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Smart Merchandising

The Art of Merchandise Planning for Omnichannel Retail

While brands are increasingly taking to the digital space, physical stores continue to play an important role. Two ways in which physical stores can complement online channels are by acting as local fulfillment centers and being an easy contact point for receiving returned goods from customers. 

Omnichannel poses a number of challenges for optimizing operations, capturing maximum sales, and ensuring the highest levels of profitability. This has implications for retail strategy, information flow, physical flow of products, supply chain management, and last-mile delivery. Most importantly, it impacts retailers’ merchandise buying and planning decisions. 

Analytics, Forecasting, and BI

Accurate forecasting at all times is essential for the right buying and planning decisions. All the information relayed back from the market is put through smart algorithms that enable retailers to take the right future-focused merchandising decisions. 

In omnichannel retail, data streams from multiple POSs, capture, and store relevant data thus it is critical to ensure the integrity of the repositories. Data related to past customer purchase behavior, bestsellers & Never-Out-Of-Stock styles, seasonality, and festive purchase behavior, facilitate inventory planning and buying decisions. This requires an effective Merchandising platform to integrate data from across channels, enabling retailers to take the decisions with ease and agility.

Apart from leveraging conventional past data, Business Intelligence (BI) plays a critical role in a highly competitive marketplace. Timely customer-related information and BI can help retailers outdo their competitors and stay ahead in the market. With omnichannel retail, you can expect plenty of market-related intelligence and information flowing in. The big challenge is to process, analyze and represent that information effectively to enable accurate planning and decision-making. 

Retailers must integrate information across channels, use it to gain customer insights, and design growth strategies accordingly. Merchandising solutions help in gaining a competitive edge as it is impossible to manage and utilize massive, multifaceted data using conventional tools like Excel sheets. (read more)

Getting the right assortment at the store level

Placing the right assortment at the right store is critical for capturing maximum sales. Gathering information on customer preferences, past purchase behavior, and their response to discounts and promotions, coupled with robust BI analytics helps stock the right inventory.

Smart assortment plan

Fashion brands are experiencing increasing complexity due to the wide range of product styles with varying customer demands. Sub-optimal assortment planning and buying can result in overstocking or understocking of items at the store level, which amounts to inefficient distribution. 

With an end-to-end merchandising solution, retailers can leverage data to develop a smart assortment plan and achieve optimal store allocation. Using over 300 algorithms, the solution ensures accurate decision-making with the help of product clustering, store-style ranking, and the inclusion of seasonality and visual merchandising. A smart merchandise allocation plan also ensures the consistent availability of NOOS (Never Out Of Stock) styles in stores.

By ensuring the right product clustering, width, and depth of the product, automation-based merchandising solutions enhance the likelihood of conversions. They also help decide the true size-set ratio at the store level, leading to minimal size cuts. The solution keeps track of the inventory health, lead time, depletion rate, and reorder quantity, to create an ideal buy plan for each store-style combination.

Optimal store allocation

Optimal store allocation is achieved through regular replenishment and inter-store transfer of goods from low-performing stores to high-performing stores for better sales. It aims at ensuring that every single item reaches the right store. Allocation of a new store is determined by comparing the features and product assortments of similar stores nearby. 

In the context of omnichannel retail, a real-time assessment of the common pool of inventory both online and offline is important to stay up-to-date about the availability of inventory at all times. Customized reports for every stakeholder level, from CXO down to the merchandiser level facilitate the merchandising decisions at each level.

Integrate Multiple Plans into a Single Multichannel Plan

Retailers need to integrate individual plans tailored for each channel into a single multichannel plan that boosts sales, margins, fulfillment rates, and inventory turns across the whole business.  Increff Omni OMS allows retailers to expose offline inventory to customers online so orders can be placed at any point of sales and fulfilled either from the stores or the nearest warehouse, thus providing a unified shopping experience to all offline and online shoppers. 

Smart assortment planning tools help with individual store planning and forecasting, down to the SKU level. Real-time inventory updates and faster order fulfillment ensure higher margins and profitability. As omnichannel becomes the future of retail, brands experience greater reliance on tech-based Merchandising solutions that enable automation in decision-making, conduct advanced business analytics for strategizing, and facilitate forecasting at all stakeholder levels for faster business growth. 

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Technology

E-commerce Inventory and Order Management with Scalable WMS

Businesses demand rapid scalability from brands and retailers, especially in times of peak demand and business growth. When your website takes up to 5 seconds to load, there’s a 90% chance that your customers will bounce to a competitor’s site instead. During the season, there could be a significant ebb and flow in demand due to factors like weather, end-of-season sales, or festivity. Dealing with seasonality, therefore, requires a robust and agile warehouse management system to facilitate scalable operations just when they’re needed.

What is WMS?

A Warehouse Management System consists of software and processes using which retailers can control and administer warehouse operations. When the demand peaks, an ideal WMS must ensure that orders are captured and fulfilled accurately. A cloud-based WMS like Increff WMS can scale quickly as a business is growing or experiencing spikes in demand. A scalable WMS offers the right picking, packing, and inventory management even under pressure.

