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Markets in Transition: Omni-channel Supply Chain Packaging – What Does It Mean for Pallets
Omni-channel retail strategy is the latest buzzword for the U.S. supply chain. How might this trend impact palletization and packaging design? Columnist, Rick LeBlanc, discusses these and other considerations.
By Rick LeBlanc
Date Posted: 4/1/2014
The trending topic in the supply chain press these days is Omni-channel retail. It is such a hot topic that I have had to upgrade my sprinkler system to ensure that all those logistics trade magazines on my desk don’t spontaneously ignite.
Okay, I’m stretching things, but heat generated from this trending omni-channel approach could be contributing to global warming.
Okay, I’m still kidding. Hopefully new approaches to distribution will reduce carbon footprint. But seriously, trade publications and conference speakers increasingly deify the “connected consumer” and the omni-channel approach that will win all hearts and e-wallets. Omni-channel has to do with fulfilling the smart phone packing customer’s growing desire to have an integrated, unified shopping experience whether in a bricks and mortar store, at a convenient satellite pickup location, online, smartphones or for home delivery, to name some options. Does this approach have anything to do with pallet selection? Hold that thought and we will return to it briefly.
For retail customers, said Chris Saynor, CEO of eyefortransport, “they want to buy something from a retailer in store, on the phone, or online and want to have the option to have it delivered at a time and to a place that is convenient for them. That is what the retail experience has to be now, yet most companies do not have the capabilities to offer this level of service.”
But customers are increasingly demanding more options and better delivery or they will go elsewhere. Saynor added, “It makes me want to grab these retail execs and shout at them ‘it’s not an option, you have to do this, and do it quickly and do it well!’”
If this is true, then the question for the pallet and pallet services supplier is how they can best add value with respect to providing the pallet solutions needed for those omni-channel retailers to “do it well.”
Figuring what that means isn’t easy. Most of the industry discussion around omni-channel I read is at a strategic level, rather than ankle high where the cardboard hits the pallet. There is minimal if any discussion around how pallet selection might be impacted. To get a better feel for how this might play out, I called Gene Bodenheimer, senior vice president at GENCO, the world’s leading reverse logistics provider. Bodenheimer is a thought leader in the area of packaging and related damage in the retail supply chain.
And Bodenheimer is clearly excited to talk about omni-channel and the challenges ahead. He does not foresee major implementation issues for companies already offering e-commerce in addition to a brick and mortar storefront. He sees greater challenges for companies who are not yet in the e-commerce space.
As for packaging, Bodenheimer believes that there will be less need for eye popping package design. In an online purchase environment, packaging need not drive the buying decision, so actual packaging could be a plain brown corrugated box instead of flashing high resolution graphics to entice the customer. However, he noted, that such decisions are influenced by how much is sold online versus through other channels, and whether it makes sense to have a separate pack for ecommerce delivery. Additionally, if saleable product in the plain brown box is returned to a brick and mortar retailer, it wouldn’t really be suitable to put on the retail shelf.
Talking to Bodenheimer, it seems that omni-channel distribution is complex, and could involve a lot of different packaging options depending upon specifics of how retailers wish to get goods to the consumer. I bounced some ideas off of him, such as what he thought about potential impact for inbound logistics.
With respect to inbound, Bodenheimer doesn’t see much of a change from the way things are done at present, regarding primary or consumer packaging, secondary packaging, and pallets for goods moving from manufacturer to retail distribution facilities. He feels that the changes are more on the outbound side where those goods will take more diverse routes or channels to reach the consumer.
So what are some of those changes to watch for on outbound? Bodenheimer observed that one of the first things changes might be a pallet with greater top deck coverage to facilitate smaller consumer or primary packages moving to satellite locations or other points for distribution to customers. This, not surprisingly, is in synch with the new CHEP half pallet that has more complete deck board coverage for the very reason of supporting smaller pack sizes without product damage.
One obvious possibility is an incremental decrease in downstream pallet use to the brick and mortar retail outlet. If, for example, 20% of volume shifted to e-commerce delivery to home or satellite location, then it stands to reason that there would be a corresponding reduction in pallet usage to the retail stores.
Other specialized approaches might make sense. I asked Bodenheimer about the potential for bins or roll cages as a means of getting products from the distribution center to a satellite pickup location. He said in fact this approach is currently being tested, but it really depends on a number of factors specific to each application.
So that’s the early look at omni-channel retail and its impact on pallet. Inbound should look largely the same. Continued automation and upgrades at distribution facilities will focus attention on pallet quality. For outbound there is the potential for some degree of decreased pallet usage, along with a range of possibilities for emerging channels, depending upon the variables involved.