Can Warehouse Emulation Result in Successful In-store Fulfillment?

by Michael Koploy on 2012-07-28 02:06:25

Last month, I spoke with Shawn Casemore, supply chain consultant and founder of Casemore & Co. In our conversation, I wanted to gauge his reaction to the Wall Street Journal story about Macy’s implementing warehouse-like strategies within retail outlets in the U.S. to fulfill online orders. Rather than utilize its distribution centers, Macy’s will pull inventory from its outlets and ship the items from store to customer.

 

As a greater number of customers are choosing to shop online, this is an interesting way for merchants to lessen the stress on its distribution centers --while getting items to customers at a lower cost, more quickly. In addition, “integrating” inventories between stores and distribution centers can help alleviate instances of a merchants having to mark-down inventory that moves slow in stores but often sells out online.

 

Our conversation led me to a list of strategies that merchants need to follow for this to be successful. To be successful, I believe these steps build on each other--step 1 has to occur before step 2, and so forth. So here’s what I put together:

 

1. Implement [practical] “item-level” RFID tagging

Macy’s chose to go with UHF Gen 2 RFID tags, and only on items that it deemed to be replenishment items, or frequently-purchased products that are resupplied automatically when sold to customers. JCPenney recently announced its plan deploy RFID tags on 100 percent of store items by Februrary 1, 2013. Whichever end of the spectrum merchants choose, some level of RFID tagging will be essential for store associates that need to quickly locate items for packing and shipment.

 

2. Deploy RFID scanners and readers that can integrate with the back end system

Store associates are going to be asked to man the floors, checkout customers and locate stock for fulfilling online orders. Instead of having one individual tasked with fulfillment, retailers can utilize RFID readers to receive notifications from the store’s back-end system when orders come in. In addition, readers will help associates locate items that have been misplaced.

 

3. Utilize people counting systems to find the ideal customer-per-staff-hour ratio

With the multitude of responsibilities that associates will be tasked with, store management may have to rethink how and when they schedule individuals to work. If more orders are commonly coming in from the online system during certain days (or hours), store managers will have to adjust their workforce accordingly. To find the right balance of employees that can meet the needs of store traffic and online shoppers, management can deploy people counting systems to find the perfect ratio of staff per online-and-offline customers.

 

4. Invest in WFM solutions to maintain the forecasted workforce

Retailers will have less wiggle room with these new expectations. For example, if an order is being picked up by a truck in one hour, the store must be able to accommodate this request in addition to meeting the expectations of the in-store customers. Workforce management solutions will help ensure that employees are aware of their shifts, that the right balance of skilled employees are being scheduled, and employees can easily have shifts covered while still maintaining appropriate staff levelsfor the store.

 

5. Hire accordingly to fill the new gaps on the team

Finally, store managers may have to re-think who is hired to work in the store. While many outlets feature employees in high school or fresh out of school, the profile of the ideal candidate may become a little more demanding (and experience). Excellent multi-taskers and individuals experienced working in a warehouse environment or storeroom experience will be in high demand.

 

I’m curious if anyone has any other experience or thoughts on working with a merchant implementing these strategies. You can read more on this discussion over on my Software Advice site blog: Want to Master In-Store Fulfillment? Think Like a Warehouse. Alternatively, drop me a line at michael@softwaredvice.com.