I was briefed recently by Vocollect, a leading provider of voice recognition for warehouse picking. Vocollect is looking to expand from providing voice solutions for the warehouse to also providing solutions to support retail store operations. One of Vocollet’s clients, Cabela’s, a leading specialty retailer of hunting, fishing, camping and related outdoor merchandise, has logistics personnel working in its stores and they are responsible for managing inventory in the stockrooms and shelf replenishment. The Cabela’s implementation is also noteworthy because the company uses its warehouse management system (from Manhattan Associates) not just at its distribution centers, but also at its stores to manage stockroom inventory.
This strikes me as a very good idea. In college, I helped support myself by working in a grocery store where I was primarily responsible for the frozen food department. But when it got busy at the front of the store, I would often get pulled from my duties to help bag groceries. The store manager put more emphasis, perhaps rightly so, on keeping the check-out lines moving quickly than on keeping goods in stock on the shelves. This might make sense for a small-footprint store, but for larger stores, I think there is a good argument for having dedicated store inventory positions controlled by logistics.
Coincidentally, shortly after this visit from Vocollect, the Supply Chain Execution provider RedPrairie came in to brief me. RedPrairie is currently implementing a solution for a retailer that is doing something similar. This retailer has stores in busy metropolitan areas. These city stores don’t have sufficient storage, so there are warehouses in the city that serve as the stockrooms for the stores. These city warehouses are not distribution centers; each store has its own allocated inventory that is kept separate from the other inventory in the warehouse. The streets are too busy to make daytime deliveries, so they deliver the goods to the stores and stock the shelves at night. Similar to Cabela’s, the personnel running these retail storerooms/warehouses are managed by the logistics function.
Incidentally, a similar argument can be made for reverse logistics. The primary focus of most warehouse managers is to get that day’s orders out. Thus, if reverse logistics is co-located in the same warehouse, managers will likely pull people from the returns department to help with outbound execution if they fall behind schedule. Because of this, I believe reverse logistics operations should be housed separately, or if co-located, it should have its own dedicated manager and workers.
Finally, I think one advantage of having logistics in charge of store inventory fulfillment is that you could fairly implement a Key Performance Indicator for logistics linked to the percentage of time a store shelf is in stock. This is a key metric that drives store profitability. Currently, if problems exist with store-shelf replenishment and out-of-stocks, logistics blames store operations and store employees blame logistics.
Should Logistics Personnel Work in Retail Stores?
I agree that logistics personnel handling warehouse inventory management may make sense for big boxes, but I see this as real challenge for small, specialty stores because of their capital investment. The idea of throwing man power at a problem versus investing in technology to solve a problem is at best a short term solution.
Technology can make a dramatic difference in ensuring everyone is working off the same page regarding inventory availability. In my past retail experience, I cannot tell you how many times I was involved with expedited shipments to roll out a new product or support a sales peak and the store claimed it never delivered. It did, it was just received on a different shift and got placed behind a rack. Store and supply chain visibility solutions, integrated to WMS and order management software, can solve this issue. Advanced shipment notifications can notify the store manager of hot, new product that needs to go directly to the floor. Visibility to on-order and due-in shipments greatly improves distribution center and store labor efficiency.
In the case of high volume dense inner city stores, I would advocate that a satellite distribution facility is justified. A centralized replenishment and cross docking facility to support these stores with a dedicated staff also will be of value. This does not eliminate the store receiving and stocking issue though.
I wonder what ever happened to direct store delivery. At one time retailers had pushed the replenishment, receiving and stocking tasks to the supplier. Store expenses and labor are always a challenge and retailers are able to pass this expense rather than adding staff. Otherwise, I suggest investing in technology.