Retail & Distribution
28 February 2020
January Sales, Black Friday, Single's Day: the number of special discount periods and promotions seem to be multiplying in retail. And to help manage these massive shopping peaks, warehouses have to ramp up their efforts and often use OMS tools to rapidly dispatch those products selected by the customer. But in the face of growing concerns over the environment and a desire to receive goods as quickly and cheaply as possible, the warehouse is no longer necessarily the best shipping point.
So that’s where distributed order management (DOM) comes in. The new tool can be used to analyse every transaction and determine the most efficient shipping location based on the order. It takes into consideration multiple factors, including speed of delivery to meet the deadlines set, but also the distance to be covered between the shipping point and the customer, as well as stock levels in stores. This clearly requires a unified view of stock across multiple channels in order to know exactly where the products are. As seen at the NRF 2020 show, the role of DOM will become all the more important in future as more and more retailers handle larger volumes of data – both internal and external – and turn to artificial intelligence to improve their analytical prowess.
« If an Order Management System (OMS) is a must for the warehouse, retailers should think more along the lines of Distributed Order Management (DOM) and being able to determine the most efficient shipping point to fulfil a customer’s order. It’s something that will transform the role of stores. »
Marketing director at cegid.
Stores become logistics hubs
With the deployment of a DOM solution, stores become logistics hubs in their own right. Stores can often have the upper hand when it comes to having stock that’s ready for direct delivery to customers and for quickly fulfilling a web order (Ship-from-Store).
This shift in the role of the store is particularly relevant in the apparel sector, where merchandise is often no longer in the warehouse mid-season, but dispatched to the point of sale. It also makes more sense to use the stock in a regional store to deliver to a customer that lives nearby, instead of relying on a central warehouse further away. Especially so, when some stores might actually have a surplus of stock for this very article, freeing up space to bring in new collections. And it’s no good incurring additional handling costs at the end of the season from returning unsold stock.
That said, not all stores will be ideally suited to becoming logistics hubs. Retailers have to make choices, because adding logistics operations at the point of sale requires manpower. And staff need to be trained in picking and preparing parcels. The ‘ship-from-store’ service needs to be carefully looked at in terms of the impact on the customer, staffing priorities, and the look of the store. For instance, you always need to consider the number of salespeople required to properly serve customers coming to a store for advice, so as not to jeopardise relations. It’s also important to make sure you always retain enough stock so that consumers can see the products displayed.
Finally, the key to success of a ‘ship-from-store’ service lies in optimising the preparation points for shipments. And to facilitate the change, you need to put in place clear rules on how this service will work. It’s also about changing the way sales staff deal with increasing numbers of customers they don’t physically see. One major issue to be resolved, for example, is when and on which tool to notify sales teams that an e-commerce order is to be processed. Should it be done at the checkout, or via a salesperson’s tablet or smartphone? Does the alert need to be validated in real time, or will the store indicate schedules on which teams can manage web orders? On all the decisions made, it’s imperative to communicate well with the sales teams: not only on the processes; but also on the issues behind the omnichannel services. This might even entail changing the incentive schemes for stores and sales staff.
Retailers are fully aware of the challenges of order management and the new role that the store can play. According to a 2018 Retail Touchpoint Omnichannel Survey, 74% of retailers will soon use, or already use, their stores as a shipping location. But be careful not to jump in too fast. You first need to optimise your processes before gradually introducing distributed order management. Because if you get things wrong and service is affected, the consequences of a disappointed customer can be severe!