How to manage inventory and warehousing operations efficiently with WMS

  • A warehouse management system allows you to match orders to facilitate accuracy in inbound and outbound logistics. By optimizing and automating the receiving process, a WMS ensures that errors are reduced. 
  • Using serialization or barcoding, a WMS keeps track of batches for effective inventory control, even during peak sales time, thus providing a consolidated view of the available inventory in real-time.
  • Automating the processes for allocation, replenishment, picking, printing labels, and fulfillment, a WMS helps meet peak demand efficiently. 
  • It offers accurate and error-free picking to avoid wrong delivery, unnecessary return, and loss of sales.
  • Managing reverse logistics efficiently in case a customer returns an item, a WMS facilitates the circulation of the product back to the sales channels immediately.

What are Economies of Scale in Warehousing?

Times of peak demand and drastic business growth provide retailers with a unique opportunity to sell huge volumes of products. This helps them accrue the benefit of “economies of scale” which essentially refers to a reduction in the per-unit cost of an item due to the huge volume of sales. 

By providing efficient operations, centralized warehousing, and large storage capacity, warehouses provide economies of scale. For instance, instead of shipping individual packages, large batches of items are shipped to the stores at the same shipping cost, thus reducing the cost per unit item. Likewise, the storage costs per unit product decline during peak demand due to large volumes in the warehouse, as opposed to fewer items during periods of normal demand.

What is Order Management; Processing, and Fulfillment?  

Order management is a vital part of operations for any e-commerce business. It starts with tracking and monitoring orders which can only be ensured with automation provided by a WMS system. This is especially true during rapid business growth and peak demand, to avoid errors and manage orders with accuracy and agility.

Order processing refers to the process or workflow from placement to delivery where reliability and accuracy are a must to ensure customer satisfaction. Picking, packing, sorting, shipping, and tracking are important steps that form part of order processing.

The entire process from when the sale takes place till the product is delivered to the customer is known as order fulfillment. This depends on 3PL partners and is augmented by an efficient WMS solution that helps drive the whole process without errors and inaccuracies. 

Perfect Inventory and Order Management for Scalability

An inventory management system can be quite complex with a number of moving parts which can cause shortages if not handled well. Inventory management for a business that is scaling up begins with forecasting the demand as accurately as possible. Projections based on past data or recent trends in customer behavior can help have the right inventory to avoid under or over-stocking. 

Having strong relationships with vendors and partners can help ensure seamless supply during peak demand. Vendors who have open stock inventory can fulfill orders as needed, this is on-demand manufacturing or Just-In-Time inventory management.

Finally, with automated order management systems, retailers can avail the benefits of APIs that offer flexibility, efficiency, and scalability. These enable a retailer to streamline operations while catering to huge customer demand.

Scalability is one of the most essential features of a WMS as it allows a retailer to meet the growing challenges of a burgeoning marketplace. Not having ample scalability means loss of sales, dent in a brand’s reputation, dissatisfied customers, and plummeting revenues.

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Business

Successful Omnichannel Strategies for E-commerce

As retailers increasingly switch to multi channel order fulfillment, they reinvent the supply chain to enhance asset monitoring, outbound & inbound storage, returns management, and distribution of goods. To survive this fast-paced retail environment, retailers need cutting-edge technologies for end-to-end visibility and inventory accuracy to enhance operational efficiency, optimize allocation, and boost turnover.

Improve traceability using inventory tracking software

Inventory serialization with barcodes significantly reduces human errors and enhances operational efficiency by digitizing data collection and process. Barcodes store the complete history of an item to improve tracking efficiency and error accountability. 

  • Serialization enables retailers to effectively manage orders, inventory, and shipments. Since each product has a unique barcode, its identification becomes simpler and more accurate. 
  • Barcodes help locate items easily within a warehouse and provide insights into the movement of inventory.
  • Barcode and RFID contribute significantly to productivity as they automate tasks thus reducing manual efforts, human errors, and the need for paperwork. 

Build your network strategically

As customers expect same-day deliveries, retailers operating across multiple channels find it extremely challenging to catch up. There is a need to distribute inventory according to regional demand and build shorter supply chains for better demand and supply management and reduce pressure.

  • Strike a balance between CapEx and OpEx: Retailers must selectively and strategically expand their network of warehouses and distribution centers, to keep CAPEX and OPEX under control and increase the speed of delivery to customers across channels and geographies. This is very important as setting up high-capacity warehouses costs a lot. Opting for urban or market-fulfillment center strategies, such as dark stores, and dedicated fulfillment locations helps meet their strategic objectives. 
  • Leverage automation: Refining analytics and automation to better position your inventory in key markets can be highly instrumental in reducing delivery time and logistics cost to customers. Serialization enables faster, accurate order picking and facilitates express shipping of priority orders. With 100% inventory exposure across all sales channels, retailers can significantly increase their ability to maximize sales.
  • Ensure faster fulfillment from the nearest location: By processing orders from the nearest possible location (store or warehouse), the order time to the customer is significantly reduced. Regional fulfillment begins with a pre-season forecast and planning of inventory on the basis of local demand. In-season sales are then optimized with inter-warehouse transfers to meet the changing demand in a particular region. Likewise, distributed warehousing allows retailers to ensure greater supply chain flexibility and agility, and to prevent a broad-based impact across the market in case of disruptions in one location.
  • Build last-mile partnerships: Finally, to complement efficient warehousing, brands need reliable, last-mile delivery partners for faster customer service. Partnering with regional carriers and expert tech providers consistently enhances delivery standards. Such value-adding partnerships and collaborations help address last-mile challenges with greater effectiveness in the future.

Inventory vs marketplace model for inventory management

In view of the growing trend of omnichannel retail, an important strategic decision for new entrants in terms of choosing a marketplace model vs an inventory model. With D2C business gaining momentum around the globe, there is increasing popularity of marketplace-led models for inventory management. 

