Commerce Trends

by Manhattan Associates

Look But Can’t Touch? Turning Supply Chain Visibility into Customer Availability

When shopping, we’ve all been faced with out of stock situations, but fewer than half of us will settle for a substitute product. Nearly one in three of us will buy the same item, but elsewhere[1]. This equates to a sales loss of around four per cent for the retailer. If their turnover is £1bn, that’s £26m of sales.

A huge revenue gap can be created by inventory not being in the right place at the right time. As consumers are increasingly shopping across more than one channel, this challenge will only get tougher. Retailers need to have more confidence in their ability to fulfil in order to close the gap.

We have seen many, many retailers take greater control of their supply chains. Most know what stock they have and where it is within the supply chain. However, knowing where it is and putting it in the hands of the customer are separate issues.

The speed with which customers want fulfilment on their orders is high. We’ve seen through our own research that the expectation of 2-hour delivery and/or click and collect is growing. When surveyed, 57 per cent of consumers want 2-hour click and collect, while 48 per cent want same day delivery. Speed of fulfilment grew in importance as well.

So what does all of this mean for retailers?

Seeing where stock is located is the first important step. Without that visibility, the next steps are futile. It is this point that retailers need to build their confidence to fulfil. Making a sale does not have to mean availability at the precise location and time that a consumer is looking to make a purchase – not if you can provide a suitable alternative.

In-store is where an out of stock will be most frequently encountered but, as long as you have the inventory, customers should never see an out of stock. There are three ways to ensure this never occurs:

  1. Make the product available in the store within two hours on the same day. If the customer is willing to come back a little later – after doing other shopping – then they can collect the items. The items can be made available in the store through a transfer, a warehouse shipment, or simply by locating stock if you know it is in the store.
  2. Offer home delivery of the product later that day. It’s possible to ship from store or distribution centre to the customer’s home, so that it coincides with them getting back there. This is often most preferable.
  3. Refer to another store. This option is potentially inconvenient for the customer, depending on where the alternative stores are, but instant visibility of stock holding can give the option of going elsewhere. If the other store is too far, refer back to the first two options of fulfilling from there.

The key to success in saving these sales is speed of decision making. Can you combine knowing where products are, with making the decision of what to do? A big part of that decision-making process is the profit calculation. Can these fulfilment options be executed while maintaining a profit. The more automation that can be built into the process for suggesting solutions, the quicker, easier and more profitably orders can be fulfilled. Most importantly, when it works, you get happy customers and ones that are likely to return to buy more.