Omni-channel is the retail buzzword of the moment. Inside SAP spoke with Larry Sweeney, co-founder and senior vice president, strategic markets, Vocollect, about how retailers are wrestling with how to create true omni-channel operations, and the role voice technology can play in maximising efficiencies.
ISAP: We are hearing a lot about the push towards omni-channel retailing – how are your customers approaching this?
Larry Sweeney: We have seen a significant shift in engagement by our customers over the past several years trying to address e-commerce and omni-channel.
E-commerce is a very tricky thing for distribution folks to manage for a number of reasons – one is it is growing, and they can’t tell you what the mix of retail and e-commerce will be two years from now. They are also handling an unusually high number of returns, because people may order the same thing in three different sizes to try it on, for example.
What’s driving all of this is the consumer – the growing middle class is putting a lot of pressure on supply chains and retailers. The consumer wants to be able to go to a store, maybe do some research on their smartphone while they are in the store, buy something on the spot, or buy it and have it shipped to their home. They might be online, then look at something in the store, then buy it online and have it shipped to the store or their home. So this whole omni-channel proposition is putting a lot of pressure on the retail as well as distribution operations.
ISAP: How do retail stores then need to be thinking differently?
LS: They are just one part of this whole delivery and returns mechanism to and from the consumer. When things come into the store, are they high priority shelf stock items? Are they customer order items? Can they wait to be restocked at a later time? Picking customer orders in a store is becoming very popular certainly in the grocery world, and it goes on from there – shelf labelling, cycle counting, inventory on the shelf in a store – so some of the same functions we actually do in a warehouse are now being applied to retail stores.
ISAP: What is the most common pain point you hear in relation to omni-channel?
LS: One is being able to predict where it’s going to go, but also being able to run two different types of operations in one distribution centre (DC). Where a distribution centre may have previously been focused on shipping to stores (of which there might be several hundred), now they are also focused on shipping for thousands of end-user customers who are consumers. How do you do that under one roof in a DC? One example of a company which has been very successful at that is Pacific Brands.
ISAP: Within the DC environment, what are some of the global trends that you are seeing in the use of voice, and how do you expect this to evolve in the future?
LS: One of the biggest global trends that we see right now is that because distribution centres don’t know what their mix of e-commerce versus delivering to stores will be even one or two years out, they are very reluctant to spend a lot of money on automation or warehouse technology that has a long payback period. Voice fits that very well because it is very scalable and flexible, it can adapt and adjust to whatever that e-commerce demand will be. We find a lot of our customers buying voice not on a return on investment payback basis, but more on a flexibility basis because they don’t know what the future looks like.
ISAP: How do you expect the use of voice to evolve in the future?
LS: We are seeing an evolution begin now – voice got started with picking technology, but Vocollect as an organisation knew that the benefits of voice apply to many other workflows in the warehouse. We have seen very consistent growth in non-picking workflows in DCs, and in fact, we have several DCs that are 100 per cent voice.
The trend beyond that is we are moving voice down the supply chain into retail and we have a number of customers that we are working with on pilots at this point on identifying the value proposition for voice in a store. The whole omni-channel trend is accelerating the adoption of voice and flexibility in the supply chain.
The article was first published in Inside SAP Yearbook 2015.