In the inventory-led inventory management model, large multi-brand retailers source products from merchants and stocks them. The marketplace model on the other hand, simply acts as a meeting place for buyers and sellers, although it offers shipping assistance by partnering with selected logistics players. The marketplace model is in line with the much preferred zero-inventory policy. It is investor-friendly, highly scalable, and gives brands greater control over their inventory and customer data. 

Use omnichannel for expansion, efficiency, and higher CX 

A successful omnichannel strategy puts customers in the driver’s seat. In fact, 53% of leading European retailers implement an omnichannel strategy because it improves customer lifetime value. With omnichannel, retailers can reach new customer segments and realize exponential growth in their business due to plenty of flexibility and convenience.

Operational efficiency is one of the major challenges in retail supply chain management. With the omnichannel strategy in place, retailers have a holistic overview of their market and there is no need to create or implement separate strategies for each channel. By gaining better visibility and exposure to their inventory, retailers are able to increase inventory turnover, optimize stock levels and automate replenishment. This avoids losing business due to out-of-stock scenarios. The most significant benefit of omnichannel retail is increased sales and revenues. Having the right strategies in place to tackle the challenges inherent in omnichannel retail is crucial. Which strategies retailers opt for depends on their business objectives, constraints, assets, and leadership outlook.

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Technology

Building Integrated Digital Supply Chains for Omnichannel Retail

Supply chain integration brings together all the functions in omnichannel fulfillment into a single system. It necessitates careful coordination and alignment to ensure everyone is working towards the same objective. Supply chain integration is an ongoing process that needs to be regularly updated and tweaked as the business evolves.

Most common Supply Chain Integrations: 

  • Vertically integrated Supply Chains: Vertical integration occurs when a retailer takes control of one or more stages in the fulfillment process. Thereby, owning multiple stages of the process with the aim of increasing market share and gaining tighter control over the supply chain. Vertical integration can be backward, towards procurement & production, or forward towards the end consumer. 
    • Backward Integration: When a retailer expands across multiple supply chain segments beyond its value chain, e.g. merging operations with another company that provides the goods or services required for omnichannel fulfillment. A basic example of backward integration could be that of a fashion retailer partnering with a garment manufacturing unit.
    • Forward Integration: When a retailer takes control of the business activities ahead in the value chain, expanding to the next levels of the supply chain and getting closer to the end consumer in the value chain. For example, a fashion retailer pursues forward integration if it partners with a last-mile delivery company.

Marketplaces are a great example of vertical integrations. They bring together sellers and buyers in a single platform, making it easy for both to find what they need; a greater reach to a larger audience, and better prices.

  • Horizontally Integrated Supply Chains: Horizontal integration is a strategy when related or similar functions being done by multiple companies merge. In its most basic form, horizontal integration is acquiring a commercial entity operating in the same industry or level. In this technique, a company takes control by buying, merging, or seizing control over other businesses in the same sector’s value chain. Actual examples of horizontal integrations can be Adidas with Reebok and the merger of Vodafone with Idea. 

ERPs are an excellent example of horizontal integrations. They combine the various functions of a company, such as accounting, marketing, and purchasing, into a single system, thus allowing companies to streamline their operations and making it easier to track inventory and sales.

Benefits of Supply Chain Integration:

  • Improved control over distribution
  • End-to-end visibility
  • Enhanced flexibility to demand fluctuations
  • Increased efficiency
  • Cost savings
  • Improved customer satisfaction

Methods for increasing productivity & effectiveness through integrated supply chains:

  • Present and Future Business Mapping: Determine the present level of supply chain integration and the gap to reach the future desired state. This mapping could be done at four broad levels:
    • Basic: At this level, the extent of the silo approach needs to be mapped; if various departments within the company work on issues separately and disconnected.
    • Functional: Map the information flow within the company to determine the dependability and responsiveness of interdepartmental working.
    • Internal: Determine if all departments and functions are connected to one IT structure, use insights from central data analytics and inter-related information dashboards. Additionally, map the alignment of overall company objectives, for example, the customer-first approach, along the entire value chain.
    • External: Determine if all vendors and service providers in the supply chain collaborate and operate almost as one to meet customer demand, boost efficiency and profits, and meet OTIF.
  • Data Integration and Data Analytics: Consumers produce an enormous amount of data, that can significantly impact supply chain management and improve demand forecasting. Using consumer and corporate data to identify threats and opportunities in the supply chain can assist retailers in mitigating risks in omnichannel fulfillment. This is only feasible if supply chain system integration is implemented. Also, real-time updates are essential for effective supply chain integration. Everyone involved in the process needs access to up-to-date insights to make quick decisions based on the latest data analytics. Supply chain planning with real-time data analytics ensures economies of scale, OTIF, and that inventory is correctly aligned with demand.
  • Integration with Logistics Partners: This ensures that products are stored in distribution warehouses and delivered to the customer quickly and efficiently. Crucial for supply chain integration is better collaboration with vendors through connected systems, leading to overall improvements in inventory management. End-to-end supply chain transformation is required to implement a successful last-mile plan. Retailers must establish a last-mile strategy that addresses their current end-to-end supply chain inadequacies and aligns them with the final objectives. A digitally integrated supply chain, for example, may help distribution centers construct a comprehensive last-mile solution that reduces delivery lead times.

