As we outlined in last month’s article, BOPIS (buy online pickup in store) is a strategic option for traditional brick and mortar retailers as a growing customer demographic demands immediate or same-day receipt of their purchases.
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| What is the vendor’s ability to put in the carton what they said they put in the carton? |
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For some, overnight shipping charges are prohibitive and 2-day shipping just isn’t quick enough. For the time-strapped consumer, the ability to secure their product online, march down to the store in an hour or two, go to customer service and pick up their product and quickly be on their way is an extremely attractive option.
The benefits for the retailer are numerous: selling existing stock without additional freight and minimal handling, creating additional cross sell opportunities, protecting and even reinforcing the retailer’s brand, and mitigating margin risk are some that quickly come to mind. And, the consumer may be willing to pay a little (not a lot, but a little) more if they can get it today versus waiting. I know I am.
What is the impact of BOPIS on vendor performance and the overall supply chain? After numerous conversations with senior retail supply chain executives, as I laid forth in the previous article, to execute a BOPIS strategy key characteristics of the supply chain must include:
• Visibility
• Speed
• Execution
• Inventory Integrity
In this article, we will look more closely at the visibility challenges a retailer must overcome to execute their BOPIS strategy.
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“Where is my stuff?” is a common question heard from retail merchants. What exactly does visibility mean to the retail enterprise as it pertains to inventory? Is it granular visibility to the actual physical locations of inventory? Visibility into a vendor’s ability to deliver on their on-time and fill rate promises? Or, is it in the retailer’s ability to flow shipments to their stores once the product is received at a consolidator or distribution center?
I believe it’s all three - and more. The importance of knowing the physical location of inventory is obvious, but visibility into the location of inbound product and on-time and fill-rate performance data is just as important. Let me give some examples.
• How many times do our merchants change their purchase orders, creating an impossible moving target for their vendors that needlessly extends the purchase order lifecycle?
• What is the vendor’s ability to put in the carton what they said they put in the carton? This sounds simple, but results from the Auburn University 2011 ASN Accuracy study suggest otherwise. Look for the updated study at the November 2017 Retail Value Chain Federation conference.
• How many days does it take from PO creation to store receipt of merchandise and how does that affect our buying decisions and capital outlays?
• If I need to create an emergency order, what vendor has the best track record of consistent on-time and complete order fulfillment?
 I will go out on a limb here and say visibility into the performance of all major stakeholders (merchants, vendors, supply chain) will become more important than the visibility of the physical item itself. Why? Because as the cost of information continues to decline, we move closer to the 1990’s unifying objective of supply chain, which was to “trade inventory for information”.
What does visibility have to do with BOPIS? Brand credibility for starters. If you invite your dearest friends over for dry-aged steak and Caymus, they are likely to be disappointed if you serve lasagna and Chianti Classico. Not that lasagna and Chianti aren’t fine choices, but expectations are like a contract and when you don’t meet or exceed them, you have broken them. So, before you invite the customer into your store to pick up their product, it’s wise to be 100% sure the product is there. Visibility gives the retail enterprise the confidence that the merchandise will be there when the customer comes to pick it up.
As a long-time resident of southern Florida, my neighbors and I faced shortages of cash, fuel, and water in advance of Hurricane Irma. Much to my surprise and disappointment, guaranteed two-day delivery is apparently not a legally-binding term. With not a bottle of water to be found in the state of Florida, my wife was able to cleverly source and secure a case of water on-line at our local office-supply store. BOPIS to the rescue!
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