A shift in consumer shopping preferences and behaviours is driving the growth toward multichannel retailing. This multichannel strategy has a direct impact on a business’ supply chain and creates different priorities for both retailers and their suppliers.
For retailers, supply chain priorities include increasing on-shelf availability while reducing inventory stock and growing multichannel capability. While for suppliers the priorities are to reduce operating costs while improving service levels, inventory control and forecast accuracy.
Consumers are browsing and buying online more frequently, and with this comes greater expectations regarding their purchase delivery and pick-up options. As a result, retailers must determine how to create a customer experience that is seamless, irrespective of channel, order size, origin and delivery choice.
To address the ongoing changes in consumer behaviour, retailers need to optimise their supply chains around these three key areas:
Order fulfilment
Product distribution is a critical process of the supply chain, and multichannel order fulfilment means retailers need to leverage supply chain operations and processes to fulfil traditional store orders while also competing with individual customer orders online. To determine an optimal order fulfilment strategy, retailers must ascertain their customers’ expectations of multichannel experiences, then decide how to manage these expectations while managing the costs of carrying inventory stock and transportation costs. To help determine the best delivery method for their business, they must first understand the different types of fulfilment strategies currently available.- Integrated fulfilment allows retailers to use existing facilities to leverage inventory stock across channels. Inventory stock is then segmented during shipping activity.
- Dedicated fulfilment through independent fulfilment centres develop and categorised inventory stock by selling channel. Tailoring operations within each channel based on specific order profiles, frequencies and the value-added service needs of each channel or customer type.
- Hybrid fulfilment provides a combination of integrated and dedicated fulfilment centres, allowing retailers to create their own models. For example, retailers can have separate inventory stocks for retail replenishment and consumer-direct orders in a single facility.