The value of data in the warehouse management

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The need of harmonizing physical and digital, increasingly reduced margins and the challenges of a not always foreseeable market impose attentive choices and technological upgrades to keep the service quality high and to grant the business profitability.

The multichannel, or omnichannel, scenario has focused the attention on the warehouse management aspect. With the need of matching physical and digital, lower and lower margins and – in the case of resellers and TSC – very efficient competitors, it is necessary to keep pace with the service quality that customers expect and, at the same time, to grant the business profitability. How to manage it? On one hand, then, the needs and the expectations have enormously grown, on the other hand the digital technology has introduced brand-new prospects and instruments able not only to manage the daily routine but also to look beyond the present time to imagine the business of the future, to anticipate consumers’ demands, to create new services and new products, literally “reading” current trends in bits. These are the skills of artificial intelligence (AI) instruments, analysis and prediction software tailor-made to meet the requirements of producers and sellers, fed by data.

 

AI in numbers

The MITSloan Management Review in collaboration with The Boston Consulting Group has processed a study based on interviews with over 3,000 business managers and managers on a global scale, in 112 Countries and 21 markets, and with around 30 technology experts, precisely on the artificial intelligence issue: if and how it is considered in business, and how it reshapes its style. Three fourths of the interviewed managers think that the artificial intelligence will make their company able to widen the activity towards new businesses, 85% believe it will help them to attain a competitive edge, and it will support this advantage. Actually, however, only one company out of five has concretely introduced some AI processes into its structure, and fewer than 39% rely on a real strategy concerning that. The interest and the expectations are transversal, i.e. in all business fields, managers expect big changes due to the adoption of AI logics, even if the sector where they perceive this value better is the one of technology, media and of telecommunications, where 72% of interviewees have great expectations.

In what ambit of the corporate activity will the artificial intelligence prove crucial? Most of the companies foresee evident effects in the activities that concern the IT sector, operational and manufacturing activities, the supply chain management and finally the activities that involve the direct contact with customers. Astride risk and opportunity, the balance is positive: 50% of managers envisage only opportunities, 33% both opportunities and risks and 13% express a neutral opinion.

Concretely, what advantages will the AI use bring to companies? 85% of managers answer competitive edge, 75% expect instead the activity widening in new businesses. However, executives also understand that they are technologies promptly adopted also by those operating as new players and by competitors, while both suppliers and customers will increasingly take the use of these technologies for granted.

Nevertheless, the gap between the perception of opportunities and the effective implementation is still big: if 4 managers out of 5 think it is a strategic technology for their company, only one out of 5 has introduced it into some corporate processes and only one out of 20 has done it in extensive manner. In fact, companies often invest to solve specific problems, not generically in technologies that might exert an impact on various business ambits. Besides, the adoption of AI logics involves the engagement of suitable professionalisms in companies for managing them and interfacing them with the corporate everyday routine. As a matter of fact, the real efficacy of AI algorithms is linked with the capability of “feeding” and “training” them with the data and the procedures of one’s own company. Therefore, an effective data infrastructure, a sufficient quantity of data and dedicated personnel are necessary: “The data collection and processing are generally the most demanding activities in the development of AI applications” state the authors of the research. It is necessary that data are available or company’s property, they are integrated and not subdivided into clusters. Also for this reason, several outsourcing offers have emerged, and the high competition has resulted in the “democratization” of the access to these technologies. Moreover, several online courses are conceived and oriented precisely to the primary alphabetization of managers, who already today should know how AI algorithms operate, at least intuitively.

 

Big data for companies

What about the big data that feed the AI? The investigation carried out by the certification body DNV GL – Business Assurance and the research institute Gfk Eurisko outline a picture resembling the already mentioned report: companies understand the relevance of the matter but they cannot exploit its potentialities fully, yet. Those who have already started doing that, however, have already attained concrete benefits, 23% in terms of efficiency, 16% in the improvement of decisional processes and 11% have ascertained concrete savings. Besides, in 16% of cases customer experience and involvement have improved, in 9% the relations with stakeholders. “Big data are changing the rules of the game in a whole series of sectors –states Luca Crisciotti, CEO of DNV GL – Business Assurance -, envisaging new opportunities and new challenges. I think the companies that develop and implement strategies and plans to exploit fully the information of their data pools have multiplied the opportunities to become more efficient and to satisfy better market and stakeholders”.

