As part of our on-going series BOPIS (buy online pickup
in store) to the Rescue, we will this discuss the critical
characteristic of inventory integrity and how it relates to supply
chain performance. To summarize quickly to where we are to
this point in our series, we talk about four key characteristics
a supply chain must possess in order to be successful in
executing a BOPIS strategy.
They are visibility, speed, inventory integrity and execution. In
our last article, we talked about the importance of speed to the
traditional brick and mortar retailer. We discussed speed in the
supply chain (defined as purchase order create to store receipt)
being important for a number of reasons, including: increasing
sales, reducing inventory investment and delighting customers.
Let us now move to the third characteristic of inventory
integrity in the supply chain as it relates to implementing a
successful BOPIS strategy.
Compliance Networks Says... |
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| As stated by Dr. Brian Gibson of Auburn University, "Without accuracy, prioritizing speed leads to errors that become returns, shortages that inhibit sales and dissatisfaction that drives defection." |
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The Moment of Truth
Think about psychology of a customer when he or she places
a BOPIS order. For me, it is the delight that the search is over,the task complete and the problem solved. After a quick jaunt to the store's front desk (no need to go deep this visit) and I will be on my merry way to the next problem.
And, while we are at it, please staff this location with enough workers. In a time crunched world of BOPIS, we don't want to wait in long lines either. Time for the today's consumer is no longer a luxury, it's a constraint and a demanding taskmaster at that. The BOPIS visit psychologically to a customer is different than when he or she responding to the Sunday circular. It is similar to the difference between dating and marriage, as one can be described as casual while the other as commitment.
When that commitment goes wrong, the consequences are real. Lost sales, lost margin, lost loyalty and worst of all, an open invitation to succumb to the gravity that is online shopping. For you football fans, it's similar to fumbling at the one yard line. In the age of disruption and transformation, there is no time for fumbles.
"But our System says it's in Stock"
Maybe so, but that doesn't make the customer's day any brighter does it? And in the challenge to hold marketshare against online retailers only results count, not excuses. In a recent study conducted by Auburn University, it is estimated that "in-store accuracy levels hover around 80% at an individual item level." 80% - let that sink in. Imagine how you would feel about renewing your Amazon Prime Membership if they hit its two-day delivery promise 80% of the time.
So what happened to our inventory count? The usual suspects are called down to the station: miscounts, pilferage, wrong location, still at the distribution center, in the backroom (or even in the lunchroom). But truth of the matter is that more times than not, the inventory never existed in the first place.
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Ghost Inventory
In our previous article we discussed inventory speed as a strategy to simultaneously to increase sales, reduce costs and delight customers. But is sacrificing inventory integrity for speed a good thing? An effective tool to facilitate inventory speed is the use of ASNs to blind receive at the distribution center and crossdock the merchandise directly to the store. While the benefits are numerous, the consequences for inaccuracies are endless.
 In a recent study titled "Advance Shipping Notification and Inventory Integrity Report" (2017) conducted by Auburn University along with Compliance Networks, the Retail Value Chain Federation and Supply Chain Digest, it was revealed that retailers achieved a median performance of 92% among the survey respondents as it pertains to ASN accuracy. Or simply put, the ability of the vendor to accurately communicate what they shipped is not high.
While this study focused on all ASN errors, a major component of those errors were that the audited order contained less than was listed on the ASN. And in the eyes of the customer, nothing else matters more if the merchandise isn't where you said it would be.
The Net Net
So working down our list of supply chain characteristics required to implement a successful BOPIS strategy, it is easy to understand why inventory integrity is so important moving forward. As stated by Dr. Brian Gibson of Auburn University, "Without accuracy, prioritizing speed leads to errors that become returns, shortages that inhibit sales and dissatisfaction that drives defection."
Next in our series we will discuss the role execution plays in a successful BOPIS strategy. For a copy of the 2017 Advance Shipping Notification and Inventory Integrity Report, please email me at richard.wilhjelm@compliancenetworks.com.
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