Omnichannel in your warehouse – or how Empik integrated its sales channels

22 Dec 2020 - Case study, Logistics

The COVID-19 pandemic and subsequent lockdowns have shown that companies which have consistently focused on developing new sales channels and deployment of information technologies were able to better handle the ever-growing e-commerce sales. At one point, the biggest retail chains decided to add online stores to their traditional retail outlets. As the consumer interest in online shopping grew, it became necessary to integrate both sales channels at various levels, especially in terms of logistics.

Omnichannel challenges

The omnichannel strategy calls for major changes in the supply chain management, as a single warehouse is now expected to handle orders from traditional retail outlets, online stores, and shopping applications. Cost-efficient processing of large volume of orders covering a relatively small number of products is a major logistics challenge.

For several years now, Empik has dynamically implemented its omnichannel sales plans, steadily expanding both its retail store network and the sales platform, while putting a strong emphasis on the highest quality offered to customers across all channels. These wide-ranging efforts have led to the steadily rising share of e-commerce and digital sales in the Empik Group’s revenue, growing popularity of the click&collect service, and ever-expanding client base of the Empik Premium and Empik Premium Free programs.

Combined e-commerce and retail warehouse

One of the key developments across the Empik network is the evolving logistics strategy driven by dynamic growth of the company’s e-commerce sales, combined with the continuing operation of retail stores. Initially, the e-commerce warehouse was treated in the WMS as a ‘separate store’ to which orders were sent.

For many years now, Empik has successfully delivered its omnichannel logistics strategy, as confirmed by a number of awards (such as the Omnichannel Retailer of the Year award received for three consecutive years in 2017-2019).

The Empik strategy envisages an overlap between the company’s online and offline channels to ensure quick service, highest comfort, and best experience for our clients’, said Grzegorz Barcikowski, Central Logistics Director. ‘Creation of optimum logistics channels is one of the key drivers of this strategy. For example, clients may order products available online in a retail store or, conversely, order products via the website for free-of-charge delivery and pickup at the retail store of their choice, adds Empik’s representative.

However, implementation of effective and dynamic logistics processes would not be possible without computerization and integration of various warehouse management tools, sales systems, and warehouse automation solutions. The Company decided to replace its legacy WMS tool with PSIwms and to partner with PSI Polska to deploy a warehouse management system which would integrate various sales channels.

Tailored WMS deployment to meet business needs

The task put in front of PSI Polska was to implement a solution which would handle warehouse logistics for both e-commerce and retail channels, and support integration of advanced warehouse automation systems. In order to maintain continuity of business processes, a decision was made to launch the system in two stages corresponding to two sales channels. Deployment of PSIwms to support nearly 300 Empik retail outlets was completed in 2019. This process was broken down into separate phases corresponding to product groups, so as not to interfere with the operation of the entire retail chain. As a result, the risk of disrupting deliveries across the distribution network was minimized, and warehouse personnel were given a chance to gradually learn the new processes and the system as a whole. The second stage involved deployment of new logistics processes for the e-commerce business.

Importantly, the deployment was not limited to a mere launch of the new WMS solution. Instead, it covered the entire logistics process to ensure its integration and automation’, said Mikołaj Garbarek, Director of Production, Logistics and Public Transport Systems at PSI Polska. ‘The new process envisages combination and integration of retail and online sales. Previously, retail and e-commerce warehouses were separated, which made it difficult to process orders and manage available stock. The deployment of PSIwms made it possible to integrate those two sales streams, and the same storage areas and inventories are now used to complete orders from both online and retail stores, adds Mikołaj Garbarek of PSI Polska.

Omnichannel in a single warehouse

In order to drive up the efficiency of its personnel, Empik opted for warehouse automation solutions such as sorters, a shuttle warehouse, integrated conveyor systems, and put-to-light areas. This allowed the company to use its inventory more efficiently, optimize the supply process, and minimize the time necessary to handle the sales platform.

Matching the two separate sales channels with very different characteristics was one of the major challenges of the project. E-commerce warehouse operations call for an efficient end-to-end delivery, and integration of the sales channel with up-to-date information on inventory levels is of primary importance. If the sales platform is to offer top-quality service to its customers, including an option to cancel orders which have already been sent to the warehouse, dynamic integration of IT systems is a must. On the other hand, retail stores need highly efficient processes coupled with low cost of logistics operations against total expenses. In the e-commerce business, costs are obviously a major factor, but customer satisfaction is of paramount importance – the product ordered online should be delivered within a certain time.

In the case of online orders, we focus on order processing, so as to deliver on the promise made to the customer on purchase. This simply means that we cannot wait until we have earned the expected value in terms of cost optimization. We need to start order picking even for single-article orders to make sure it is dispatched right on time’, explains Grzegorz Barcikowski, Central Logistics Director. Combining cost optimization with high-quality customer experience is the overriding goal of Empik’s logistics muscle, currently powered by PSIwms. To that end, a number of systemic solutions have been implemented to fully integrate Empik’s warehouse automation and back-office systems with PSIwms. The system manages all goods movements and the performance of warehouse staff’, adds Empik’s representative.

Such complex processes inevitably call for precise planning of logistics activities. To that end, PSIwms offers order grouping, with individual orders grouped based on a number of criteria and subsequently processed together using optimum warehouse equipment in specific areas, within a time frame which will ensure just-in-time delivery. If the system is able to issue an almost full pallet from the backup warehouse, the cost-intensive manual picking process in the shelved warehouse will not be necessary. The pallet will be picked up from the rack and goods will be sorted out as per the orders, while the remaining goods will be sent to the shelved warehouse to be used by the order-picking staff.

This is just an example of our approach which combines different priorities of separate distribution channels and logistics processes. PSIwms makes it possible to effectively handle and coordinate all warehouse operations, so that warehouse logistics meets the ever-growing business needs, said Mikołaj Garbarek, PSI Polska.

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