Software’s Role in Inventory Planning
By Sushil K. Mishra
In an age of omni-channel marketing and smart “package tracking” apps offered by Amazon, overnight delivery companies and others, consumer expectations have been set high. The increasing popularity of “buy online, ship to store” (BOSS) this past holiday season exposed a number of weaknesses along the retail supply chain and left consumers wondering, “Where exactly is my ship-to-store order?”
Just as importantly for retailers, warehousers, distributors and even manufacturers shipping product directly to stores, BOSS has exposed broad logistical inefficiencies that are increasing operational costs and cutting into retail sales.
Understanding the Problems
Aside from creating a customer satisfaction issue, several inefficiencies exist within the supply chain that directly affect inventory and labor. Instead of being available for purchase in aisles, inventory is sitting in receiving bays and labor costs increase when retailers are not staffed properly to unload trucks. These are not new issues, but ones that many consumers and those within the distribution industry thought were being addressed through software upgrades and other IT solutions.
Unfortunately, this is not the case. There’s an assumption that major retailers have this software in place. Some do; many don’t. Some systems are cobbled together from legacy applications. Some are off-the-shelf and don’t fit a retailer’s specific needs.
At some of the biggest retailers, it can take up to three days to unload a truck and move inventory into bays and aisles because of inefficient shipping and receiving systems. When BOSS orders are included in shipments, customers typically wait an additional three days before they can pick up their purchase.
The two biggest culprits are inefficient truckload estimates and inaccurate estimated times of arrival at retail stores. Basically, a perfect ETA is still a myth for stores and when the truck arrives, it doesn’t have a best idea of what products are on the truck or how it’s organized.
The IT Solution
Resolution to these challenges is not difficult. At one big-box retailer, the solution involved a combination of customized application development and integrating different software applications.
While it’s impossible to estimate trucks’ time of arrival with 100 percent accuracy, this retailer now receives live GPS feeds from carrier trucks to provide accurate arrival time estimates to store managers. These feeds are preceded by the supply-chain notifications at least 7 to 10 days earlier for store manager to plan his staff’s labor hours.
The other issue – moving product from trucks to the receiving bay and eventually to the store sales floor – can also be addressed through a combination of software applications and process improvement. Software can provide the analytical support for both loading and unloading shipments, which is generally known as load content. But this is only half the problem solved; the other half is getting product from the receiving bay to the aisles.
Vital steps in upgrading the retail supply chain include:
* Ensuring that the shipped packages are identifiable by their respective bay and aisle number or department, depending on store topology.
* Ensuring the right team is available to unload the truck. This data can estimated based on truck load metrics gathered seasonally or depending on the stores sales numbers.
* Identifying the algorithm to place the truck load on the receiving floor for efficient transport to bays. This algorithm should take in perspective size, volume, quantity or SKUs coming out of the truck.
* Designing the swiftest and shortest path to the bays once shipment is unloaded. Labor team experience with load content is vital here as is a software application that derives the best way to sort product from the truck and recommends the order bays are accessed in order to save labor hours.
Any “last mile” solution creates multiple benefits to retailers, including cost savings in staff time and transportation costs; having a more engaged labor force, increased sales and better customer service.
Sushil K. Mishra is technical director of the retail IT practice at Xavient Information Systems, a leading, U.S.-based provider of IT services to Fortune 1000 companies in a variety of industries.