56 DC VELOCITY FEBRUARY 2016 www.dcvelocity.com
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qualified to speak about supply chain strategy: 69 percent
hold vice president or higher positions, and they have 24
years of supply chain management experience on average.
The survey and interviews explored three main areas:
demand planning, store-based order fulfillment, and
returns management, all key success factors in omnichannel commerce. To master them requires operational flexibility and precision as well as technical prowess—including
the ability to track, manage, and deploy inventory across
an enterprise, regardless of
location or sales channel. It’s
no surprise, then, that half of
the respondents said they plan
to increase their investments
in supply chain processes and
upgrading supply chain software and technology in 2016.
Here are some highlights
from the preliminary survey
results and a sampling of what the researchers and retail
executives had to say about each of the three areas.
b Demand planning. Forecasting demand that comes
through multiple channels, that is no longer bound by
geography, and that fluctuates in response to Internet-driven consumer trends is among the toughest challenges
facing retailers today. Accordingly, respondents said their
top three demand planning challenges included achieving
forecast accuracy goals ( 63 percent), peak-period demand
forecasting ( 47 percent), and demand planning for online
channels ( 43 percent).
Despite those difficulties, fewer than half of the respon-
dents ( 45 percent) said that e-commerce retailing “greatly
complicates” their demand planning activities. Still, some
respondents clearly are struggling. Only 16 percent said
their ability to forecast e-commerce demand is excellent,
and just one-third claim to effectively adjust forecasts to
account for marketplace uncertainty. One factor that may
be hampering them: A mere 13 percent believe their exist-
ing technologies effectively support e-commerce planning.
As one sporting goods retailer told the researchers, “We’re
either leaving money on the table or losing money in mark-
downs because we don’t have the tools to make the right
decisions.”
Supply chain executives interviewed for this year’s study
also cited inadequate commu-
nication among merchandis-
ing, demand planning, and
stores as a reason for their
forecasting difficulties. A num-
ber of them said that align-
ing these functions by creating
cross-functional teams of mer-
chandising, store operations,
and supply chain professionals
will be a high priority in 2016, says Dr. Rafay Ishfaq, assis-
tant professor and research fellow in supply chain manage-
ment in Auburn University’s Harbert College of Business.
Other frequently cited priorities included more granu-lar-level demand plans that cover multiple demand streams
and fulfillment nodes; innovative store-replenishment and
delivery processes to respond to changing demand dynamics; and adopting “pull-based” store replenishment, which
leaves most stock at a DC with small quantities delivered to
individual stores as needed.
b Store-based order fulfillment. There appears to be no single, right answer to the question of who should be responsible for store-based order fulfillment activities, such as order
allocation to stores, delivery planning, inventory accuracy,
and labor scheduling. Take order allocation to stores, for
example: 49 percent assign it to their supply chain group
Order allocation to stores
Order fulfillment accuracy
Order picking and packing
Order delivery planning
Order fulfillment productivity
Order fulfillment training for employees
Store inventory accuracy
Order fulfillment labor scheduling
Supply chain
group
49%
38%
36%
36%
33%
15%
15%
10%
Store
operations
8%
44%
51%
41%
44%
54%
72%
67%
Shared
responsibility
44%
15%
10%
23%
21%
31%
13%
23%
Outsourced
activity
0%
3%
3%
0%
3%
0%
0%
0%
EXHIBIT 1
Who does what for in-store fulfillment?
(% of respondents)