Digital supply chain integration strategies are essential for companies looking to fulfill orders through omnichannel retail. Businesses can streamline their operations and provide a great customer experience using the right tools and tactics. Bringing all the stakeholders together to streamline processes as one continuous and transparent flow might be challenging. There are, however, a variety of tools available today that can make the process of supply chain integration simpler.

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Smart Merchandising

Allocation and Replenishment for Omnichannel Retail

As omnichannel retail becomes a steady trend, conventional allocation and forecasting can cost millions and appear to be rather tedious. The omnichannel approach demands proactive and integrated strategizing across all points of sales, responsive allocation, and timely replenishment. The growth of omnichannel retail has therefore created new challenges for retailers, especially in allocation and replenishment. Accurate decisions to meet evolving customer demands can be taken by leveraging past data, customer buying patterns, competitors’ tactics, and seasonality with automation and analytics-based merchandising solutions. 

Forecast right down to the store level

It is important to forecast demand across multi channel retail accurately to ensure that the right quantity of stock is allocated to the right warehouses and stores. Predictive analytics helps determine the timing of replenishment, size of the consignments, and frequency of allocation. 

Analyze Patterns of Online and Offline Demand 

To determine allocation and replenishment accurately, gauging customer demand patterns is critical. Retailers must consider factors that decide the quantity, timing, and motivations of customers’ purchase decisions. As compared to the traditional methods of analysis, data-driven decision-making helps in easy, instantaneous, and accurate demand analysis. New-age merchandising solutions help retailers drill deep into product & size level granularities to predict the exact style-size combination to serve customer demand across both offline and online channels.

Right Allocation for Ideal Demand Fulfillment

Once the pattern of demand is identified, it has to be backed up with the right allocation. In case of a sudden spurt in demand in a particular market, in-season reallocation can be optimized through inter-store and inter-warehouse transfer.

Likewise, using Increff Distributed Warehouse Inventory Optimization solution as part of your pre-season allocation strategy helps maximizes fulfillment from local warehouses. It enables retailers to provide cost-effective fulfillment by reducing the shipping distance. Delayed order delivery is one of the major reasons for returns, fulfilling orders faster from regional warehouses helps reduce this significantly. It increases margins, provides operational efficiency, and minimized shipping costs immensely while ensuring the highest levels of customer service and repeat purchases.  

Turn on Auto-Replenishment 

An ideal merchandising solution enables retailers to set auto-alerts to notify when the quantity of a fast-moving style has reached below a certain level and needs to be replenished. While setting the alerts, it is prudent to consider the average lead time and keep a provision for supply-side delays. In case a particular product or style is unavailable, the merchandising solutions can suggest the next best alternative which can be considered for replenishment. This helps capture maximum sales and avoid loss of revenue due to the non-availability of goods.

Sales of bestsellers (e.g., plain white T-shirts) are not seasonal and their replenishment can happen throughout the year. If sales of some styles that are in limited quantities, pick up suddenly during a season, then alternatives styles can be replaced to ensure consistent sales.

Use Markdown Management to Boost Sales and Improve Margins

Throughout the season, retailers expect crests and troughs in demand. Whether it is the end-of-season sale or festivities, retailers must anticipate demand accurately for the right inventory management and to avoid over or under-stocking of inventory.

At the end of a season, retailers usually sell off the leftover stock at high discounts so it can be replaced with new stock. A number of factors like True ROS™, Ageing & Cover, Health of stock in a store, etc,. are critical factors to consider in determining the right percentage of markdowns. Since omnichannel can complicate the markdown decision immensely, retailers cannot rely on excel sheets for decision making. They need to implement the right markdown optimization tools to accurately access discounting percentages, ensuring maximum sales and high profitability. 

Markdown management is also useful to expedite the sale of slow-moving stock during the season. For this, an appropriate discounting percentage must be applied that avoids causing excess loss or devaluation of merchandise. Discount levels can also be manipulated based on the store-level customer demand for a particular product. 

Manage Returns Proactively 

Omnichannel commerce increases the complexity of returns as customers who buy online often prefer to return the goods offline at physical stores. Brands, therefore, have to facilitate easy returns management by putting in place quality checks and product sorting right at the store level, or at a nearby fulfillment center. Finally, they are required to expedite reverse logistics to the warehouse so that the merchandise is made available for resale as soon as possible. 

As is evident, omnichannel adds to the need for proactive strategizing, better forecast and demand anticipation, greater demand fulfillment from regional warehouses, and accurate inter-warehouse transfer to meet customer demand, helping capture maximum sales and boost profitability. For all this, retailers need the robust support of automation and predictive analytics provided by an ideal merchandising solution.

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Technology

Advantages of the Marketplace model vs Inventory model for E-commerce

The e-commerce industry has been around for more than a decade now, and it has changed the dynamic of operation of most of the world’s retail marketplaces. One of the major shifts e-commerce players have experienced is the shifting from an inventory-led model to a marketplace model for inventory management. The inventory-led and marketplace e-commerce models are both major parts of the e-commerce industry, but play different roles in the market. Marketplace platforms and online stores have both become powerful e-commerce business models within the digital economy.

Let’s look at the definitions of the inventory model and the marketplace model:

Inventory Model– This is when a marketplace e.g. Amazon, sources volumes of inventory from brands & sellers and stocks it in its own warehouse. The e-commerce marketplace owns the inventory and sells it directly to the customers, managing the logistics and every aspect involved in the e-commerce business. 

