Evolving to Networked Order Management
Among Millennials, Amazon is the biggest name in online apparel sales, capturing some 16.6 percent of the market over the past several years. As this generation of shoppers continues to mature, their spending power will only increase ― and the shopping habits they form now will likely dictate how they spend in the future as well.
Clearly, Amazon has become the “king of the hill” when it comes to e-commerce, and they could potentially displace a lot of apparel retailers. Those retailers need to do something to stay competitive — so the question becomes what can they do to differentiate themselves from Amazon? The two biggest assets a traditional retailer has that Amazon doesn’t are real people and real locations. If retailers just focus on the location side, it’s about managing the supply chain and having the right products sourced to stores. It is vital for retailers to ensure that their supply chains are aligned in a way that will ensure customers can receive the products they want as quickly and inexpensively as possible. And that’s where there’s great opportunity to extend the fulfillment power of a networked order management (NOM) further upstream in the supply chain. By taking a networked approach to order management and connecting stores and warehouses to suppliers and trading partners, retailers can turn their supply chains into something that truly differentiates them against the likes of Amazon ― which will also help them build customer loyalty and satisfaction along the way.
Let’s consider a customer who comes into a retail store and can’t find exactly the size or color they are looking for. Can the retailer get it from a nearby location — say another store or warehouse ― and give the customer the option to have it either available for pickup or shipped to their home? What if they locate the logistics provider or factory that has the product the customer wants and has them ship it? That level of extended visibility can make up for a product being out of stock in the store, giving the retailer the chance to save the sale and determine which avenue would be the quickest and cheapest means of fulfilling the order for this specific customer and other customers in the future.
By taking a networked approach to order management and using modern systems built in the cloud, retailers and brands can also begin making more intelligent fulfillment decisions. At its core, a NOM is essentially a “rules engine” that helps route orders based on location and availability. By taking advantage of the elastic supercomputing power of the cloud, it becomes possible to inject more sophisticated machine learning into the NOM, ultimately allowing for more precise fulfillment rules that consider more factors than ever before, such as labor costs, weather or optimal routes.
Changing consumer habits put brands and retailers on their heels
They say that to be the best, you need to beat the best, but when competing with the fulfillment capabilities of an e-commerce giant like Amazon, it feels like some retailers aren’t even trying — especially in the world of apparel and footwear, where seasons and styles change fast and the ability to get a product in consumers’ hands quickly and cheaply is often the difference between lifetime loyalty and a lost sale.
The way people shop has changed, and we aren’t going back to the good old days of single-stream transactions any time soon. Today, 73 percent of shoppers use multiple channels to find, research, try, and buy new products. Most retailers and brands have the raw ingredients for omnichannel: physical stores, e-commerce platforms, loyalty programs and promotions. But behind the scenes it’s still a mess. These solutions often exist in functional silos, with limited interaction between specific channels or functions. Further, when it comes to fulfilling orders, each channel is an island unto itself with limited visibility and a host of manual processes needed just to connect available-to-promise inventory to an order.
For every customer, retailers need to make sure there’s a supply chain to serve them. It’s time for retailers to get more serious about the advanced moves that need to take place in the supply chain to align costs and fulfillment options with consumer expectations.
Why aren’t we there yet?
Most retailers have become good at e-commerce, but they still live and breathe brick-and-mortar stores. The next step for today’s retail players is to bring everything together and surround customers with a host of options tailored to their specific needs. Yet, this is easier said than done. Only 32 percent of today’s U.S. retailers offer the option to buy online and pick up in-store, and less than 20 percent give their customers the ability to go online and search for products based on store availability. These shouldn’t be advanced moves for any retailer that wants to compete ― in fact, it’s the marriage of the physical and online worlds that will truly set the best retailers apart from the likes of Amazon.
By taking full advantage of the supply chain — from stores and warehouses, all the way upstream to logistics providers and suppliers ― retailers can truly evolve for the next generation of shoppers. For most, the main ingredients are already there. So, now it’s time to take legacy systems to the next level and truly extend visibility and fulfillment capabilities into the global supply chain through networked order management.
David Dorf is vice president of product strategy at Infor.