What Exactly is Omnichannel Fulfillment?
Omnichannel Fulfillment is a fulfillment strategy that allows all inventory to be accessible and customer demand fulfilled across multiple channels. In other words, an Omnichannel strategy allows orders to be fulfilled via a multitude of channels potentially from a multitude of locations. The below list provides several examples of the multiple channels involved in the fulfillment of customer demand.
- Customer Orders Online / Order Delivered Directly to Customer from Warehouse
- Customer Orders Online / Order Delivered Directly to Customer from Store
- Customer Orders Online / Order Delivered Directly to Customer from Manufacturer
- Customer Orders Online / Customer Picks Up in Store
- Customer Selects Items in Store / Customer Purchases in Store
As shown in the examples above, inventory housed in different location types (Warehouse & Store) is available to fulfill any customer order, either online or in store purchase. Additionally, there are different channels available through which the order is fulfilled e.g., direct from warehouse, direct from store, direct from manufacturer, pick up in store, purchase in store.
Omnichannel Provides a Fulfillment Win-Win. Through Omnichannel Fulfillment a retailer has the ability to fulfill customer orders utilizing the most optimal channel because orders can be fulfilled from the optimal inventory location regarding both fulfillment cost and lead time. Thus, customer satisfaction is enhanced in conjunction with reducing fulfillment costs rather than with the tradeoff of increased fulfillment costs.
Omnichannel Reduces Inventory. Because inventory can be shared across multiple locations, the amount of overall inventory required is less than if inventory is dedicated by channel. This allows, for example, a retailer to leverage the inventory previously restricted to stores for in store purchases to be allocated for online purchases as well. Another advantage is that omnichannel fulfillment also allows a retailer to take advantage of inventory on hand at the manufacturer as well.
Omnichannel Creates Fulfillment Redundancies. Since there are multiple ways to fulfill an order, customer satisfaction can be maintained during external events impacting one part of the fulfillment network such as a winter storm or natural disaster in the proximity of a warehouse or group of stores.
Omnichannel fulfillment offers significant advantages through both improved customer satisfaction and decreased operational costs. However, implementing an Omnichannel fulfillment strategy requires investment in order management and warehouse management systems (WMS). These systems are needed to provide the structure necessary to correctly route and fulfill customer demand. Through both investment and commitment, Omnichannel Fulfillment can be embraced and deliver significant returns to any retailer.
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