Marketplace Business Model– Following a zero inventory policy, the e-commerce platform acts as a facilitator between the buyer and the seller, providing an efficient, transparent, trusted virtual environment for commerce. The inventory remains with the seller and customers directly buy from the sellers, while the e-commerce platform manages the logistics. 

With increasing momentum in the D2C business model, the marketplace model of inventory management has become popular. As marketplaces can stay lean, they are prepared to adapt to the changing competitive e-commerce landscape easily.

5 advantages for sellers to take on the ecommerce marketplace business model of inventory management are:

  1. Better Capital Utilization for maximizing efficiency – Managing capital investments wisely means better cash flow, faster business growth, and greater competitive advantage. Traditional e-commerce ventures were highly capital-intensive involving setting up large storage spaces and handling associated management, warehousing, and logistics costs. The marketplace model of inventory management now distributes this burden to individual suppliers thus making business more viable. While Marketplaces manage the platform and logistics, sellers manage their inventory which gives them better control over the supply chain.
  2. Highly Scalable– New-age technology solutions like Increff WMS, allow sellers to expose 100% inventory across multiple sales channels simultaneously. Without segmenting or blocking inventory for a specific channel, sellers can achieve greater inventory visibility, higher sales, better margins, and greater cash flow. With the real-time inventory update feature of Increff WMS, as soon as an order is placed on one channel, that quantity of inventory gets deducted from the overall stock, so the available quantity of inventory is only visible at all times. This prevents marketplaces from accepting excess orders even during peak sales. The robust tech backend facilitates millions of interactions between the servers every second, without any downtime, to ensure perfect sync. With the rise in SaaS technology solutions, infrastructure upkeep is low for sellers since maintenance and updates are handled by the tech provider. 
  3. Better control over customer data – As orders directly reach the seller, they get complete access to customer data. With efficient warehousing and faster order processing using Increff WMS, brands/ sellers can ensure faster order fulfillment and better customer service. They can analyze region-wise demand and plan merchandise for the upcoming season accordingly. 
  4. Wider Reach – Marketplaces have an existing well-developed customer base so individual brands/ sellers can capitalize on it thus saving efforts and costs in marketing for themselves. They also have a well-established network of Third-party logistics providers so brands/ sellers can ensure efficiency in the last mile.
  5. Investor-Friendly – Entrepreneurs need financing and support to flourish their startup idea. Marketplace provides an established platform to expand the business, maximize sales, minimize returns and increase brand loyalty. D2C aggregators like Globalbees, G.O.A.T, Mensa Brands, etc. are investing in D2C brands and using advanced tech platforms, like Increff WMS, to boost the business growth of individual brands in their portfolio. Such immediate growth creates an advantage over other businesses searching for an investment.

Increff WMS solving challenges of the Marketplace model for Brands & Sellers

  • Increff WMS allows efficient inventory management, 100% accuracy, and traceability of inventory within the warehouse. 
  • Sellers need a central standardized platform to view all data that would be coming from multiple marketplaces. Increff WMS provides a single platform to view inventory movement across different sales channels and multiple downloadable reports, at every stakeholder level, for in-depth analysis. Brands can analyze sales at individual channel levels and estimate the right assortment plan for each channel to capture maximum customer demand.  
  • The real-time inventory order sync feature ensures no excess order is received from any marketplace and that the inventory is updated at all times for a better customer experience
  • The robust tech solution supports millions of interactions per second between the Marketplace and seller panel, without downtime, to ensure smooth system interaction and zero glitches. This allows easy, effortless business scalability and growth. 
  • Inventory serialization in Increff WMS allows rapid returns processing and efficient re-commerce to maximize sales opportunities.  
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Smart Merchandising

Building Digital Supply Chains with Integrated Demand Planning

As the global economy becomes interconnected and complex, companies find it challenging to meet customer expectations. They must make supply chain decisions faster, decisive, and accurate, and have the ability to implement those decisions rapidly and transparently.

Integrated demand planning is necessary to remain competitive in today’s marketplace. It amalgamates the supply side and the demand side of a business to form a cohesive unit that is vital for meeting OTIF (On-Time-In-Full) for supply chain success. To achieve OTIF, a company must have end-to-end supply chain visibility and be able to balance demand and supply in real-time to make the right decisions quickly and effectively. It is important to improve customer satisfaction, optimize inventory levels and distribution networks, and achieve a faster time to market for sales maximization. 

Best Practices for Integrated Demand Planning:

Demand planning is a cross-functional approach that enables brands to meet customer demand while minimizing waste and quickly adapting to supply chain disruptions. Effective planning boosts profitability and consumer satisfaction. 

