How to solve the Big Problems of Omni-Channel Order Fulfilment

Posted by Martin Verwijmeren on Oct 5, 2015 9:27:51 AM

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An interview with Kees Jan Roodbergen lecturer quantitative logistics at the University of Groningen.

Cross Chain Order Fulfilment 

There are still many questions about e-fulfilment for which there are no ready-made answers.Different retailers make different decisions about outsourcing versus insourcing of their logistics operations. Cross-channel retailing and back-end collaboration with other webshops are other areas in which retailers currently are looking for best practices. It looks like cross-channel retailing and horizontal collaboration are on the rise. Time to get an expert opinion from Kees Jan Roodbergen lecturer at the University of Groningen and leader of the Dinalog project, "Cross Chain Order Fulfilment Coordination for Internet Sales".

How does The Netherlands compare to other countries?

Notably, it has become the norm in The Netherlands for webshops to guarantee next-day delivery. It is much less likely for delivery within 24 hours to be standard in other parts of the world. Just look at webshops in Belgium and Germany.

The Dutch 24-hour trend has produced one of the greatest logistics challenges for webshops: enormous peaks and troughs in the number of orders. Since the majority of orders are placed at weekends, webshops can often have to process 30 to 40 percent of their weekly volume on Mondays. 

What is the consequence of this trend for webshops?

Combined with the rapid growth of e-commerce, such unpredictability is an influential factor in retailers’ decisions on whether to outsource their logistics operation or keep it in-house. Most small webshops that haven’t yet built up a name start out handling it themselves. For such companies, the size of their logistics operation grows in parallel with their turnover. "It’s a different matter for established retailers who are relatively late entrants, like De Bijenkorf. They have a strong reputation and immediately attract a lot of business, making it difficult to align the logistics accordingly".

"De Bijenkorf initially tried to handle things itself, but soon opted for outsourcing to Docdata". In addition, many web shops are too small to run their own operation efficiently. "Outsourcing enables them to benefit from economies of scale – just think of the major contracts that fulfillment specialists have in place with courier services, which alone can help companies save a couple of euros in delivery costs per parcel" states Roodbergen. 

What developments do you see in the future?

"I predict that webshops will increasingly move towards more frontend and back-end collaboration. Look for example at Stad.nl, a shared platform for numerous small webshops. For them, back-end collaboration is now just a matter of time. Or consider all the webshops that are already ordering online and collecting from a store, or vice versa. In the Dinalog project, I am investigating the opportunities for companies in this area. So far, activity is limited. The problem is that many retailers have outsourced their online logistics or have set up a separate operation with separate inventory. Stock that’s allocated for the webshop will never make it into the shops, and an item that’s already in a store will never be sold through the webshop". 

What are the possibilities of horizontal collaboration?

"Take an item that you’re planning to phase out. Imagine that you’ve sold all the stock in your DC but that you still have one piece lying around in one of your stores. What do you do if someone wants to order the item through your webshop? Do you re-order from your supplier, or do you arrange for the customer to be sent the item that’s in your store? I’m not aware of any webshops that currently check availability of the item both in the warehouse and in their stores". 

Do you want to know how Retailers Scapino, Hema and Hunkemöller manage e-fulfilment. Download the complete article below.

SCM article e-fulfilment

Topics: Supply Chain Trends

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