Two-day shipping, same-day shipping, fast shipping; these are terms that have become synonymous with multiple deliveries from the same retailer on the same day (cough, Amazon, cough), delivery vehicle traffic, oversized boxes for one small item, and of course, a high carbon footprint.
Now, whether shoppers truly want super-fast shipping all of the time can be debated, but that’s not the intent of this article. Rather, when speed is determined to be a top priority, this article highlights how omnichannel retailers — with brick and mortar and online stores — can offer faster order turnaround and delivery without breaking the bank, financially or environmentally.
At the heart of this “green speed” is a multi-node store fulfillment model; a model where orders are fulfilled from multiple distributed locations rather than one single centralized location.
In the early days of e-commerce (and still today for some retailers) online orders were fulfilled from a central distribution center (DC), which today would be considered a single-node fulfillment model. Basically, there was one DC serving a specific geographic area. This DC carried all the products for that online store. Online orders were sent to this DC to be picked, packed and shipped, regardless of the distance from the customer.
While this made sense in the olden days of e-commerce, in this new age of fast delivery, skyrocketing shipping costs, warehouse labor shortages, and of course climate change, it is an outdated model. That could be a hard pill to swallow for some supply chain stalwarts who spent multiple years and millions of dollars on infrastructure and technology to get these locations up and running.
[Read more: 5 Retailers Ranked ‘Most Sustainable' in 2022]
Regardless of previous investments made, today’s retail reality does not align to this single-node model because it inherently forces a longer “last mile.” So how do you shift toward a model that better fits the omnichannel narrative? The quickest and easiest way — without completely dismantling (and overly disgruntling) the current supply chain model — is to leverage stores as fulfillment centers and ship orders from the store closest to the customer. Doing so reduces the distance traveled of an order, thereby reducing delivery times, delivery costs, and delivery carbon footprint.
Essentially, this entails shipping from the store closest to the customer, using inventory from that very same store. While this might sound like a simple proposition, it requires investments in technology, a shift in inventory planning methodology, additional workforce management, and employee training.
First, the tech. A distributed order management system (a.k.a. DOM or OMS) is required to assess inventory levels in each location and then route an order to the best fulfillment location. You can’t do this with any level of efficiency without an OMS capable of advanced order routing.
From an inventory planning perspective, it starts to get tricky. Planners who normally plan for store sales using historical demand will now need to plan for foot traffic and online demand for each store. That means planning for online demand by geography (where the orders will be delivered).
If there are hundreds of stores, this gets complex. Additionally, if inventory planning misses the mark, it could result in either stockouts or overstock and markdowns. Retailers can err on the side of less inventory if they have a regular store replenishment process, as it would ease the impact since additional inventory can be brought in… but stockouts still result in lost sales.
From a workforce planning perspective, retailer store managers, much like planners, will need to gauge online demand and foot traffic to have optimal levels of staff at each store at any given hour of the day. Overdo it, and you have low store productivity. Understaff those stores and the customers — online, in store, or both — will suffer.
From a training perspective, retail associates may need to begin wearing multiple hats and be a salesperson one moment and a picker-packer the next. In this model, the role of the store associate needs to evolve and expectations need to be set to ensure associates understand their new role in the store.
For retailers with an existing network of stores, getting orders to customers faster and more sustainably can be done by sourcing and shipping from locations closest to the customer. The underlying concept is simple: less mileage = lower emissions. The execution of that concept, on the other hand, will require a complete shift in mindset of the retail supply chain, from single-node to multi-node fulfillment, inventory and workforce planning taking online demand into account, and additional investments in technology.
While change is uncomfortable, leveraging it can be a powerful competitive advantage, especially in a retail landscape that consumers are in the midst of redefining.
— David Mascitto, Retail e-Commerce Supply Chain Product, Marketing Manager at Tecsys