Article

Unlock the full potential of your supply chain

By Amy Tennent,
Unlock the full potential of your supply chain

The retail world is changing and the fulfilment of direct-to-consumer orders continues to expand beyond distribution centres (DC’s), warehouses and vendors to now include hundreds or even thousands of stores. Retailers with store networks have a great opportunity over online retailers if they can provide fast, free delivery profitably. Optimised fulfilment is only possible if the store is not treated as simply another ship node, but used to a far greater advantage.

Next level optimisation
Adaptive Network Fulfilment (ANF) empowers retailers to maximise the profitability of direct-to-consumer orders with continued systematic learning. Systematic learning improves the understanding of the factors that really matter to your store far beyond shipping, handling and geo-proximity.

By utilising ANF, retailers can maximise overall order margins in a variety of ways. Automatic identification of products likely to require a price reduction based on their sales, stock and location. Optimal pricing reduces overstock and markdown situations which in turn reduces operational and logistics costs when dispositioning end of season inventory to the distribution centres and vendors.

Adaptive inventory management directly impacts profit margins. ANF can reserve store inventory for the higher margin in-store shopper based on the accurate probability of in-store sale or, when appropriate, use store inventory to fulfill online orders. In fact, ANF evaluates the demand from all sales channels and fulfils every order, regardless of its source, from the optimal location.

Streamlined operations are another significant contributor to maximised profit. Adaptive learning over time calculates the probability of fulfilment success, rejection rates and time to ship. ANF will strategically allocate fulfilment to locations that are best placed to handle demand, have the correct capacity, lowest rejection rates and fastest ‘click to deliver’ times in order to reduce hidden costs. Hidden costs include service level upgrade costs that are associated with store rejections and delayed fulfilment and customer credits and refunds.

Total fulfilment costs
With a holistic representation of the total cost to fulfil, retailers can now configure and evaluate options by simultaneously reviewing multiple factors to minimise the overall cost of fulfilment. It has become necessary in an omni-channel world to continuously evaluate and execute based on multiple considerations:

  • Do I want to spend an additional 10% in shipping and fulfil this order from a location that is drowning in inventory to prevent potentially costlier price markdowns?
     
  • For my free shipping orders, should I only consider locations within 5% of the lowest shipping & handling costs or… choose the location with the deepest inventory, highest fulfilment success rate and most available store capacity for fulfilment.

ADAPTIVE NETWORK FULFILMENT
Retailers are leveraging store inventory and ship from store to improve:

ABILITY TO MEET CUSTOMER EXPECTATIONS 

  • Fast and free is the new normal.

ABILITY TO REACT TO ADDITIONAL PRESSURE ON FULFILMENT NETWORK

  • Automatically redirect supply to fulfil order spikes in online sales that occur because of holidays, flash sales or promotions.

USAGE OF NETWORK INVENTORY 

  • Utilise the entire global network of inventory to prevent stock-outs and markdowns, sourcing from the most efficient supply source.

The shipping costs to fulfil an order are easily measured. owever, the true cost to fulfil expands beyond pure monetary costs to operational and opportunity costs such as store associate capacity, deep inventory and failed or delayed fulfilments.

With Adaptive Network fulfilment, significantly more fulfilment optimisation factors are considered and converted to a cost equivalent which makes life easier. Real-time data within the Order Management System (OMS) is leveraged to refine the cost of any given factor. Retailers have the flexibility to define the cost or incentive and penalties of using one option over another. For example: Retailers may wish to curb the usage of a location by 20% when inventory is low. Leveraging rich order data within the OMS to convert all considerations to an equivalent cost enables retailers to evaluate the overall cost of fulfilment holistically.

Measuring performance
Purpose-built enterprise dashboards enable retailers to understand overall fulfilment performance, view pockets of opportunity and understand if business objectives are being met.

For every order, the business can view fulfilment decisions made, options evaluated, parameters evaluated and the deconstructed break down of each factor making up the overall cost of fulfilment. And it is this window into the algorithm enables retailers to maximise margins while exceeding customer expectations.

Deliver On Your Promise to Customers