An Omni-Channel Fulfillment Benchmark: How Do You Compare?

Omni-channel fulfillment is arguably today’s hottest supply chain topic. My colleagues and I have written a number of blog posts on individual case studies on this topic. Here is a case study on an anonymous major US retailer that likely has a store location near you. How do your fulfillment operations compare to this leading retailer’s? I will refer to this anonymous retailer as “Retailister.”

RetailisterRetailister currently operates 9 traditional store replenishment DCs and 4 e-commerce fulfillment centers. The company also engages 3PLs during the peak season. Retailister operates with a global inventory system that provides comprehensive inventory visibility. This capability is enhanced with an established distributed order management (DOM) system. Going forward, Retailister is expanding its inventory visibility deeper into its supply chain by obtaining production and inventory information from suppliers to obtain chain-of-custody and “factory to port” visibility.

Omni-Channel Fulfillment Operations
Retailister predominantly utilizes its traditional store replenishment DCs for that purpose and the e-commerce fulfillment centers for online orders. However, store replenishment DCs also fulfill high-volume SKUs ordered online during the holiday peak season. Come November, the store replenishment peak has diminished, providing slack resources in time to support the retail ordering peak.

Retailister’s stores are also enabled to ship items. But the practice of ship-from-store is used as an exception because the company does not want the stores to initiate split shipments (As a side note, Steve’s post from Monday on Walmart’s omni-channel initiatives states that 65 percent of customers want to have items consolidated in fewer packages). However, Retailister’s stores do fulfill a lot of buy- online, pick-up-at-store orders. They also make sure that safety stock is retained at the stores, as store traffic is the store’s primary customer. This year, the company is engaging in a smart fulfillment sourcing initiative that is further evaluating the merits of ship-from-store.  Previous ARC research has shown that many organizations are concerned with the efficiency of ship-from-store operations. In particular, Retailister will be evaluating the merits of shipping from the closest stores to shipping destination and the use of underperforming stores for this purpose.

I consider Retailister’s omni-channel fulfillment operations to be more sophisticated than most organizations. In particular, the company’s global inventory visibility and distributed order management system serve as a foundation for the integration of channels and the expansion of additional order and fulfillment combinations. The company’s initiative to obtain greater visibility into its sourced orders from suppliers will increase its ability to properly match supply with demand. I am interested in learning about the findings of the company’s “smart fulfillment sourcing” initiative. If this pilot uncovers efficient scenarios for ship-from-store operations, Retailister’s omni-channel fulfillment practices will move into the Leaders category in my book.

Leave a Reply

Your email address will not be published. Required fields are marked *