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Something's happening here
One of the highlights of our sister publication DC Velocity's annual report on omnichannel distribution is a summary of the findings of its latest survey on that topic, conducted in partnership with ARC Advisory Group. Among other things, the survey looks at the trends and forces driving the omnichannel revolution.
At the top of the list is e-commerce. Internet sales are now pivotal to a retailer's success or failure. And for companies accustomed to doing business through traditional retail channels, competing successfully means rethinking their distribution center (DC) operations and logistics networks, many of which were originally built to serve brick-and-mortar stores.
These e-tailers compete not only with other traditional retailers, but also with the online pure-plays like Amazon.com. In 2014, Amazon posted higher sales than the next nine online retailers combined. What makes Amazon such a formidable competitor? One word: technology. No retailer has come close to matching Amazon's prowess in using tools like predictive software, big data, and goods-to-person systems to gain a competitive advantage.
Amazon is not the only business that has deployed digital tools to change its industry, as Tom Goodwin noted in a blog post on the website TechCrunch. "Uber," he wrote, "has become the world's largest taxi company, yet it owns no vehicles. Facebook is now the world's most popular media owner, yet it creates no content. Alibaba is the most valuable retailer, yet it has no inventory. And Airbnb is now the world's largest accommodation provider, though it owns no real estate."
What all of these companies do have is consumer-interface technology that matches buyers who want something with sellers who have something to offer. As this snapshot of the marketplace makes clear, something interesting is happening here.
And it's not just happening in the consumer world. Some of the same disruptive technologies that are changing our personal lives are making their way into logistics operations, particularly warehouses and distribution centers. Exhibit A would be the tablet computer; Exhibit B, the smartphone.
This trend will only grow stronger. In "Seven technology trends shaping the future of material handling," his article in our Q4/2014 issue, Lew Manci of Crown Equipment offered his thoughts on how technology will transform warehouse and DC operations. "In the next 10 years, the intelligence designed into material handling equipment will grow exponentially, as will connectivity between systems and their environment," he wrote. "Tech-savvy workers will operate intelligent machines, working alongside robots and autonomous forklifts in highly automated operations."
In other words, logistics operations of the future will look different from anything we can imagine today. That's why it's time to look at technology in a different light. When we consider the benefits of logistics technology, we must start thinking beyond efficiency, beyond productivity, beyond the ability to help us make better decisions. Technology is opening a path to gaining a competitive advantage through logistics. The winners will be those who recognize the opportunity and seize it.
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