Omni-Channel Excellence with Advanced Analytics
The Answer To Omni-Channel Retailing’s Order Fulfillment Challenges
The Omni-Channel Challenge
The omni-channel fulfillment world today is nothing short of chaotic. It is characterized by highly fluid, unpredictable, complex and rapidly evolving order fulfillment processes. Customers’ ever-changing behaviors for wanting products instantaneously are forcing retail companies to deliver products in ever shorter lead times, accessing all available inventory units (whether in-store or at distribution centers). The consumer demand for “anything, anytime, anywhere” and the growing competition from e-tailers are forcing traditional retailers to juggle:
To operate effectively, today’s retail supply chains must be incredibly flexible and agile, capable of intelligently determining the best ways to fulfill orders, and dynamically optimizing the availability of the right inventory at the right location to achieve desired customer service levels.
Sustaining multiple sales channels complicates the inventory management and order fulfillment process – so much so, in fact, that finding a dynamic solution gives organizations a distinct and powerful competitive advantage. Companies that find dynamic order fulfillment solutions see immediate cost and service impact, and have a valuable tool that helps them reduce stock outs while improving margin performance concurrently
By navigating the supply chain deftly, leveraging the entire network, retailers can reduce costs across the board – people, processes, tools, brick-and-mortar – and improve the service level. If they don’t – if they continue to rely on outmoded, traditional methods like static rule-based Distributed Order Management (DOM) – they run the real risk of being quickly bested by competitors.
Solvoyo Dynamic Order Fulfillment is The Solution
The stakes are huge in omni-channel retail today; what Solvoyo Dynamic Order Fulfillment represents is even bigger.
In the simplest terms, Solvoyo DOF is a cloud-based Software as a Service (SaaS) that gives retailers optimized fulfillment plans, leveraging end-to-end inventory visibility and fulfillment options across the entire network.
With consumers now expecting to be able to purchase, receive and return products anywhere, any time, retailers can no longer rely on simplistic order-flow rules to move products from the supply source to the consumer. Only Solvoyo DOF optimizes the order fulfillment, with a holistic context of the supply chain that dynamically recognizes what products are available at each point and channel at any time, then fulfills the customer orders in the most cost-effective way in line with channel priorities and customers’ service expectations.
Solvoyo DOF leverages real-time inventory visibility from end to end – from supplier to end consumer and at all entities in between, then fulfills orders using actual costs and easily configurable algorithm that takes into account dynamically calculated order priorities in different channels, due dates, total cost of fulfillment and any applicable penalties.
Solvoyo DOF minimizes cost-to-serve by:Determining inventory deployment across multiple echelons of the fulfillment network to ensure the right goods are in the right places at the right times Planning replenishment to minimize backorders or lost sales Optimal allocation of resources and goods to maximize fulfillment of orders and at the same time aim to maximize service levels Consolidating shipments to minimize transportation costs
What kind of results can retailers expect of Solvoyo DOF?
The graph below provides a more detailed picture of the significant impact Solvoyo DOF can have in 11 critical areas of operation. The chart is representative of changes expected in key supply chain metrics after implementing Solvoyo DOF.
The results are nothing short of remarkable,” says one of our customers. In fact, the payback of Solvoyo DOF averages between 3 and 9 months. Inventory savings range from 10 - 30%, annual freight bill savings from 5 - 25%, and on-time fulfillment improvements from 10 - 35%.
Solvoyo Dynamic Order Fulfillment Is Nothing Short of a Game-Changer
An intelligent, algorithm-driven, cloud-based solution that integrates with ERP systems, is quick to deploy, easy to extend, and offers exceptionally fast ROI.
Designed specifically for omni-channel retailers, this SaaS platform is a scalable planning solution, ensuring that every order is filled by the best source while minimizing cost-to-serve and maximizing profit.
Throughout the order day, Solvoyo DOF dynamically executes the batch size and release schedule; its sophisticated algorithms determine the best fulfillment solution for every order line in the batch.
Solvoyo DOF also takes into consideration the value of inventory according to the location where it’s maintained. For example, if a store is in an overstock position anticipating markdowns to move excess, these items can be given priority for e-orders.
