Target and Toys R Us posted overall sales declines during the holidays.
As more retailers offer customers additional ways to place orders—through self-serve, web-based store kiosks, for example—they also face the challenge of supporting those orders with effective back-end fulfillment inventory management, experts say.
As more retailers offer customers additional ways to place orders-through self-serve, web-based store kiosks, for example-they also face the challenge of supporting those orders with effective back-end fulfillment inventory management, experts say.
Order management systems integrated with web services and related technologies are making it more possible for multi-channel retailers to coordinate incoming customer orders across multiple channels-web, contact center and stores-with back-end fulfillment systems that provide for shipment from the most expedient source of inventory, whether that inventory is shipped from one of a retailer’s several networked distribution centers, one of its stores, or drop-shipped by a supplier directly to a customer, experts say.
But carrying out such a complex order fulfillment system is still on the cutting edge of retail operations, and it requires careful, in-depth planning as well as sophisticated technology, says Rob Garf, vice president of retail strategies at research and advisory firm AMR Research Inc.
“Cross-channel order fulfillment is all about breaking down barriers of inventory across channels, so the inventory can be available to customers independent of the point of order,” he says. Technology systems capable of integrating customer orders with available inventory in multiple locations are becoming more available and being deployed by large retailers, but they also require coordinated planning across multiple retail operations, Garf adds.
Multiple departments within a retail organization-including marketing, merchandising, store operations and supply chain management-need to agree on business rules that will determine how orders will get fulfilled, Garf says.
He notes, for instance, that a recent study found that by the end of 2010 72% of retail chains expect to offer in-store kiosks for placing customer web orders. Ideally, orders placed through a kiosk could pull from any available inventory in a way that expedites shipment and maximizes customer service while also addressing the most efficient management of inventory stocks.
But there are numerous options to consider, such as whether to charge the customer for delivery to a home address, Garf adds. “Retailers need to manage cross-channel orders from two perspectives,” he says. “First, to ensure that the right product arrives on time in good condition, but also to deliver it in the most efficient manner without losing money.”