A promise creates a commitment: order fulfilment in an omnichannel environment
Order fulfilment is synonymous with living up to your delivery promise. A promise creates a debt and so the customer will not appreciate it if you fail to pay this debt. The trick is to create the promise of delivery in such a way that you can both keep your promise and maintain the use of the most efficient supply chain possible.
Exactly what the most efficient supply chain for your company is depends on various factors such as the costs, delivery method, delivery time, product availability, etc. And because of the increasingly higher demands that clients are placing on these factors, it is quite a big challenge for a retailer or wholesaler to keep the shopkeeper or customer satisfied.
It becomes even more complex if you have to deliver both online, in-store, and wholesale orders, and you have various different stock locations (DC, store, suppliers, third parties) across your organisation. So what is the most efficient supply chain for that one single order?
Well between the time that the customer presses the order confirmation button and the actual delivery, a rather complex process takes place. So how do you keep control and make sure that your clients are happy? By dividing and optimizing the order fulfilment process into the following four steps:
- Creating the promise
- Affirming the promise
- Fulfilling the promise
- Re-determining the promise
In this blog, I will discuss the first two steps of the order fulfilment process.
Creating the promise
The promise that you make to customers and shopkeepers is created in different ways, at different times, and with different intentions:
- During the search in the online store;
- During the selection of the product;
- During the calculation of the required resupply of the store;
- During the talk that your sales office employee has with your customer.
It may seem that this is difficult to control because you don’t know in advance when the need for a product is created and when it has to be delivered. However, by deciding yourself what you’re offering in terms of choices, you can take control of the process.
You can send out the delivery promise in such a way that you can both fulfil this promise and use your most efficient supply chain to do so. How?
First you should give the customer some crystal clear options. If you are always giving the same promise i.e. ‘order in the morning, delivery in the evening’, it means that you have a constant pressure on your delivery process even though the customer might actually only need the product the day after tomorrow.
The moment that the online shopping consumer has added the product to their shopping basket, you can start giving them options. For example, ‘order in the morning, delivery in the evening’ (from either the store or with PostNL) or ‘order today, delivery tomorrow’ (from the distribution centre via the private delivery services). The starting point should be that you offer options that are the most efficient for yourself. But make sure that the customer experiences these as options. After all, everyone likes to have the possibility to choose for themselves.
Second: reward the customer for choosing the best option. Instead of ‘punishing’ with, for example, extra delivery costs for a faster delivery, you could also reward your customer for choosing the option that suits you best. Customers are sensitive for discounts. So if, for example, due to stock scarcity a delivery time of two or three days would be more convenient for you, you could offer the customer this option including a reward, such as extra loyalty points or an extra discount. In this way there is no need for you to sell a no to your customer, but you can spread the delivery promises and therefore put less pressure on the delivery process.
Affirming the promise
The moment you make your delivery promise, you must be certain that you can fulfil it. This might seem obvious, but it is often a tricky thing to do. The following three elements must be taken into consideration.
Available to sell
In an ideal situation you’ll always have enough stock for everyone and you can deliver it directly. Of course, in practice this is often not the case. Therefore the question that needs to be answered is: what do you have of a product and when do you have it available to sell?
This starts with making clear, omnichannel and customer-driven agreements on priorities:
- Which ‘channel’ has priority: for example, 1. web, 2. wholesale and 3. stores;
- Which type of customers / stores (franchise – own) have priority;
- Which individual customers / stores have priority;
- Which type of orders within a channel have priority: rush orders compared to normal orders.
By using segmentation, you can divide this stock over virtual ‘pots’. Through clear agreements you can establish who can get something out of another virtual pot when their own pot is empty. For example: the web often has the stock of a wholesaler and stores, but a store can only refill their assortment from the store stock. So from these ‘pots’ and the applicable business rules, you can decide whether a product is available to sell or not.
And as a final step you decide when the order will definitely ‘own’ the stock (for example, immediately upon saving or only when it enters the logistic picking process). This is because this determines what has already been reserved for the virtual pot and is therefore no longer available.
Omnichannel under sourcing
The choices for making use of a delivery promise get bigger when the company has a mixture of sources from which to deliver the orders: DCs, stores or suppliers. In that case you mustn’t focus on one predetermined supply chain, but you should make use of that flexibility and thus decide which source to use. What is the best option for this specific customer, and that is also the most efficient for yourself? The fact that there are extra choices with an omnichannel order sourcing is of course wonderful, but at the same time it also makes the choice more difficult.
It gets even more interesting when the customer orders multiple products at the same time, for which different delivery promises can be made. Imagine the consumer orders a sweater online which is in stock in the store (and can be delivered in the evening) and then also adds a pair of trousers and socks to the shopping basket (which has to be retrieved from the DC and therefore won’t be available till the next day). At the moment the order is complete, the customer can make a choice: either in two separate shipments or as one package tomorrow afternoon. There is of course a price tag.
The question will always be ‘when does the customer really need the product?’ Leave this choice to the customer, but preferably you’ll make them choose from options that are the most suitable ones for yourself.
The time between the shopping basket and ordering
In the time between the placing of the product in the shopping basket and the moment where the costumer presses the button to confirm the order (confirmation step), the stock level might change. Therefore, at the moment when the consumer actually places their order, it must be checked whether the delivery promise is still valid. You can incorporate this in the ICT system of your order fulfilment application by:
- Reserving stock the moment a product has been placed in the shopping basket. Don’t forget to indicate how long this product is reserved for in the shopping basket.
- Recalculating your delivery promise when checking out.
In a follow-up blog that we will publish shortly, we will share with you the two last steps (‘fulfilling the promise’ and 're-determining the promise’). If you follow the four steps, you will be on the right track towards optimal order fulfilment.