…and DOM Is “Dumb”
Rules-driven DOM can’t take omni-channel retailers where they need to go. Distributed Order Management (DOM) is a simple, heuristic-based solution that isn’t capable of intelligently assessing inputs and determining the best next action; it simply does what it’s told…even if what it’s told doesn’t make sense holistically. For example, once an order comes in, DOM will just pick one available item for the order. It does not consider the impact of assigning this item. The allocation for this order might be good by itself, but it might have significant negative impact to the bottom line without considering other orders simultaneously. On both the strategic and tactical fronts, traditional methods and tools like DOM don’t provide the analytical insight into the network structure needed by retailers today. On the operational front, DOM’s rule-based approach may provide a feasible orderto-inventory or order-to-delivery assignment, but its blind to the full set of revenue, cost, service and product availability dimensions needed in order to make the best fulfillment decision. It doesn’t provide the much-needed end-to-end flow and total landed cost in the decision criteria.
4 Facts About Solvoyo DOF
- Executes the best inventory assignment for every order line, every time
- Ensures retailers get the most from their centralized and deployed inventory
- Enables the total lowest cost-to-serve resulting in the greatest profit
- Delivers maximized total customer satisfaction for any level of inventory investment
|Feauture||Solvoyo Dynamic Order Fulfillment||Distributed Order Management||Solution methodology||intelligent, mathematic programming with the ability to optimize for customer service, revenue and inventory availability, or minimizing markdowns at particular stores||rules-based sort|
|Order batching||aligned order batches||single order|
|Scope||end-to-end supply chain||inventory by location||Timing||workflow based||instantaneous per order|
An omni-channel retailer receives two online orders – one a single line order and the other a multi-line order.
A DOM solution may allocate the last availableto-promise item, located in a store, to the single line order and fill the multi-line order from a DC.Total transaction cost: $17
Solvoyo DOF sees a more cost-effective way to fulfill these orders and can use the store’s last available-to-promise item in filling the multi-line order, and use an alternative source, like a DC, for the single line order, based on anticipatedfuture value reduction of the store markdown.Total transaction cost: $16
Cases In Point
Grocery, Home Fashion & Department Store
$1.5B Regional Supermarket Chain
This supermarket chain with a nascent online business was focused on optimizing both store allocation and warehouse replenishment. Using Solvoyo, shelf availability improved from 90% to a sustainable 97%. The super market chain realized annual recurring uplift of $10M to their bottom line as a result of better run in-store and online operations.
$200M Home Fashion Retailer
This 270-store retailer sought Solvoyo’s help in optimizing their in-store as well as online fulfillment, allocation, and replenishment. Solvoyo now even helps the retailer create vendor purchase orders. Shelf availability increased from 55% to 85% within the first year and the company saw a sustainable increase of their inventory turns.
Department Store Retailer
This Southeastern US retailer has 2 e-tail warehouses and 19 stores designated for online order fulfillment. Solvoyo developed a fulfillment optimization solution that identified 10% cost savings, balanced workload and improved margins.
Solvoyo Dynamic Order Fulfillment At Work
Once you’re up and running (typical implementation lasts 3-4 months), you will begin seeing positive results.
Implementation is relatively straightforward, as the Solvoyo DF platform operates hand-in-hand with your existing retail technologies and can be integrated seamlessly into the enterprise IT systems. There’s no need for a lengthy trial-and-error rules adjustment period. No need to rip-and-replace your existing systems until you are absolutely sure that Solvoyo DF works!
Using our proven Agile Implementation Methodology (AIM), Solvoyo DOF deploys an omni-channel fulfillment solution using:
- … professional implementation resources with deep retail experience
- …iteration sprints of short design-buildvalidation steps in order to ensure acceptance by your IT team and key users
- …efficient modeling through sector-specific templates: grocery, fashion retailer, and hard goods
Solvoyo DOF applications utilize a secure, scalable, flexible and dependable cloud infrastructure, or can be deployed in your private cloud and behind your own firewall.
The Time Is Now
There’s an urgency to implementing a smart, flexible omni-channel fulfillment solution. According to a Retail Industry Leaders Association study, an effective solution for omni-channel fulfillment is a top priority for nearly all executives respondents.
The study also declared that omni-channel retailers that can implement agile, intelligent systems and processes have a huge competitive advantage, allowing retailers to “smash their competitors.”
- Available-to-promise inventory
- Pick, pack & ship capacity
- The role of DCs, warehouses, stores and 3PLs
- The status of inventory relative to future demand
- how much has been spent on the inventory in position
- how much more it will cost to allocate the inventory
- the service implications of the potential fulfillment solution