As part of our on-going series on "BOPIS (buy online pickup in store) to the Rescue", we will now discuss the critical characteristic of speed and how it relates to supply chain performance.
As a quick summary of the series, we talk about four key characteristics a supply chain must possess in order to be successful in executing a successful BOPIS strategy. They are visibility, speed, execution and inventory integrity.
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| The book on the purchase order lifecycle is too long, filled with variability and waste, and the chapters must be shortened. |
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In our last article, we talked about the importance of visibility to the traditional brick and mortar retailer. Knowing where the product is and to confidently offer it on its website can only happen if the retailer has not just visibility to the product location, but accurate visibility.
Let's now move to the characteristic of speed in the supply chain and its importance to a successful BOPIS strategy.
It may be a cliché, but it's true: the "need for speed" is everywhere. I believe it's ingrained in our human culture and with the advent of technology is accelerating at an exponential rate. As consumers, we demand it faster whether it be the answer to our questions, the arrival of our purchases or even the media and entertainment we consume (all ten episodes at once!). "We want the world and we want it now" has become our cultural mantra. And I'm referring to the adults in the room - just take a look at the demands of the two generations behind us.
So it comes as no surprise to the retail supply chain practitioners that they must up their game, whether they like it or not. And no, overnight shipping is not a practical answer to the challenge.
From the date the merchant presses send on her purchase order management system, to the date her warehouse management system receives the product, a purchase order lifecycle is created.
What lies within those two dates are key milestones within the lifecycle. Examples include: the ship window, both start and stop date, ASN creation, pick up date, transit and receipt date. Think of it as a book, whereas the story is the purchase order lifecycle and the key milestones in between are the chapters.
How long is the book? That depends on the product, the vendor, the carrier, the retailer and all stakeholders in between. If you ask most merchants, and I do, "How long is your purchase order lifecycle", the replies range from "I don't know" to some absurdly low, inaccurate number. Certainly not a moral failing on their part, but more than likely two key reasons: (1) no visibility to the information and (2) the retail enterprise traditionally hasn't placed an emphasis on it.
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While not monitoring the PO lifecycle may have been acceptable in the past, today that is no longer good enough. According to a recent Wall Street Journal article, Kroger is starting to level chargebacks to vendors that deliver late or incomplete, joining both Walmart and Target. While this has been common practice in the apparel side of the business for years, reports suggests its spreading to other retail sectors.
 Why? Because the book on the purchase order lifecycle is too long, filled with variability and waste, and the chapters must be shortened. Going forward, expect both delivery and ship windows to tighten and consequences to increase. Variability is an inhibitor to speed acting as a governor to overall supply chain performance. Reducing the variability will undoubtedly lead to an increase in supply chain speed. The faster the supply chain, the more predictable, consistent and more profitable it will become.
This will also result in a decline in capital required to fund overall inventory investment. That keeps everyone in the C-suite happy.
By most reports BOPIS as a strategy will continue to grow as an effective way to target the consumer who needs to have their merchandise immediately while skipping the normal shopping routine. And BOPIS growth is not just local, but an international trend as well.
A recent report suggest that two thirds of China's consumers are willing to try BOPIS while one third have already done so. So why is speed so importing to executing a successful BOPIS strategy?
Quite simply, it is a key enabler. Along with fill rate and visibility, speed, or ensuring on-time is critical to confidently predicting inventory availability on-line to the time constrained consumer.
Next in our series we will discuss the role execution plays in a successful BOPIS strategy.
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