Streamlining order management is critical for retail success
- Posted on August 28, 2017
- Estimated reading time 2 minutes
One of the distinguishing traits of a successful retailer in creating a frictionless shopper experience is efficient order management. Order management and fulfillment is cost intensive. It not only escalates the total cost of sales but also exposes a retailer to lost sales and margin opportunity. Retailers such as Amazon and Gilt have redefined order fulfillment, and as a result, have raised shopper expectations when it comes to order delivery.
Retail research firm EKN states that for every dollar that a shopper spends on an order, eighteen cents of it is being spent by the retailer on fulfillment. The study goes on to report that 40% of retailers see automating order capture and processing, integrating inventory and standardizing order management across channels as a major challenge. Only a third of the retailers interviewed for the study have a unified order management and fulfillment process in place with a similar number planning to implement one soon. This consumer part of the order management process needs to be combined with the sourcing component as well for retailers to optimize their return. Spanish apparel brand, Zara, has long followed a supply chain intensive business mode for sourcing, which allows it to move from first design to final production and distribution to its stores in a very short time cycle. Fast fashion brands, Forever 21 and H&M make sure that trends are delivered as quickly as possible and at affordable prices.
The fast pace, shopper-focus of the fashion and apparel industry means that the shelf life for new trends is relatively short. Therefore, it is critical that current trends are supported by an accurate order management process. A concrete example from the similarly paced food industry shows how Avanade worked with a grocer chain retailer to custom-design an app that serves up detailed product information including item visuals, inventory location and available stock. The app provides a real-time action log that monitors every action and continually refines the process.
Retailers should focus on creating a single, centralized and scalable distributed order management system that is linked to a unified point-of-sale (POS), warehouse management (WMS), enterprise resource planning (ERP), inventory management, supply management and business intelligence systems. Taking it one step further, retailers must also rationalize the comparative value of cloud-based versus on-premise order management systems.
Find out more about the fashion and apparel fulfillment process in EKN and Avanade’s research report and learn about Avanade’s specialized retail solutions.