Denmon has seen a marked increase in the number of companies attempting to fulfill multiple channels from a common distribution center. They are attempting to drive their supply chains with as little inventory as possible, given increasing uncertainty on the demand side, he says. The dream is to fulfill orders from a single inventory pool, yet be able to provide the same or better service to customers.
That's not an easy task. The various distribution channels have sharply differing process requirements and order profiles. To make it work, Denmon says, companies need to achieve a "thorough understanding of the business requirements by each channel."
In particular, distributors need to take into account the smaller quantities and higher shipment frequencies that are characteristic of the e-commerce channel. There is little commonality of product in that sector; on any given day, the mix of orders tends to be quite different.
Some distribution operations simply cannot accommodate multiple channels in the same facility. The business requirements of each might be so unique as to justify separate facilities. E-commerce can typically be fulfilled from a fewer number of locations than traditional retail, but companies should nevertheless be on the lookout for opportunities to share space.
Denmon advises that companies engage in detailed benchmarking of their distribution operations, and "look at that larger competitive landscape" over a five-year horizon.