 

Small size, dimensions do not matter

Going into the details of the consumer electronics sectors, the immediately usable solutions for retailers and producers are numerous and accessible to enterprises of all sizes. The theme of the warehouse management according to a multichannel vision in fact involves all: the retailers compelled to integrate the assortment online and offline, then very interested in knowing and managing all warehouse, general and local, diffusely, to supply the consumers on the territory at best. Then, the companies that produce to sell directly to the public or to distributors: logistics is a very relevant cost centre. Finally, for all those that, besides selling, choose products and assortments, it is essential to know what to produce to sell profitably tomorrow, and AI technologies can be a great help.

The shop paradise, Storeden, is set up as accessible platform for the eCommerce also to SME, and equipped with data analysis algorithms that can be activated hand in hand with the growth of the data at the company’s disposal. It is not only useful to implement the eCommerce site, but in general to sell on marketplaces like Amazon or eBay, and consequently to integrate the corporate data to develop the business in omnichannel modality, and abroad, too. “Not only eCommerce is at stake- explains Francesco D’Avella, managing director of Storeden -, we are a platform operating since 2012 by numerous customers, on which the company continues the development, irrespective of the single Saas contract. Concretely, it means that surfing users are recognized on the sites of different companies and for retailers it means to work always with the best technology, at very affordable costs: a monthly subscription that costs 29 Euros”. Since September 2016, this offer has been opened to the public, and since then it has allowed small and big companies to approach the multichannel world, taking advantage, for the services not directly provided by Storeden, of the partnership net. “Our core business remains the data management – adds D’Avella -, then, for instance, to make the review request start only if we are certain that the package has been delivered. We are also introducing an AI system for the advanced organization and management of eCommerce-side warehouses that allows organizing the arrangement of products with high replacement cycle in the warehouse, in order to speed up packaging and shipment, to analyse the average stocking time of the single product to have a turnover of stocks and to avoid stocking up old products”.

 

Optimizing the business

A broad and synergistic vision characterizes the platform studied by Salesforce, Californian giant pioneer in big data and today in artificial intelligence, with Einstein: this is in fact the name of the AI platform able to act at different levels in the optimization of the corporate business, also of Salesforce itself, which has implemented it among the instruments at its management’s disposal. Results obviously depend on the data supplied to the system but the highlight of Salesforce consists in the capability of “reading” a big quantity of data, and in conveying responses into practical actions for customers. “Salesforce started two decades ago as pioneer in Cloud – affirms Maurizio Capobianco, regional vice president of Salesforce Commerce Cloud -. For some years now, there has been a boost to propose targeted solutions in retail ambit, then evolving the CRM solution in more and more vertical and specific manner, to satisfy the requirements of modern retail companies”. Which range from the time of interaction with the customer up to the eCommerce as support and integration to stores, to clienteling applications that follow buyers on the various socials, and of marketing, also mobile. All this requires the integration of inventories, also of single shops’, with the central and eCommerce warehouse.

 

The specialists of the supply chain

Manhattan Associates, global brand for 27 years committed to the development of solutions for the supply chain and the omnichannel commerce, thinks that companies should organize to grant services while preserving profits, too. “Big companies – states Remy Malchirand, general manager of Manhattan France and South Europe – that must manage an extensive range of products and various sale channels, were the first that understood the importance of an up-to-date supply chain model. There are no sectors that are more interested or more suitable than others for improving supply chain processes. Probably, those more linked with impulse purchases, or which more depend on the customer experience quality, such as fashion, luxury and distribution, have been more attentive to the supply chain theme since the beginning, because improving these aspects exerts an immediate impact on sales”. However, the advantages of an “intelligent” management are transversal. Here are some: “managing the fluctuating levels of the demand and sale peaks, tracing and reacting to trends, improving performance and efficiency of the supply chain to fidelize customers and to increase sale volumes, backed by the constant availability of a product for consumers asking for it”. The previous experience of Manhattan in Spain teaches that especially SME benefit from that: “In Spain, first big companies turned to us, then followed by smaller ones –explains Malchirand-. In South Europe, some big retailers that operate in the technological sector have already chosen our infrastructures to improve the performances of their supply chain, to achieve a precise control of the inventory, to speed up the order release process and to reduce returned goods, to decrease costs and at the same time to increase customers’ fidelization, sales and revenues”.

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