A SPECIAL SUPPLEMENT TO DC VELOCITY S-13
Koch cites one customer he recently visited that is looking
to combine wholesale fulfillment, store replenishment, and
e-commerce in its operations, with orders varying from heavy
boxes to individual items or “eaches,” and without adding
new real estate. “That’s not an isolated discussion,” he says.
“It’s one playing out among different folks in that circumstance: How do I leverage my assets—the buildings doing
fulfillment—and leverage my inventory? The discussions
center on what software can help me and how my [material
handling] equipment can help me.”
DIFFICULT DECISIONS
Developing a strategy for responding to these changing
requirements can be difficult. Babel says the major issue for
most retailers faced with growing e-commerce demand is
the need to bring “each” picking into DCs that previously
shipped full cases or split cases to stores. For DC managers, he
says, that often means making tough calls, such as whether
to add the labor needed for “each” picking or make sizable
investments in automated solutions such as goods-to-person
systems.
And the question of whether and how to fulfill online
orders from stores can be a difficult one as well. For one
thing, there’s the matter of how to best allocate store labor.
Consumers expect fast and accurate shipment of online
orders. But a clerk boxing an order in the backroom is not
meeting another consumer expectation: service on the store
floor.
“How you manage the fulfillment process in the stores is
an open discussion, and I think it’s often forgotten about,”
Khodl says. It creates multiple issues for store management—
including who will pick, pack, and ship orders; what shipping
supplies to keep in the backroom; and how to manage cutoff
times. It also raises questions for DCs shipping to stores—
such as how frequent those shipments should be. The complexity of fulfilling e-commerce orders from stores has led
many retailers to decide not to engage in the order-online/
ship-from-store piece of omnichannel.
That’s distinct from order-online/pick-up-at-store, in which
consumers can have visibility into store inventory and reserve
an item, a much simpler piece for store management and one
that has rapidly become widespread. But as retailers move
toward giving consumers the option to order online and pick
up at the store, they should be aware of the repercussions
upstream, Babel says. “There are various permutations,” he
says. It might mean picking from store inventory. Or it could
mean boxing an item at the DC and including it in a shipment
going to the store. Or it could mean that picking from store
inventory triggers a replenishment order at the DC. Whichever
way it plays out, filling orders at the store might require more
