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Retailers have been fulfilling online orders for two decades, so the e-commerce order fulfillment process is not a mystery. However, the issue is that some retailers are still using the same fulfillment processes from twenty years ago.
Let’s face it, a lot has changed in retail — especially since 2020. It’s unfortunate that many retailers have prioritized keeping their websites up to date, but left some of the back-end e-commerce order fulfillment processes and systems in Y2K mode. Some of you reading this might even be running on AS400s — not that there’s anything wrong with that.
Before I share ways to modernize your e-commerce order fulfillment process, let me explain what e-commerce order fulfillment means and the benefits of optimizing your process.
E-commerce order fulfillment is the “other half” of the omnichannel shopping experience. The half that starts immediately after credit card numbers are entered and the submit button is clicked. The order is now placed and it needs to get to the customer in the way they asked to collect it (home address, another address, at a specific store, at a locker, etc.) and when they asked for it to be collected (same day, next day, two days, 1 hour pickup, etc.).
While some retailers may continue to get away with their e-commerce order fulfillment process from decades ago — most likely the simple single-node fulfillment model where the order comes in from the online store, it gets sent to the distribution center (DC) for fulfillment and it is shipped to the customer — it is imperative to think of what’s being left on the table by not optimizing your fulfillment process. Modern e-commerce order fulfillment processes help retailers reduce shipping costs and order cycle time alongside improving labor productivity and customer experience.
Convinced yet? Great! Let’s talk about the technology and fulfillment models that will help you improve your e-commerce order fulfillment process.
Multi-node fulfillment is oftentimes referred to as hyperlocal fulfillment, micro-fulfillment and/or store fulfillment. It is not so much a technology than it is a fulfillment philosophy. The philosophy being that instead of storing inventory in one central location and shipping from that one central location, inventory is distributed across multiple locations and shipped from any one of these locations. These locations can be DCs, mini-DCs and actual stores.
Why ship from multiple locations? It’s faster, cheaper and more sustainable. To put it simply, when shipping an item from a store in your neighborhood to your home, the distance is much shorter than shipping it from a DC in another county or out of state.
Are you having trouble hiring or retaining warehouse (and even store) staff? Is your order completion suffering? Are your order volumes unmanageable? Are you running out of warehouse space? If you answered “yes” to any of the above questions, then automation may be in your future. To be clear, when the term automation comes up, a lot of people think about automatic sorting/retrieval systems (AS/RS) which are these cool little boxes with wheels running across a grid system. Yes, that is automation, but automation comes in many shapes and sizes: from pick-to-light functionality on racking or trollies, to an automated mobile robot that brings stock from point A to point B. Automation is definitely worth exploring for your DCs and potentially even in your retail stores. Depending on the need and complexity of your e-commerce order fulfillment process, the initial investment might not be as high as you think and the return on investment might come sooner than later.
An order management system (OMS) with distributed order management functionality is what makes multi-node fulfillment possible. It pools and virtualizes inventory from across the multiple inventory locations and routes orders to the optimal fulfillment location. The location to which an order is routed is based on business rules set by the retailer and can include geographic proximity to the final shipping destination, inventory availability and the choice of fulfillment method (click and collect for example). Retail order management comes in many stripes and legacy OMS versions are usually home grown or part of an aging enterprise resource planning system (ERP). To be able to offer rich omnichannel experiences (e.g., buy online pickup in-store, endless aisle, online orders returned to the store, pre-orders, stock visibility and drop-shipping) requires retailers to have a current SaaS-based OMS.
Similar to legacy order management systems, legacy warehouse management systems (WMS) might be home grown, part of an aging ERP or designed to optimize store replenishment — not e-commerce fulfillment. And that’s if you have a WMS in the first place! There are some retailers that still run on paper and Excel … this might be the AS400 crowd.
To keep up with the growth of e-commerce, retailers need to consider an e-commerce WMS to streamline their order fulfillment process and pave the way for additional functionality and scalability (like automation). The good news is if your WMS still works for your “core” operation and you don’t want to replace it, consider a “warehouse-in-a-warehouse” strategy where you implement an e-commerce WMS to run in parallel to your current/legacy WMS and only manage the e-commerce side of the business.
Improving your e-commerce order fulfillment process will come down to a combination of technology enhancements and process improvements. This means an investment in digital transformation of your supply chain capabilities. The upside is that the technologies I mentioned can be implemented and up and running in a matter of weeks. An OMS can be done in as few as six weeks and an e-commerce WMS in as few as four weeks. The important first step is recognizing you need improvements. The second step is selecting the right technology and consulting partners to help you on the e-commerce order fulfillment process improvement journey.