Lightwell Business Technology Blog

Omnichannel order fulfillment is a double-edged sword. On one hand, you have multiple methods for fulfilling customer orders, and customers can choose whether they want orders shipped to them or picked up in store. This flexibility helps to make customers happy.

On the other hand, retailers have seen upwards of a 300 percent increase in what it costs to serve omnichannel customers. 

According to the Retail Industry Leader Association’s annual survey, as reported in Supply Chain Quarterly, executives identified controlling supply chain costs as a top priority, with order fulfillment and omnichannel costs being a part of the reason.

The good news is that tools exist to help reduce omnichannel order fulfillment costs and complexity. These tools leverage advanced capabilities like artificial intelligence, cognitive computing, and predictive analytics to optimize order fulfillment processes.

The transparency provided by these tools can help companies drastically reduce the cost to serve their omnichannel customers while still meeting consumer expectations of speedy delivery.

While there is no magic bullet to cost reduction, let’s take a look at three ways companies can use these advanced capabilities to improve the way they fulfill orders.

For retailers as well as B2B companies, order fulfillment plays a major role in both customer satisfaction and profitability. Customers expect flawless, fast order fulfillment across all channels.  While customer-centric companies work hard to meet these expectations, it can be very expensive to do so.

As customers purchase from your company across multiple channels—via the Web, mobile apps, kiosks, marketplaces, retail locations, and even catalog and telephone orders—you’ll want capabilities like centralized order orchestration, ship from store, drop ship, and real-time inventory visibility. These order management capabilities work together to meet customers’ expectations seamless, fast and error-free order fulfillment.

However, these capabilities alone don’t ensure companies can do so profitably.  In fact, while many CEOs have identified omnichannel commerce as a top priority, the IBM Consumer Expectations Study found that it could cost up to three times more to serve omnichannel customers.

Every channel adds complexity to the order fulfillment process. In addition, there’s pressure from customers and competitors to same-day or two-day shipping, making it even more critical to leverage modern technologies to fulfill orders in the most efficient, cost-effective way possible. In fact, the IBM study found that 72 percent of consumersconsider two-day or less shipping as a factor when making a purchase.

On top of using an omnichannel order management system, companies are now adopting solutions that can apply human reasoning and cognitive capabilities to order fulfillment. As a result, they’re able to meet or exceed customer expectations while reducing their fulfillment costs. Let’s take a closer look.

Omnichannel commerce brings new challenges to order fulfillment. Think of all the channels your customers use to shop—your website, online marketplaces, stores, paging through a catalog, or calling your contact center.

Add in all your inventory locations—including DCs, warehouses, fulfillment partners, and retail locations—and you may run into difficulty fulfilling orders as flawlessly as customers expect. All the order touchpoints such as point-of-sale systems, contact centers, and e-commerce platforms need to sync with your order, inventory, warehouse, shipping, and reporting systems. Otherwise, orders may need to be canceled or delayed, which affects customer loyalty and chips away at profitability.

Flexibility is key when it comes to omnichannel order fulfillment and order management systems that enable it. Static business rules—such as a customer located in California should receive products from the nearest fulfillment center in Arizona— no longer makes sense when inventory is sourced from retail locations as well.  Now, you also need to consider the store inventory, as well as the demand for a product in that geographic area.

That same customer, located in Northern California, orders a popular product online that sells out quickly in the retail store in his area. Instead of shipping from the store in his area that has low inventory (and risking losing an in-store sale as a result of being out of stock), artificial intelligence can determine that it’s better to ship the product from a store in an area that isn’t experiencing the same level of demand.

Sound confusing? It can be. But this is the next generation of order management and fulfillment, which uses artificial intelligence and cognitive capabilities to determine the best source for items and ship them in the most profitable way possible. These capabilities can transform the way orders are fulfilled—reducing costs and increasing profitability, while ensuring customers are happy. Here are a few examples of how this works.

It’s no secret that customers expect a seamless and personalized experience, whether interacting with a company via a mobile device, computer, in-store, or on the phone with a customer service representative.  As consumers (and B2B customers) ourselves, we have little—if any—patience for inconsistent information and impersonal interactions.   

This not only applies to our shopping and purchasing experiences, but to our post-purchase experience as well:  timeliness and accuracy of order status updates, if our order was delivered or available for pick up as promised, the quality of our interactions with representatives, and the ease of returning items.

Sounds obvious, but if you’re reading this blog post, you understand that meeting these expectations consistently is no small feat. Delivering flawless omnichannel shopping and post-purchase experiences can be exceedingly complex from technology, process, and training perspectives—especially for companies with multiple business models and brands, multiple marketplaces, a large number of items, and numerous store locations, warehouses, distribution centers, and fulfillment partners. 

An omnichannel order management system (OMS) can play an essential role in meeting these expectations.  Today’s sophisticated order management and fulfillment systems are capable of much more than capturing an order through and sending it to a back-end system for processing.  Some can meet a wide range of customer demands, orchestrate order fulfillment across channels, facilitate an experience that engenders customer loyalty, and assist in maximizing profits for the company as well. In addition, these systems can provide critical business data to better inform decisions surrounding merchandising, returns, inventory, marketing, and other functions. 

Most likely, if you are selling products online, you are already employing some sort of an order management system. It might be part of your ecommerce platform, ERP, or CRM system—or perhaps a home-grown, proprietary solution. However, as you may have recognized, these systems often fall short of meeting customer expectations.

