Online sales grew by more than 30% in the fourth quarter, but store sales slid by 6.1% year over year.
With deeper visibility into its supply chain, a retailer shows more products to customers.
It offers products that meet virtually any need of the serious or even not-so-serious cyclist. But multichannel retailer Performance Bicycle hasn't always been able to show online shoppers its entire inventory—which can cost it the sale, for example, of a Mongoose mountain bike that is ready and waiting in one of its warehouses. That's beginning to change, however, with a new web-based system designed to show web and catalog shoppers all the inventory Performance has available, whether it's in one of the retailer's four distribution centers, one of its stores, or available at a supplier set up and willing to drop-ship orders directly to the retailer's customers.
"This allows better management of our supply chain," says Jane Parker, vice president of warehouse operations for parent company Performance Inc. "We can see inventory across our entire supply chain, including what's available in our distribution centers, third-party logistics providers' warehouses, and from our suppliers."
Once the new system is in place, a shopper looking for that Mongoose mountain bike, wherever it is within the Performance network, will see it on the web site. In addition, the web site will be able to display a broader range of products, and delivery in many cases will be faster. It's all designed to ensure that a customer who is ready to buy does not click away from PerformanceBike.com because he can't get what he wants when he wants it.
At a time when retailers must be careful not to over-order, it's especially important that merchants know what inventory is available to ship, and be able to provide accurate and up-to-date information to consumers.
For many companies, that's not a slam dunk. In a recent survey of retailers and manufacturers, IDC Retail Insights, a unit of research and advisory firm International Data Corp., found that respondents placed advanced inventory management and improved sales and operations planning among the top areas of supply chain application investments in 2010. "This acknowledges the supply chain's need for better coordination with customer-facing departments," says the report, which was conducted by Leslie Hand, research director at IDC Retail Insights.
Performance, which sells on the web, through a catalog contact center and more than 85 stores, has long managed its inventory with a warehouse management system from Manhattan Associates Inc. Now it's deploying Manhattan's web-enabled Distributed Order Management system, which will centrally manage the flow of products to customers, Parker says.
"Manhattan's Distributed Order Management solution will enable us to optimize our cross-channel retailing strategy while lowering our supply chain costs," she says.
More product choices
The new Distributed Order Management application, or DOM, is designed to let Performance fulfill online orders from multiple warehouses, including two operated by third-party logistics providers, or 3PLs, that currently ship only to the retailer's stores, Parker says.
This will replace a current system under which all online orders are shipped from one of Performance Bicycle's two company-owned warehouses, in Chapel Hill, N.C., and Canfield, Ohio. "Right now, if a product is not in stock in our Chapel Hill or Canfield distribution centers, it doesn't even display on our web site," Parker says.
"DOM allows us to get real-time updates from the inventory managed by our third-party logistics providers to show a broader range of bikes and other products on our web site," Parker says. This replaces a cumbersome and often ineffective system that required Performance to rely on a mix of phone calls, faxes and e-mails to get information from suppliers and 3PLs on what inventory they had available, including for shipment to stores, she adds.
With the new system, which the retailer expects to go live in time for the holiday shopping season, shoppers on PerformanceBike.com will be able to see the availability of inventory from all four warehouse facilities the company uses as well as items available in stores. When an online customer places an order, the DOM will automatically route it to the nearest warehouse that has the product available for shipment, Parker says.
The shopper will also have the option to click a button for in-store pickup, in which case the system will show that the store has the item or indicate that it can be shipped to the store for pickup.
"We expect to see a definite improvement in inventory management and customer service," Parker says.
Connecting with customers
The DOM system, which receives and coordinates inventory updates from outside logistics providers and suppliers through a web portal, also supports more efficient and faster fulfillment. An online order destined for an address in Virginia will ship from the Virginia-based warehouse operated by Givens Inc., one of the retailer's logistics providers. Likewise, an order headed for a consumer on the West Coast would ship from the retailer's California facility managed by Universal Warehouse Co.
Performance is already using the new system to expand the items it can drop ship. "With suppliers on board our DOM, they can show us their full product assortments and what they're willing to ship directly to our online customers, so we don't need to carry as much inventory in our warehouses," Parker says.
"If the retailer didn't have a middle layer like DOM to connect to the Mongoose inventory available to sell, it couldn't enable the drop-ship process, and the consumer would not even know that the item was offered," says Brian Kinsella, Manhattan Associates' lead product manager for its Distributed Order Management system. "This expands the assortment retailers can pull from suppliers, so they can sell more lower-end items and higher-end items with more features."
Integrated with Performance's WebSphere Commerce e-commerce platform from IBM Corp., the DOM system is also designed to send automated XML-based alerts to the e-commerce system of any unexpected and significant changes in inventory coming from suppliers, he adds.
Retailers can set the system to issue alerts when a supplier ships more or less than what was expected. Online shoppers then get accurate views of what's available. "So when shoppers browse the web, the site will accurately show if something is in stock for ordering or not," Kinsella says.