Looking to revamp your supply chain and combine a central warehouse with regional cross-dock centers? A lot of our customers have implemented multi-channel solutions, and I want to point out a couple of things to look for that can help you avoid getting trapped.

I see more and more of you being pushed to serve a broader mix of customers and order sizes. It can be retailers selling both via brick-and-mortar stores and web shops, manufacturers opening up also for B2C e-commerce, or wholesalers mixing large and small customers. If the operation grows in size and complexity we will most likely need multiple warehouses to cope with volumes, lead time requirements and broader assortments.

On a network level you want to achieve flexibility to route products via a combination of sites. One key aspect is that these sites need to support multi-channel warehouse capabilities, including storage, flow-through and cross-docking processes. Here is my short checklist of things to look for when enabling this:

• Storage – the traditional model for operating a warehouse includes receiving products, put-away into storage, and picking from fixed or floating pick locations.
  What to look for:  Ability to distribute picking of orders across the workforce and have several pickers do multiple orders or subsets of orders in parallel (often called cluster picking). As customer size and requirements vary, you also need to ensure that the same product can be handled in different package size (e g pallet, carton, each), and that the order subsets can be merged easily.
• Flow through – looks at the opportunity to avoid storage and instead link inbound orders to outbound, so that arriving products immediately fill pending demand.
  What to look for:  The system needs to support pick-by-line concepts that allow pickers to pull products into temporary pick locations for picking, or to a sorting area where products are (manually or automatically) distributed into shipping containers. A well-functioning system creates temporary locations and/or issues products for sorting dynamically based on arriving products.
• Cross-docking – is a transit flow where inbound orders, shipments or packages are moved directly from receiving to staging or loading.
  What to look for:  Traditional systems will require matching of inbound and outbound orders (similar to flow-through). But my view is that the most efficient solution is a single scan operation where each arriving unit knows its next destination. This calls for the WMS to pre-determine the destination for arriving goods so that the inbound and outbound logic happens ‘behind the scene’. By doing so I have seen many companies really leverage ASN best practices and serialized shipping container codes (SSCC).

Note: You might use other definitions for these concepts – I know for example that many companies use cross-dock in a broader sense, often also including flow-through scenarios. But that’s fine, the important thing here is that we need the multi-channel flexibility. 

There is one more important aspect: Each of the above channels can be reasonably simple to support one at a time, but the real trick is to combine the different channels in the best way so that orders and shipments can be consolidated at the right site:

• Coordinated Routing – the core of multi-channel distribution is time coordination; to tune lead times between sites so that transit goods swiftly moves from inbound to outbound and meet arrival and departure time windows without huge intermediate staging or storage areas.
  What to look for:  The critical feature here is visibility, meaning dashboard-style monitoring of how departures from the warehouse gets planned and filled up, and continuous updates of the status of products in transit or warehouse production. Running all warehouse sites and the coordinated routing in the same system makes it easier to manage time dependencies and achieve real-time monitoring. 

It takes hard work to implement these processes, but from our customer base I know there is also a huge opportunity to increase turnover, utilize the capacity in each site better and to lower the total supply chain costs.

What is your company doing here? Comment and share your thoughts on multi-channel warehousing.

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