  • Implementing the Right Tech-Solution: In today’s complex and rapidly changing market, choosing robust tech solutions to organize data and estimate demand is crucial.
    When looking for a Merchandising or WMS solution, it is vital to analyze the tool’s capabilities in handling intricacies in demand fluctuations, supplier efficiency, and adaptability. Following are some critical elements to consider when choosing the right solution for your business:
    • Easy integration with existing ERPs
    • Ability to handle omnichannel, multi-region, and multi-product portfolio complexity
    • Demand sensing for better short-term forecasting by deep data analysis of daily demand fluctuations and trends
    • Enables end-to-end supply chain visibility
    • Ability to conduct performance monitoring based on real-time analytics and user-friendly dashboards
    • Ability to incorporate AI and machine learning to provide contextual intelligence
    • Integrating with Cloud Solutions
  • Business Intelligence & Data-Driven Decision-Making: Now more than ever, data drives demand planning. Digitized supply chains give real-time insights into inventory changes and market trends, and help identify key areas for optimization during demand planning. Traditional excel based analytical tools do not suffice anymore as big data analysis requires granular-level scientific decision-making that does not rely solely on instincts.  
  • Planning the Ideal Assortment Mix: Managing an ever-evolving portfolio of products by identifying top sellers among existing styles, seasonal styles, and emerging trends efficiently leads to the maximization of demand potential. An integrated demand plan helps understand how adding new products will affect the overall supply chain, and how the demand of one product affects the demand of another. Product portfolio planners are highly involved in scenario planning to ensure that each product line’s demand influence on the other products is positive and optimized. 
  • Optimal Allocation: Allocating and reallocating the right styles in the right locations as per changing customer demand is very essential for fast, accurate order fulfillment. Mapping style-size requirements at the Pincode level, using new-age merchandising solutions can help brands allocate the right stock in the right places at the beginning of the sales season itself. In-season demand fluctuations can be addressed by readjusting or shifting inventory (Inter-Store Transfers) from stores where the demand is low, to those where the demand is high. Such easy adaptability to changing market scenarios brings greater agility and flexibility in supply chains.
  • Autonomous Planning: In a fast-changing world, the ability of autonomous planning is to assist supply chains to function more effectively under pressure and with less direct human involvement and decision-making. Automated systems are designed to function within a framework in terms of what tasks they may execute, based on predetermined rules. An autonomous system, built on intelligent algorithms and the SaaS+ model, learns and adapts to changing market scenarios and evolves continuously. 
  • Easy System Integrations & User-friendly UX/UI: New-age merchandising and warehousing technology solutions are built to seamlessly integrate with the brand’s existing system and make the transition smooth. It prevents any loss of customer data or inventory mismanagement and leads to better inventory and order control. Simple UX/UI reduces training time and increases workforce efficiency and productivity by automating processes and eliminating errors due to human decision-making. 

The rise of the digital supply chain has presented new opportunities and challenges that can be addressed with advanced technology solutions. Integrated demand planning is the basis of digital supply chains for brands to cater to the fast-paced and constantly evolving customer demands. It has the power to increase efficiency, decrease lead times, and ultimately result in more satisfied customers, more efficient operations, and higher profits.

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Warehouse Management

6 Critical Reasons to Outsource Your Warehousing Operations

When deciding whether to outsource warehousing and distribution, it is essential to consider if your business is experiencing rapid growth, struggling with inefficiencies, or spending too much money on warehousing and distribution. When faced with supply chain difficulties, you have a choice to make; you can keep trying to manage logistics internally or outsource your logistics to a warehousing and fulfillment partner. A warehousing provider can help you optimize your supply chain and improve business operations.

If you are unsure which option is best suited for your company, look for indications that might help you decide. The following are the most critical indicators that it may be the right time to outsource your logistics to a warehousing specialist:

  1. Need to scale your business faster

When a company proliferates, it often does not have the time or resources to manage its logistics. Outsourcing warehousing and distribution to a third-party provider can help businesses scale more quickly and efficiently. A warehousing partner can help you manage your inventory, shipping, and delivery processes, allowing you to focus on expanding your core business. The management need not worry about hiring and training new staff, high seasonal demand, quick order fulfillment, and so on. This gives managers the bandwidth required to take up more critical tasks that can help scale businesses faster by better allocating resources.

  1. Struggling with inefficiencies in your supply chain

If you are experiencing:

  1. Slower order fulfillment time leading to higher customer cancelations and lower sales 
  2. Mismanagement or loss of inventory inside the warehouse
  3. Inability to capture 100% orders from multiple sales channels
  4. Higher dependency on manpower within the warehouse and across the supply chain
  5. Delays and inaccuracies in order processing due to human decision-making errors

Outsourcing warehousing and distribution may be a good solution. A warehousing provider can help you optimize your supply chain and improve delivery time. Businesses need a WMS to report order statuses in real-time to succeed with omnichannel fulfillment. With advanced tech features provided by the service provider, retailers have greater flexibility in decision-making. Also, your company may choose which site, and how much space is best suited to fulfill a consumer order in the fastest time frame.

  1. Experiencing high costs associated with warehousing and distribution

If you spend a lot of money on warehousing and distribution, it may be time to outsource these operations to a warehousing partner. You can save money on labor, real estate, and other expenses by outsourcing. One of the biggest expenses associated with operating an internal warehouse is the capital investment required to set it up. By outsourcing this function, you can switch from a CapEx to an OpEx model, thereby freeing up locked cash flow. There will also be a significant cost reduction in updating the rapidly changing technology, warehouse management software (WMS), in the retail space.

Specialized warehousing partners focus on improving their services by updating to the latest technology. The cost reduction here is not just in terms of adopting new technology but also the efforts that will be spent on training the staff. One of the other advantages of outsourcing warehousing operations is the reduction in shipping costs. By working with a warehouse partner that has widespread centers, across the country, the shipping cost incurred to deliver the products to customers or other locations can be reduced. 

  1. Declining Customer Satisfaction

Late deliveries, mistakes and inaccuracies in order processing, and damaged products are all reasons for customer dissatisfaction. It is a priority to take action before your company’s reputation is harmed. This procedure begins by identifying supply chain problems and implementing modifications to your systems to address them. A more accessible and practical option is outsourcing your order fulfillment and shipments. With a warehousing partner handling these aspects of your company, you may observe how digitization, industrial kitting, and stringent quality control methods can improve consumer happiness. 

