The Greatest Impact on Customer Experience is by Building a Key Operational Capability

Retailers must focus their business transformation efforts and limited IT budgets on strengthening operational capabilities which in turn would have a great impact on their customer experience strategy. Some of the must-dos include point-to-point fulfillment, inventory visibility and unified order management.

The #1 omnichannel operational challenge that retailers have to overcome is to address the customer’s need for shipping-speed and velocity of orders. Same-day and next-day shipping is where most of the operational innovation will take place for these companies. This is especially true when it comes to the increased need for a robust order management and fulfillment infrastructure that enables ship from DC, supplier direct drop shipment, click and collect, smart locker shipment and ship from store. The relationships such as of a supplier, 3rd party fulfillment partners and on-demand fulfillment services partner are also going to be crucial for first-time right orders and on-time order delivery. Legacy enterprise resource planning (ERP), point-of-service (POS) and warehouse management systems (WMS) cause significant delays in upgrading unified distributed order management visibility, accuracy and execution.

While retailers will have to continue to invest in upgrading their omnichannel supply chain for order visibility and agility such as integrated DCs, cross-dock, split order and other related processes, the role played by stores will become even more critical in months and years to come. EKN’s 3rd Annual Stores Benchmark report indicates that 8 in 10 retailers anticipate an increase in fulfillment of online orders from store. Additionally, 32% of retailers are going to offer same-day shipping in the next 12 months, totaling close to 75% by the end of 2016.

Stores need to be spruced up and retro-fitted with the required capabilities such as ship-from-store, click-and-collect, buy-online-pickup-from-store and other curb-side pickup ones. And, it is not as simple as just taking out some shelves or moving some freight storage area to another part of the store to make way for increased online order activity in the store. The legacy order management and ERP systems will need significant upgrades and perhaps a replacement as they are only meant to handle warehouse management system as a system of record for orders shipped to stores or to customers. A number of factors can delay order shipments and equivalent risks can hamper order visibility down to the last mile. Store and its lockers, 3rd party pickup points, Uber-type last mile delivery models are among the other fulfilment destinations which are located either close to the store or the customer’s home/office.

Below are some capabilities and enabling technologies that can assist both retailers in building a 21st century and a customer-ready operational framework for omnichannel orders and fulfillment:

  • In the next 12 months, key process changes that two-thirds of retailers will undertake in order management includes: Integration of inventory across all channels, standardization of order-fulfillment across channels, and building of unified order fulfillment processes that are well-integrated into ERP, POS , WMS and shipper carrier processes
  • Almost 8 in 10 retailers have already automated order capture and processing as well as inventory update processes across channels or will do so in the next 12 months
  • While just 3 in 10 retailers have currently built a unified order management & fulfillment process or have standardized order management & fulfillment across all channels, 60% of retailers will have these changes in place in the next 12 months
  • While eCommerce order management and distributed order management systems are some of the most widely adopted systems by retailers to process omnichannel orders, high complexity, lack of scalability and poor speed-to-market of such solutions including legacy ERP-based order management  have always over-shadowed the business value of these systems
  • Cloud and lean order management systems should be deployed and made operational in 6 months to a year, so that the omnichannel teams can start to improvise on processes, start to introduce rapid change management and on-boarding benefits from a business user and consumer perspective

For further discussion on this topic and other retail trends or issues, please contact me at [email protected] or on Twitter: @sahiranand or @EKNResearch.