Other Voices: Aligning fulfillment operations with a changing channel mix

There's no one way to handle multi-channel order fulfillment

By ·

Editor’s Note: The following column by Jason Denmon, apparel/retail industry leader, Fortna, is part of Modern’s new Other Voices column. The series, published on Wednesdays, will feature ideas, opinions and insights from end users, analysts, systems integraters and OEMs. Click on the link to learn about submitting a column for consideration.

***  ***  **

Are you struggling with fulfilling orders across a number of channels?  Fulfillment can get complex as customers expect a seamless experience across all channels.  One of the key decision points is whether to manage fulfillment of each channel in shared or separate distribution centers.  Here are some things to consider to help you get to the best solution.

Shared Fulfillment Operations

Operating out of a shared Distribution Center is most effective when the channels or segments have common order profiles (item type and quantity) that share the same inventory.  But other common points may make shared fulfillment the preferred method:

• Similar service requirements (same day shipping, etc.)
• Shared suppliers or supply points
• Shared carriers
• Shared geographic distribution area
• Cross channel shopping within your customer base
• Same SKUs shipped across multiple channels

But there are other factors to consider.  A shared operation may make sense if you see large volume shifts between channels (seasonally or over time), where one channel’s busy season is another’s downtime.  Also, if you are testing out new channels, or experiencing a lot of changes in business requirements and service demands, it may make sense to house those channels together for the time being.

Separate Fulfillment Operations

Fulfillment with each channel in its own distribution center makes sense when the channels have unique requirements.  For example, the following unique channel characteristics lend themselves to separating operations:

• Separate inventories and/or unique SKUs across channels
• Contrasting and/or diverse order profiles
• Distinct system requirements, such as OMS or WMS
• Contrasting equipment and material handling requirements
• Different processes and inability to share labor
• Varying shipment lead times

You might also want to consider separate operations if you have different P&Ls and inventory owners for each channel/brand, or if it is important that you optimize your performance by channel.  Lastly, separate fulfillment operations are generally less risky as you are not relying on a single DC for all of your fulfillment.

Finding the Right Solution

Choosing what type of fulfillment operation is best for your company starts with a holistic view across the business, channels and segments. Getting stakeholder alignment across channels is a critical first step.  Start by asking these questions:

• Where are the synergies and differences between channels?
• Are you struggling to respond quickly to market demand? Or dealing with excessive mark-downs and out of stocks as a result of allocation problems?
• How is the performance of each channel measured?
• What are the tipping points where you are willing to sacrifice the optimization of one channel for the overall benefit of the organization? How wide is your lens?
• What are the impacts of changing business requirements in your channel mix?
• Do you have true business/stakeholder alignment between channels with an overarching strategy that drives one consensus plan?

With an understanding of the full impact of multiple channels on your fulfillment operation, you can look for synergies and ways to deliver the seamless experience your customers expect.


About the Author

Bob Trebilcock
Bob Trebilcock, editorial director, has covered materials handling, technology, logistics and supply chain topics for nearly 30 years. In addition to Supply Chain Management Review, he is also Executive Editor of Modern Materials Handling. A graduate of Bowling Green State University, Trebilcock lives in Keene, NH. He can be reached at 603-357-0484.

Subscribe to Modern Materials Handling Magazine!

Subscribe today. It's FREE!
Find out what the world’s most innovative companies are doing to improve productivity in their plants and distribution centers.
Start your FREE subscription today!

Latest Whitepaper
Hydrogen, the Future of Materials Handling
Large, successful organizations are integrating hydrogen fuel cell technology into their lift truck fleets and benefiting from lower operational costs, reduced emissions and improved reliability.
Download Today!
From the October 2016 Issue
Brownells’ new Iowa distribution center has taken touches—and miles—out of the order fulfillment process and increased throughput with near 100% accuracy.
System Report: Brownells new DC is flexible and responsive
Pallet Usage Report: Pallets Remain Critical in the Modern-Day Warehouse
View More From this Issue
Subscribe to Our Email Newsletter
Sign up today to receive our FREE, weekly email newsletter!
Latest Webcast
Pallets: Supporting Product, Processes and the Enterprise
The smallest leak in performance or cost can bring a lean, nimble and speedy supply chain to a halt. During this 30-minute webcast we'll examine how Modern's readers use pallets to keep the wheels turning as they maneuver a road filled with sharp edges and potholes.
Register Today!
Brownells: Designing for Efficiency and Growth
Brownells’ new Iowa distribution center has taken touches—and miles—out of the order...
Industry celebrates National Manufacturing Day
Fourth annual Manufacturing Day is a grassroots effort by U.S. manufacturers to improve the public...

American Eagle Outfitters’ omni-channel journey
The fashion retailer has used warehouse execution software and automation to create a true...
The data-driven lift truck
Now that manufacturers and distributors are using the data from their automated systems to drive...