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April 14, 2015

Fulfilment of multi-channel orders has become one of the greatest drivers of customer satisfaction and is increasingly being used as a way to differentiate against competition. In spite of this, few retailers have successfully addressed the necessary complexities associated with multi-channel operations and the resultant customer complaints are exhibited all over social media. Addressing these issues has the potential to generate very significant benefits for retailers.

The Challenge
Multi-channel offers retailers the opportunity to extend their range to include products that aren’t stocked in stores. It also provides an opportunity to utilise the stock in stores to create differentiation against competitors, particularly those that are mainly online focused. What consumers want is to be able to assemble a basket of products and then receive these via their preferred method. This could include:

  • Home delivery – which should be within a specified 1 hour window and potentially on  the same day as purchasing
  • Collect in store –as soon as possible and from a time that can be guaranteed
  • Delivery to a collection point  - such as a locker or even your car boot at a specific time
  • International delivery
  • Ability to return products via any of the same channels by which they can be received.

Retailers are continually striving to improve visibility of inventory across their business, so that they can identify in real time exactly which stock units can be reserved to fulfil online orders, whether the items be in a store, warehouse, in transit, with a third party or available to order/manufacture. Based on this knowledge, the retailer then makes a promise as to when the items can be delivered to the customer. All too often retailers fail to meet their promise and customers are left disappointed, venting their frustration via social media, having been unable to resolve the issue with customer services.

Alternatively, the retailer knows where the item will be sourced, but provides an overly conservative and vague delivery estimate so as to avoid the risk of disappointing the customer, thus eliminating any competitive advantage. In many cases the ability to provide make a promise is further diminished by technology constraints. The technology “tail” is wagging the proposition “dog”. Even where promises can be made by the retailer, they   often don’t understand the true cost via each route. This can mean they are unknowingly promoting the less profitable option, or are unable to vary the price to sufficiently compensate for the delivery cost.

The Solution
Retailers need to consider ‘Available to promise’ as having two key aspects: Global Inventory visibility and fulfilment.

The retailer needs to have accurate and real time visibility of both, with associated fulfilment costs in order to be able to provide a list of available options with short windows and costs to the customer. This means that for each stock item the retailer must know the possible routes that could be used to deliver the item to its destination and the associated costs. Similarly where a basket of products is being purchased; they must be able to produce a composite view with collation built into the process so the customer doesn’t have to receive multiple deliveries, all required in real time so that options can be provided as the customer progresses through their purchase journey. The complexity, as well as opportunity for losing money and customers is obvious.

Real Time Fulfilment Visibility
It is possible to leverage the opportunities presented by digital to more effectively deliver a solution, despite the complexity. In order to provide real time visibility of fulfilment the retailer needs to have real time access to information for each leg of the route to be able to accurately offer a time. Examples of the information required include:

  • Cube and weight of each product individually and when consolidated
  • Any specific transportation requirements such as 2 man handling
  • Scheduled truck moves with current available capacity for each specific truck
  • Availability of dedicated product moves with costs and lead times
  • Availability of resources for picking products, including in store if relevant
  • Storage capacity for the full duration that products may be stored at each location. This is needed even for collection points or small stores that may be used
  • Possible collation locations, with visibility of all resources required for collation
  • Services required at any leg, such as an engineer, with availability by resource type and location.

Conclusion
It is a complex balancing act - giving the customer full flexibility of fulfilment options, in a narrow delivery time slot and with a high degree of certainty that you can keep the promise. This challenge can be overcome with the help of a digitally led transformation of fulfilment resources, process and technology. Retailers who achieve this will enjoy significant benefits such as the ability to:

  • Offer a fulfilment proposition that stands out from competition
  • Keep promises and therefore improve customer satisfaction and reduce customer service costs
  • Make better use of store stock by improving stock turn and reducing mark downs
  • Optimise fulfilment to reduce stock holding and reduce lead times throughout the supply chain.