noted in its survey commentary.
Globally, 87 percent of respondents agreed that accepting and managing product returns is a challenge, with an increase in free and fast delivery corresponding with an increase in product returns. Seven in 10 surveyed executives agree that more retailers will turn stores into fulfillment centers that accommodate product returns. More than 60 percent of retailers that don’t offer free shipping, free returns or same-day delivery plan to shift to that model, while 44 percent expect to outsource returns management to a third party.
While 72 percent said they utilize barcodes, 55 percent of executives indicated their companies are still using inefficient, manual pen-and-paper-based processes for omnichannel logistics. But maintaining that status quo won’t be sustainable much longer.
By 2021, Zebra said handheld mobile computers with barcode scanners will be used by 94 percent of respondents for omnichannel logistics. That upgrade is expected to improve omnichannel logistics by providing more real-time access to warehouse management systems.
Radio-frequency identification (RFID) technology and inventory management platforms are expected to grow by 49 percent in the next few years. RFID-enabled software, hardware and tagging solutions allow for up-to-the-minute, item-level inventory lookup, heightening inventory accuracy and shopper satisfaction while reducing out of stocks, overstocks and replenishment errors, Zebra noted.
Future-oriented decision makers said next generation supply chains will reflect connected, business-intelligence and automated solutions that will add speed, precision and cost effectiveness to transportation and labor. Surveyed executives expect the most disruptive technologies will be drones (39 percent), driverless/autonomous vehicles (38 percent), wearable and mobile technology (37 percent) and robotics (37 percent).
Breaking the survey down regionally, manufacturers, logistics companies and merchants in North America reported their collective inventory accuracy at 74 percent and said needed to reach 83 percent for omnichannel-level capability. Among these respondents, 83 percent said autonomous vehicles will strongly disrupt fulfillment.
In Europe and the Middle East, a vast majority of respondents use store inventory to fulfill orders and almost one-third expect this to increase by more than 10 percent in the next five years.
Nearly all Asia Pacific respondents said they plan to implement same-day delivery faster than those from any other region, and almost 50 percent identified drones as one of the most disruptive technologies.
In Latin America, 93 percent of respondents said e-commerce is creating pressure to reduce the environmental impacts of relying on paper-based inventorying systems and a surge in delivery vehicles.