  1. Addressing fluctuating demand patterns

A demand surge is generally the consequence of many consumers rushing to buy supplies or goods simultaneously. Natural calamities, cultural events, such as the recent COVID-19 epidemic, and spontaneous changes in demand may result in supply chain disruptions and fluctuations in the market. By expanding or contracting warehouse operations as needed, a warehousing partner can assist businesses in attaining the desired scalability. These fluctuations often make it challenging to manage warehousing operations in-house resulting in loss of sales to more easily available competitor products. 

  1. Handling messy reverse logistics

A tried-and-true reverse logistics procedure is an excellent method to speed up return pick-up and processing, to minimize time and costs associated with returns management. With retail going omnichannel, it is essential to streamline returns processing for better sales. Distributed warehousing, and making return pick-ups geographically streamlined, by returning to the closest warehouse, will enable rapid re-commerce for the next purchase.

While the precise omnichannel order fulfillment strategy will vary from firm to firm, one thing is sure: companies are aware they must aggressively embrace Omnichannel selling and fulfill those purchases as quickly as possible. It is, therefore, a priority to understand the current stage of your company’s warehouse management system wms and order fulfillment process to decide if it may be time already to outsource your fulfillment solutions.

Categories
Warehouse Management

How Brands Can Benefit From Outsourcing Warehouse Operations

Traditional warehousing may not cut it anymore to meet customer expectations of speedy order fulfilment. To support multi-channel sales – warehouse space, capacity, and operations should be optimised and aligned with the consumer demand. The main goal behind warehouse operations is to effectively store and distribute the product you sell at the shortest lead time and minimal cost. 

In the fast-paced digital age, one of the most crucial decisions businesses must make is the decision of warehousing. Retail brands may not always be experts in warehousing logistics, and companies must seek domain expertise to make operations more efficient and customer-centric. 

Here is a list of benefits that companies can derive by outsourcing warehousing and fulfilment solutions to a Warehousing provider

  1. Enhanced focus on core business operations: Warehousing is not the core business for any brand but a requirement. The case for outsourcing ‘non-core’ business operations is vital, especially if those operations are not direct revenue earners. Brands can focus on their areas of expertise and outsource warehouse operations to a company that specialises in them. This will free up time and resources for the business, which can be used for strategising and expanding the core business. 
  2. Multi-location presence: Many businesses have several warehouses to assist them to be successful in the competitive retail market. A competent outsourced order fulfilment service may help you determine your company’s best fulfilment centre locations based on your customer demographics.
  3. Domain Expertise: When your company contracts with a suitable outsourcing partner, excellent service backed by a comprehensive agreement are provided by people who are experts in the domain. A 3PL service provider has expertise and experience in transport documentation, import and export, worldwide compliance, and economic rules. Businesses considering expanding into foreign markets can benefit from the logistics assistance and knowledge that the outsourced partner can provide, reducing costly delays and cycle time and making entering a new area simpler.
  4. Reduced Costs: Warehousing and fulfilment are resource-intensive activities. By outsourcing warehousing to a third-party logistics provider, retailers can negotiate better warehouse space, labour, and transportation rates. This is because the 3PL already has the necessary infrastructure and can offer more significant economies of scale – infrastructure, operations or maintenance. Outsourcing warehousing operations can help you cut costs on employing warehouse staff, technology, infrastructure, security, insurance, etc.  
  5. Reduced CAPEX: With no in-house warehouses, your company is free from the associated property leases, warehouse workforce and equipment costs. Setting up a dedicated warehouse space and fulfilment centre requires substantial capital investments. The need for capital only increases as the sales volumes grow, tying up a lot of cash flow. Outsourcing warehouse and fulfilment solutions free up cash, allowing for better resource allocation.
  1. Trained Workforce: Training is essential. Strategic and competitive advantage can be gained by a skilled, well-trained, well-motivated supply chain team that is enthusiastic and confident. You will need an appropriately trained and motivated workforce to run a successful logistics operation. Warehouse outsourcing provides the necessary workforce trained in the latest operating methods. 
  2. Latest in Technology: When outsourcing warehouse operations, technology maintenance and upgrades are automatic, including costs in the negotiated contracted price. A warehouse fulfilment centre has complex processes – from material handling and storage to order picking-packing and shipping. It requires the latest warehouse technology, systems, and software to run smoothly. Also, warehouse processes are constantly evolving with the latest trends in fulfilment. A warehouse partner that is up-to-date on the latest warehouse technology and practices can bring immense value to your business.
  3. Enhanced Customer Satisfaction: Outsourcing your warehousing ensures that your business is partnering with professionals with a proven track record for success. A 3PL can help improve warehouse efficiency by streamlining processes and implementing best practices. This leads to increased order throughput and decreased order cycle times, which improves customer satisfaction. In addition, a 3PL is constantly innovating and implementing new technologies and solutions to improve warehouse efficiency. This helps businesses stay ahead of the curve and maintain a competitive edge.
  4. Easy Scalability: A 3PL can provide the necessary warehouse space and capacity to accommodate any business growth. In addition, a 3PL can quickly ramp up operations to meet seasonal demand or unexpected surges in demand. A 3PL can help companies achieve the desired scalability by expanding or contracting warehouse operations as needed. This allows companies to grow at an exponential rate without worrying about additional warehouse infrastructure and staff.
  5. Better Returns Management: 3PLs have experience managing both incoming and outgoing shipments. This knowledge allows logistics firms to handle almost any returns inexpensively without investing in technology or training. A well-managed return process is beneficial to your brand since it enhances brand loyalty and reflects positively.

