Fulfillment operations used to be pretty straightforward. Companies either sold primarily through retail/wholesale channels or they sold directly to the consumer. Warehouses were designed to serve that primary channel.
Today, things are not so simple. Ecommerce sales now make up an increasing percent of a retailer’s or manufacturer’s revenues. At the same time, companies that began selling online are now striking high-volume deals with retailers to supply products in bulk.
As this evolution occurred, there was no playbook for how best to manage multi-channel fulfillment operations. So companies began serving these different channels with different structures and strategies, instead of creating a master strategy for all fulfillment operations. This has created undue complexity and inefficiency as companies learn how to efficiently service a diverse customer base.
Simplify and streamline multi-channel fulfillment
If you are living this reality, here are three guidelines for simplifying and streamlining multi-channel fulfillment operations
- Maintain one master inventory for all your channels. Without this visibility, planning is difficult and you’re likely to carry more inventory than required. Naturally, you’ll need to rely on forecasts and historical data to determine volume requirements and where you need to place your inventory. If you outsource, make sure your fulfillment partner can provide timely, accurate reports on orders and fulfillment activity. You’ll need this data to keep your inventory and labor force at optimal levels.
- Fulfill B2B and B2C orders from the same warehouses and the same inventory pool. Because the warehouse environment and picking processes are so different for B2B and B2C fulfillment, companies find it easier to separate them, or to outsource e-fulfillment requirements. This creates redundant infrastructures that drive up space, labor and administrative costs. A better option is to design the warehouse for multi-channel fulfillment, using one warehouse management system (WMS) to manage the picking process. Most inventory will reside in a bulk replenishment area. As forecasts determine future demand, and as actual orders come in, the WMS directs products into two forward-pick areas, one designed and equipped for retail distribution and one designed for each-picking. This approach eliminates redundant facilities, systems and inventory. If you elect to outsource fulfillment operations, choose a partner with a nationwide fulfillment center network so you can easily scale to meet growth requirements.
- Use a single information system to manage inventory for all your channels. Whether you run your own logistics or work with a partner, a single system gives you one version of the truth for inventory. This enables you to allocate product to any channel, based on changes in demand. If you work with a fulfillment partner, make absolutely sure they have the EDI capabilities and software to manage compliance with retail routing guide requirements. Retail compliance is a new world for many traditional eCommerce fulfillment providers, and many underestimate the process and systems requirements to do it right. Don’t take them at their word. Before contracting with a fulfillment partner, demand that they demonstrate this proficiency, or risk paying hefty chargeback penalties if they don’t.
Fulfillment Operations Should Be Channel-Agnostic
Consumers don’t have relationships with “channels.” They have relationships with brands. As such, they want to buy from Target.com or at the local Target store, and they want the same freedom when it comes to returning items.
Logistics professionals need to be channel-agnostic, as well, with one strategy, one inventory pool, and one system for all multi-channel fulfillment operations.