3 Challenges of Omni-Channel Order Fulfillment
For modern operations looking to keep up with tightening margins and increased competition from the giants of e-commerce, omni-channel order fulfillment brings with it many enticing benefits, depending on the exact strategies employed.
Using stores as distribution nodes to fulfill e-commerce orders may lead to faster delivery times, lower freight costs, less wasted inventory, increased margins, and more. Similarly, initiating a buy online, pick up in store program has the potential to increase consumer choice, decrease shipping costs, decrease shipping time, and reduce the number of returns among other considerations. Regardless of the exact strategy employed, omni-channel allows retailers to meet customer expectations, keeping them happy and retaining their business.
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But however appealing these benefits, it is also important to keep in mind that omni-channel order fulfillment brings with it a number of challenges that any operation must account for before pursuing an omni-channel fulfillment strategy. We explore each of these challenges below.
1. Inventory visibility is essential across all channels.
Most retail operations already fulfill orders through a mix of in-store fulfillment and direct-to-consumer fulfillment of e-commerce orders. Pursuing an omni-channel fulfillment strategy complicates matters by introducing alternative methods of fulfilling orders, including, potentially, buy online, pick up in store (BOPs) and/or using stores as distribution nodes to perform last-mile fulfillment.
Having a clear inventory visibility—knowing what inventory you have, where—is crucial to any operation, even those with only a single fulfillment channel. Without it, it would be nearly impossible to fulfill orders and replenish inventory in a logical, efficient way.
Pursuing an omni-channel fulfillment strategy by definition means introducing new fulfillment channels to an operation. These new channels have the potential to introduce noise to an operation’s ability to gauge inventory, leading to difficulty in demand planning and inventory optimization. For this reason, any operation considering an omni-channel fulfillment strategy must first ensure that their inventory practices are performing at an optimal level and that their systems are set up in a way that allows them to communicate seamlessly with one another.
2. Dissimilar orders need to be picked from the same inventory, at the same time.
Just as introducing new fulfillment channels complicates inventory, it also complicates the mechanics of fulfillment itself. One of the greatest challenges introduced by omni-channel is the fact that it leads to dissimilar orders needing to be picked from the same inventory at the same time. Depending on the operation, this may include:
- Wholesale orders, which typically need to be picked and processed in larger quantities (full-case, split case, or even pallet)
- Retail orders, which typically need to be picked on a split-case basis
- E-commerce orders, which typically consist of two lines per order
Each of these various order types has its own characteristics which can make it difficult to fulfill from a single inventory and with a single material handling system, making it incredibly important for an operation to have the right technology and strategies in place before pursuing.
3. Multiple channels must be unified into a single brand experience.
When a retailer introduces new fulfillment channels to their operation, they are not only introducing complexity on their end—the fulfillment end—of the equation. They are also introducing complexity on the customer’s end.
Retailers who only employ in-store fulfillment only need to concern themselves with how the customer experiences the brand when they are in the physical store. Retailers who pursue in-store fulfillment, as well as e-commerce, must concern themselves with both how the customer experiences the brand in-store, as well as how they experience the brand online. And for some retailers, for whom it makes sense to develop a mobile app to facilitate e-commerce, there is a third front which must be managed.
Customer experience is part of a brand’s DNA. When building out these various interfaces, it is incredibly important that retailers do their best to ensure that the brand experience is the same from interface to interface. Brick-and-mortar, e-commerce, and apps should feel connected—not disjointed—in order to provide a brand experience that builds customer affinity that encourages them to keep coming back.
Just as important, retailers need to make it as easy for customers to move between these channels as possible. A single customer ID or profile that can be accessed by web, mobile, and in-store makes it easier for the customer to shop and spend, while also increasing the retailer’s ability to monitor, understand, and promote to customers: A win-win.
The Bottom Line
The challenges discussed above are essential for any order fulfillment operation to preempt and address before pursuing an omni-channel fulfillment strategy. A trusted systems integrator can help you anticipate these challenges so that you can put a plan in place that leverages the right technologies and guarantee success as you undergo your transition.