Retail brands must seriously consider letting domain experts manage logistical aspects of the business. The right synergies with warehousing partners are more cost-effective and make for a streamlined order fulfilment process. The 3PL will take care of all the logistics for you, allowing you to focus on your core business activities.

Categories
Technology

7 Best Ways to Reduce Omnichannel Fulfilment Costs

The retail industry has broadly acknowledged and understood that slow and steady might no longer win the race. Operating in this digital age, being fast and accurate in order fulfilment is crucial to success.

Today B2B and B2C consumers expect fulfilment beyond seamlessness of identifying and buying a product, accuracy and on-time delivery, to post-sales support. 

This has been a difficult target for retailers, given the exponential growth and multiplication of sales channels. The market is expected to grow at a CAGR of 7.7% from 2020 to reach $29,446.2 billion in 2025. The global retail market is expected to reach $39,933.3 billion in 2030, as a result, realigning retail fulfilment has been the top priority in the past few years, and the industry has made a paradigm shift from the conventional “warehouse fulfils” model to the “omnichannel fulfilment” model.

What is Omnichannel Fulfilment?

Omnichannel fulfilment means that a retailer’s inventory is available on multiple sales channels, both online and offline – to provide a unified shopping experience to the customers. Omnichannel fulfilment optimizes resource utilization to ensure that orders can be fulfilled from a store or a warehouse, whichever is convenient and nearest to the customer. 

Critical Advantages of Omnichannel Fulfilment:

  • Accelerated Inventory Turns
  • Shorter Lead Time 
  • Improved Customer Satisfaction
  • Improves Brand Loyalty

Rising Costs in Omnichannel Fulfilment:

Order fulfilment speed and accuracy is at the core of giving experiences to customers that they demand today. Many retailers struggle due to omnichannel fulfilment’s high logistical and administrative costs. 

The reason is the complexity of sales and distribution through multiple channels. The challenges could be in the following areas:

  • Transportation and shipping costs are fluctuating and ever-increasing. Throughout the retail supply chain, logistics costs are paid to manufacturers, trucking companies, third-party logistics service providers, shipping carriers, freight brokers, and various other vendors
  • Inefficient warehousing processes lead to inventory mismanagement and loss in sales
  • Inadequate inventory stocking and allocation in stores, warehouses or fulfilment centres, resulting in regional product shortages, overstocking and inventory mismatch 
  • Lack of inventory analytics that can provide an overview of historical operational performance across different sales channels 
  • Last-mile challenges like lack of infrastructure leading delayed fulfilment in smaller towns
  • Manufacturing defects or other errors in products that are sold and shipped
  • Messy and expensive reverse logistics to manage returns

Retailers will need to be innovative to be profitable across channels, as customers expect faster deliveries and 100%  accuracy in order fulfilment. Retailers can manage costs and significantly boost customer satisfaction by having an analytical and data-driven approach to omnichannel fulfilment strategy.

Best Ways to Reduce Omnichannel Fulfilment Costs:

  • Product Sourcing: It may be worthwhile to review sourcing from vertically integrated manufacturers closer to the retailer’s warehouse. This will ensure that sourcing is done in the most cost-effective manner.
  • Region-Wise Inventory Optimization: The idea is to be closer to the customer to reduce freight, delivery lead times and all costs associated. Retailers must ensure a healthy equilibrium between inventory distribution and regional demand by allocating the right inventory closer to the right customer, on their preferred sales channel. 
  • Outsource Multi-Location Warehousing: Dedicated contract warehousing reduces fixed and recurring costs. Retailers should consider outsourcing warehousing or cloud warehousing services to reduce omnichannel fulfilment costs. 
  • Improve Picking and Packing Process: This labour-intensive task is always a high cost. Making the process more efficient and applying tools to measure employee efficiency would help reduce costs and increase productivity. Inventory should also be serialized to automate the entire process and have 100% inventory traceability.  
  • Inventory Analytics: This provides critical insights so retailers can improve business intelligence with sophisticated data science for the most efficient product handling. Retailers often have cash flow locked up in additional or inaccurate inventory due to a lack of analytics. It is imperative to invest in technology that gives a streamlined and most current view of your inventory in relation to demand. This will help improve cash flow and enhance ROI. 
  • Solve Last Mile Challenges: A report by SOTI finds that nearly half of global transportation and logistics companies use outdated technology for last-mile delivery. It offers little help in combatting delays and high shipping costs. With the implementation of a platform that can provide real-time information, logistics challenges and added costs can be addressed by businesses. Value-added partnerships also help companies synergize to streamline deliveries and returns. Fulfilment costs can be reduced as brands don’t have to build new functionalities but simple partner with companies that have respective expertise.
  • Simplify Returns Process: Consumers have come to expect a hassle-free return policy, no matter which channel they purchase on. The primary goal of reverse logistics is to recover value from assets to increase revenue and reduce expenses. This can be done by directing the returned product to the nearest point of supply and made available for purchase afresh, ensuring the defective products have been segregated. 

With an omnichannel focus, the retail business has become broad, diverse, and complex. However, some retail giants are ruling. These are retailers that have established immense credibility by delivering consumer expectations while maintaining healthy bottom lines. It is time every retailer prioritizes omnichannel fulfilment cost reduction by adopting technology-driven solutions.