Key Takeaways from RILA’s ‘Logistics 2013’ Conference

By Kris Bjorson, kris.bjorson@am.jll.com

If you're a retailer feeling the economic heat, you’re in good company. A whopping 70% of the retailers at the RILA (Retail Industry Leaders Association) Retail Supply Chain Conference — Logistics 2013 event said that the “current economy and political situation” was either hurting or having a slightly negative impact on their business. And along with the slow-growth economy, the omni-channel commitment is creating more pressure to deliver online orders faster.

But here’s the good news: Retail and logistics leaders are rising to the occasion. At the conference, ideas abounded, as leaders shared innovative new ways to meet today's retail logistics challenges through strategies related to international logistics and sourcing, transportation, omni-channel distribution, and inventory management.

Here are a few of the key ideas/themes retail leaders discussed at the conference:

Multichannel retailing supports a seamless customer experience: The evolution has begun from true multichannel retailing towards the “omni-channel.” This seamless approach to the consumer experience harnesses all available shopping channels, such as mobile devices, computers, bricks-and-mortar establishments, TVs, catalogs, and beyond.

Today's consumers are increasingly expecting access through their own channel of choice, all day every day. With this, consumers are dictating the future of retail. They want 24/7 access to goods online, as well as the option to pick up or return those goods to a store. Several panelists made the point that only by harnessing all of these channels — e-commerce and mobile device-friendly shopping as well as in-person bricks-and-mortar access — will today's retail businesses succeed tomorrow.

"It’s only the retailers and brands that focus on the best consumer experience that will thrive, which means not blurring but erasing the lines between channels," said John Ehmann, SVP GSI Commerce, in a Multichannel panel. Whether by outsourcing e-commerce fulfillment operations to third parties or tackling it in-house, retailers have options when it comes to improving seamlessness in the customer experience.

More retailers are betting on free, fast shipping: According to the conference survey, seven of 10 retailers are still working on defining their multichannel strategy. For Laura Sen, CEO of BJ's Wholesale Club, that strategy needs to meet at least one consumer demand: free shipping.

"Free shipping is just the 'table stakes' for retailers,” Sen explained.

To maintain an efficient, reliable shipping and tracking system, retailers also need more technology investment in sophisticated information systems. Compounding those up-front retailer costs are same-day and next-day delivery options, which are becoming more common amongst big-box and e-commerce companies — creating even more competition for traditional retailers that must meet the same service benchmarks.

Determining where the retail store meets the dock door: Developing new inventory management strategy was another common thread in this year's conference. It covered the importance of optimizing a common pool of inventory for the best in-store and online shopping experience, making each portal uniquely inviting to the customer. From rethinking the number of dock doors and amount of backroom inventory and/or shipping space, to ensuring adequate room for customers to pick up orders. The big question facing retailers: Where does the store meet the dock door?

Should retailers outsource individual order e-fulfillment operations to other companies? Should they build a dedicated e-commerce facility to fulfill such orders? Or, should they have a multichannel distribution center that fulfills both individual and store orders? If they do, they would do well to choose their location wisely, as JLL’s Big Box Outlook report shows that the location of ‘big box” facilities can make or break a retailer or an e-commerce company’s abilities to deliver their service commitments.

Vertical integration for reduced costs, improved service: Many retailers are aiming to hit dual goals of cost reduction and service improvement by vertical integration, from manufacturer, to logistics service provider, to retail store. Choosing the right collaboration partners is more important than ever, as same and next-day delivery of online purchases is driving even greater demand for multichannel-capable distribution centers that can handle the demand efficiently and effectively.

Given that facilities in a retailer’s supply chain do not act in isolation, it is important to achieve full integration between planning and execution systems. Also a key topic was the need to optimize inventory flow from warehouse to retail shelf. This goal becomes a much more manageable task with a strong partnership in place between retailers and manufacturers that can effectively execute the process, while creating efficiencies and reducing cost to improve on-shelf availability.

Future trends
Several panelists shared insights into predicting future trends, on topics ranging from the economy and political landscape to energy supply. Two sessions explored the use of natural gas in transport, casting it in a positive light as the would-be fuel of the future. Derek Leathers, CEO, Werner said that transitioning fleets to natural gas has become a matter of when versus if.

Kris Bjorson, international director and head of retail/e-commerce distribution, Jones Lang LaSalle, a professional services and investment management firm offering specialized real estate services to clients seeking increased value by owning, occupying and investing in real estate. He can be contacted at kris.bjorson@am.jll.com.


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