DC Velocity - January 2019

THIS CHART SHOWS THE PERCENTAGE OF SURVEYED RETAILERS USING THE FOLLOWING METHODS TO FULFILL URBAN OMNICHANNEL ORDERS.

PARTICIPANTS COULD CHOOSE MORE THAN ONE.

(also known as “milk runs”) that replenish stores two times or more per week. This also allows the retailers to replenish store inventory with individual units or prepacks rather than full cases to better match demand and manage space constraints.

However, greater replenishment frequency can cause its own challenges, including creating traffic congestion, appropriating limited parking, and disrupting store shoppers. To minimize these issues, retailers are synchronizing store associate schedules with truck receiving schedules to speed up the receiving process and the release of delivery vehicles. Replacing pallet or floor-load deliveries with roll-on/roll-off cart deliveries also helps speed up the replenishment process by allowing the store team to move product directly from delivery vehicles to store aisles.

Physical infrastructure limitations can also affect retailers’ ability to offer a wide array of stock-keeping units (SKUs) and efficiently process orders in urban stores. To address the SKU challenge, some retailers limit the online product assortment available for immediate urban fulfillment to high-velocity SKUs. Slower-moving items must be fulfilled from regional DCs. Others use a hub-and-spoke system, where online orders are routed to hub stores with adequate SKUs and labor to complete orders within a short time window. One executive explained: “We leverage our store network for capacity needs and product availability by spreading the volume.”

Another challenge to both the click-and-collect meth-
od and the fill-and-deliver method is the negative impact
they can have on the in-store shopper experience. The
increase in the number of delivery trucks required for
more frequent store replenishment can create traffic con-
gestion and take away limited parking from in-store cus-
tomers. Using in-store inventory for e-commerce orders
may reduce on-shelf product availability. Additionally,
the increase in store replenishment and picking for mul-
tiple e-commerce orders during normal business hours
creates aisle congestion. It also diverts store employees
from their normal customer service roles.

One solution is to receive truck deliveries and fill cus- Understanding retail supply chain trends

Auburn University’s Center for Supply Chain Innovation, in conjunction with Supply Chain Quarterly’s sister publication, DC VELOCITY magazine, and the Retail Industry Leaders Association, conducts an annual study of retail supply chain trends. The “2018 State of the Retail Supply Chain Report” investigates the strategies, investments, and best-in-class capabilities that drive success in the hyper-speed omnichannel retail environment. Each year, the SRSC research team conducts in-depth interviews and an online survey with top retail supply chain executives. This year’s participants represent 61 North American retailers with collective annual sales of more than $1.2 trillion. The report can be downloaded from the center’s website: http://auburnsupplychain.org/expertise.