If this is the case—and you want to improve the customer experience by leaps and bounds—consider some of the most critical components of an omnichannel order management system as you evaluate your options.  Here are some questions you should be asking.

Did you know that IBM merged a number of their top conferences—Interconnect, Amplify, World of Watson, Edge, and Connect—into one in 2018?  If you haven’t already heard about it, IBM Think is IBM’s new flagship business and technology conference, taking place March 19–22, 2018 at Mandalay Bay in Las Vegas.

It’s a global event where over 40,000 business and technology innovators, leaders, and thinkers will gather in one place to share ideas, discuss topics like Artificial Intelligence, Cloud, Supply Chain, Blockchain, Omnichannel Commerce, Data Analytics, Integration, Security, IoT, and more—and enjoy some exceptional networking, entertainment, and fun along the way.  

While there are many reasons to attend—including a few mentioned in the video below—you may be most interested in reading the highlights so that you can make plans quickly (the event is just weeks away). So, as someone who has attended quite a few conferences over the years, I’ll share in this post what I believe are some of the best reasons to attend. These are in no particular order.

IBM Amplify 2017 kicks off next week, and we're excited to be participating again as sponsors and presenters.  

For one of our sessions, we've teamed up with John Stelzer, IBM Senior Omni-channel Strategist, to share insights gained from comprehensive research on the topic of omnichannel retail. This includes several studies:

• IBM Consumer Expectations Study, which covers what consumers expect
• IBM 2016 Customer Experience Index, which describes how retailers are actually doing
• IBM/Aberdeen Group 2016 InBalance Retailer Survey, which describes how retailers think they're doing

This session offers a rare opportunity to hear correlations and comparisons between these studies, see what's most important to consumers today, understand what has changed in recent times, and (if you're part of a retail organization) assess how your capabilities compare to other retailers.  

If you're attending IBM Amplify, read on to learn more about this session and add it to your agenda.  We hope to connect with you at Amplify and see you at the session!

We're excited to be presenting at IBM Amplify with our customer, DHL eCommerce and our partner, IBM on the topic of omnichannel order management and fulfillment. If you're attending Amplify, we hope you'll add this to your agenda. 

The session is timely because today DHL eCommerce announced the expansion of their e-Commerce Fulfillment solution in the US.  This solution enables retailers to accelerate fulfillment and delivery without increasing costs, which has been a challenge for most retailers due to the required capital and complexity.

The quote contained in the announcement provides an excellent background for our session on Wednesday morning:

“The e-commerce market in the U.S. is estimated to have grown by 15.6% in 2016 with sales topping $531 billion¹, and increasingly e-tailers are seeking fulfillment solutions to enable an omni-channel experience for end consumers,” said Lee Spratt, CEO DHL eCommerce Americas, “We see a huge demand from U.S. e-commerce players needing best-in-class e-commerce logistics solutions and we’re expanding our capabilities to support these growing demands."

The Amplify session will provide detail on how the solution helps retailers improve their omnichannel commerce operations and the customer experience. If you're heading to Amplify, read on to learn more about the session and add it to your calendar.  

IBM Amplify 2017 is one of the year's most anticipated events for eCommerce, marketing and supply chain professionals who want to leverage the latest technologies to improve customer experiences, engagement, acquisition, and loyalty.  

This year's event is bound to be best yet. It will be held in Las Vegas at the MGM Grand from Monday, March 20 through Wednesday, March 22. Once again, Lightwell will be an IBM Amplify sponsor, will be participating in Solution Expo, and will be presenting in multiple breakout sessions.  For those of you planning to attend IBM Interconnect, you'll recognize that the conference is happening at the same time, just a couple of properties away. 

While there are so many reasons that we enjoy attending the IBM Amplify conference, we wanted to share 10 of our favorites for 2017 (in no particular order).

Q&A with Alora Chistiakoff, Director of Commerce Services at Lightwell

We caught up with Alora Chistiakoff to discuss the challenges retailers are facing and the best practices around omnichannel order management and fulfillment. Here is a summary of what we discussed. 

• What are the challenges to fulfilling orders across multiple locations?

Alora:  For retailers, there’s rarely one single source of truth for inventory information. There’s inventory from the store (in a POS), warehouse (in a WMS), drop ship inventory (in purchase orders), in-transit, on-order, on-demand, etcetera. To accurately understand fulfillment options, all of these pieces must be brought together into a single source, such as an order management system.

The real-time nature of this information is particularly important for retailers. A given warehouse might not be able to fulfill an order during a morning wave, but could put everything in place to ship the order later that afternoon.

They must quickly decide which is more important: getting the order out from the closest distribution center in the afternoon, or sending it in the morning from a location farther away at a higher shipping cost. Having sophisticated order orchestration capabilities is critical for this.

Lightwell team members were among the more than 33,000 attendees at the National Retail Foundation (NRF) Retail’s BIG SHOW 2016 in New York City. The Javits Center exhibit halls, ballrooms, and smaller session rooms were swelled to capacity with retailers, technology vendors, and other industry thought leaders and innovators.

Large conferences can be overwhelming, to say the least, so it’s important to focus on networking and coming away with a few great kernels of knowledge, a connection, or a new way of better meeting the needs of your customers.