Retail fulfillment has experienced dramatic evolution during recent years. What started out as a simple process for getting items from a warehouse and out onto the shop floor has now evolved to become a central focus for companies managing complex fulfillment operations that combine eCommerce, omnichannel and bricks-and-mortar retail.
As stores start to reopen and eCommerce becomes increasingly popular, retail brands are facing growing pressures to cut costs and improve their bottom lines all whilst struggling to merge their various selling channels into a single, streamlined experience due to outdated warehouse technology.
A true and successful omnichannel warehouse must have the capabilities to intelligently optimize fulfillment by packing orders according to individual store layouts and preferences as well as coordinating the delivery of orders to individual customers’ doorsteps.
One view across all channels
In fulfillment, complete visibility of inventory across all points of sales is imperative. Clear stock visibility allows warehouse workers to quickly identify and resolve any potential problems, including low stock, unavailable items or unsold products. Retailers should therefore use one system to manage inventory for all sales channels.
For instance, a global footwear manufacturer should use the same SKU across all its channels for any particular shoe – regardless of whether those shoes are being sold online or in-store. Instead, many retailers’ distribution models remain disjointed. A shipment of 100 pairs of similar shoes, for example, may be separated into 80 pairs for retail while the remaining pieces are attributed to eCommerce – and the two will not overlap. Retailers therefore lack the capacity to ship eCommerce orders from their store warehouses and vice versa, restricting their ability to sell inventory across multiple channels.
To help solve the distribution model silos, retailers should look to adopt an Artificial Intelligence (AI)-driven order fulfillment software that looks across all inventory in the warehouse, managing it along with the people, resources and robotic automation that make modern fulfillment possible. The solution can therefore manage complicated business rules across all these areas and all channels in real-time, making the best decisions about how to keep promises to a customer whichever channel they shop.
Multiple hierarchies of inventories
Warehouses and distribution centers traditionally focused entirely on shipping pallets. But a global shift to online shopping means they are now managing cases for stores, individual customer orders and other shipping requirements. This puts new pressures on fulfillment centers that have to manage multiple hierarchies of inventories as efficiently and effectively as possible.
To cope with the demand, some businesses are implementing unadaptable automated hardware systems. Historically, most fulfillment systems were built to manage separate inventories and only pallets or cases, they never had to deal with individual items, or ‘eaches.’ The boom of eCommerce and omnichannel means that many retailers have moved to using separate inventories for specific channels, but this approach is both inefficient and costly. If store closures shift consumer demand online, having inventory stuck in a pallet for store replenishment will cost a retailer in sales – and in customer loyalty.
Instead, warehouses should look to adopt a comprehensive fulfillment operating system that manages all inventory in a single location. Using smart software and automated robotic technology, operators can easily shift inventory to the channel with the highest demand, such as reassigning a case for store replenishment to fulfill eCommerce orders, optimizing order fulfillment by smartly managing all types of hierarchy – from pallets to cases to individual items – all in one location.
A common infrastructure
For omnichannel retail fulfillment to run smoothly, the system must be able to handle different types of configurable processes for both retail and eCommerce under a single shared infrastructure. When the infrastructure includes all systems, both hardware and software solutions, the need to segregate the process based on inventory goes away.
The need to track and respond to business growth across separate sales channels therefore disappears, making it easier for retailers to adopt a ‘single view’ strategy for the different channels. This enables intelligent forecasting, replenishment and inventory management across the network – three things no brand can afford to be without in today’s competitive retail environment.
This year, eCommerce sales are expected to account for 18% of global sales and this will further increase to make up 22% of retail sales by 2023. To support that growth, a high yield fulfillment operating system can help retailers to build out a common infrastructure that includes software and hardware that works and learns together to reduce errors, maximize efficiency and help drive revenue growth.
Good resource utilization across all channels
Global retailers are still coming to grips with the growth of online shopping while learning how to leverage a sudden customer demand for omnichannel experiences. As retailers work to harness the opportunity, the most successful brands are focusing on getting the best resource utilization possible across all channels.
The resources can be as basic as warehouse stacking and shelving, or as complex as the software systems that support fulfillment, warehousing and transportation. Retailers can face resource challenges during seasonal peaks and valleys, when resources may be in huge demand or completely on the contrary. To overcome this, retail fulfillment operations must cross-utilize resources and optimize similar resources in the same facilities in a way that effectively manages seasonal changes without the need for additional support.
An adjustable and adaptable system
This year has taught retailers that omnichannel fulfillment and adaptability are everything, especially when the unexpected happens. Warehouses must be prepared to tackle any sudden disruption, reach peak effectiveness and adjust to changing customer needs and expectations. Retailers need to be able to continue to provide an exceptional and seamless experience, regardless of the current business conditions or where the customer is shopping, to stay relevant and remain ahead of the competition.
Predicting channel growth with certainty is almost impossible. Instead, retailers need adaptable, next-generation systems that grow and adapt with them. That way, retailers know their fulfillment operations are fully supported and ready to take on progress across any channel.
As shoppers demand more and as brands continue to tackle issues like the warehouse space crunch, persistent labour shortages and fast delivery expectations, the need for automated fulfillment strategies will continue to increase. Single view, hierarchical inventories, a shared infrastructure, good resource utilization and adaptability across all channels will help retailers to effectively design true omnichannel fulfillment to meet customers’ ever-changing needs and ensure cost-effective, on-time and accurate orders.
Akash Gupta, CTO, GreyOrange