eStar senior project manager Patrick Gaskin discusses store fulfilment in the time of COVID.
The disruption of the past 18 months has brought on change, both temporary and permanent. Central business districts – the mecca of foot traffic – have remained largely deserted as people continue to work from home and shop online. Lockdowns remain a constant threat, fuelling uncertainty and hurting consumer confidence.
It is no wonder, that distribution centres (DCs) have, once again, come to the forefront of eCommerce fulfilment strategies. At a glance, it seems like a very logical decision. As the volume of online orders grow, the need to increase fulfilment capacity becomes imperative. Dedicated eCommerce distribution centres can hold hundreds of thousands, and even millions, of SKUs. The controlled environment and scale of DCs allow process optimisation to be addressed more easily. There is enough space to implement strategies such as optimised picking waves, creating ‘stores’ within the DC to optimise inventory management, and implement robotics to automate processes. These are strategies and measures that will be difficult to achieve elsewhere.
While some big-name retailers are giving up on store fulfilment in favour of large DC investments, others are going the other way and investing further in store fulfilment as a competitive advantage.
This article is not about the pros and cons of establishing huge, automated distribution centres for fulfilment (although we do have to acknowledge that not all retailers have hundreds of millions of dollars to invest in these types of mega DCs) versus leveraging the existing store network for fulfilment. A lot has been written about the topic and the conclusion invariably says the same thing: the approach largely relies on the type of business you have, the footprint of your existing store network and that the two approaches can coexist harmoniously for optimal results.
This article is presenting a case that store fulfilment can work and that retailers should not give up on it. Lockdowns and ghost business districts notwithstanding, your store network is still there. The stores are still open (when they can), they are still staffed, and they still hold inventory. As we all wait for things to get back to a semblance of normalcy and for foot traffic to ramp up, leverage a key asset and make your stores work for you!
Sophisticated distributed order management systems allow retailers to maximise order fulfilment while balancing two considerations:
- The customer’s expectations of receiving their order on-time and in-full.
- The company’s desire to meet these customer expectations at the lowest possible cost.
Depending on the complexity of the retailer, inventory may be held across stores, distribution and fulfilment centres, dark stores, micro fulfilment centres, suppliers, and third-party providers holding inventory and managing fulfilment and dispatch (3PL).
How to Succeed
These are some of the key considerations to make store fulfilment a success:
Prioritise DIFOT (Delivery in Full on Time) metrics – there is nothing like receiving five separate packages for a seven-item order to tank customer experience. And we haven’t even started counting the economic and the environmental costs of this inefficiency.
Ensure that your order management and fulfilment (OMF) solution supports multiple fulfilment and dispatch points – and yes, this includes support for hybrid fulfilment including fulfilment from the distribution centre, the store, and even the supplier (drop shipping) networks. Make sure that you have the ability to enable or disable a fulfilment location on demand, and have this setting immediately apply to the order routing rules, for business agility.
Take a closer look at just-in-time order allocation – order routing rules are traditionally applied to immediately allocate an order to the appropriate fulfilment location upon order confirmation. More and more we see the disadvantage to this approach during lockdowns: a store that may have been open at the time of the order allocation may be closed within hours of the allocation due to lockdowns. A just-in-time order allocation approach ensures that the order is routed to a fulfilment location at the time of picklist generation because the location is available and able to fulfil the order within your service guarantees.
