The world is in the midst of a global supply chain crisis. In fact, hundreds of container ships sit outside ports waiting to be unloaded but can’t dock due to COVID-19 restrictions and the ongoing labor shortage. That’s more than 500,000 containers full of products that are sitting idle.
Domestic transportation is also facing a perfect storm of chaos. Truck utilization in the United States sits at 100%, yet a driver shortage continues to grow — up to a deficit of approximately 25,000 drivers — making it extremely hard for retailers to find the capacity needed to receive and ship their products.
Simply put, the logistics industry is being hit on all sides. In addition, consumers are spending record numbers in ecommerce and retailers are struggling to manage high volumes and find enough labor to fulfill the orders.
Both brands and consumers are seeing longer lead times, higher freight costs, delayed delivery timelines, and a friction-filled experience. But, while brands can’t control their supply chain completely, they can implement technology solutions to lessen the blow of the supply chain crisis and offer creative solutions to adapt their customer experience.
Here’s how the right order management system (OMS) benefits retail brands through manufacturing and distribution hiccups and emergencies.
4 Ways an OMS Helps Retailers During Supply Chain Disturbances
1. Keeps Fulfillment Strategies Flexible
Capacity constraints at one location can quickly turn into fulfillment opportunities at another with the right strategy (and fulfillment routing technology) in place. If there’s one thing the COVID-19 pandemic taught retailers, it’s that fulfillment can (and should!) take place wherever necessary — including stores, pop-up locations, and distribution centers.
Having a flexible, omnichannel fulfillment strategy reduces the burden on overwhelmed or closed locations. As an added benefit, brands can control profitability by routing orders based on proximity and product type (i.e. big and bulky). Even during high-volume periods, an OMS identifies and routes orders based on the highest-margin or cross-channel fulfillment path — turning even complex paths into happy paths.
2. Reduces Strain on Overwhelmed Fulfillment Centers
As capacity to fulfill orders ebbs and flows at different locations, updating capacity rules on a per-location basis can prevent fulfillment centers from becoming overwhelmed. Capacity configurations are helpful during high-volume seasons as well as when warehouses face labor shortages.
For example, if Distribution Center A’s capacity is set to 100 for the day, after 100 orders have been routed there, smart fulfillment routing will pick the next best location for the 101st order to be routed based on other rules (like proximity). Proactively implementing capacity limits will automatically protect both stores and fulfillment centers from delaying orders or fulfilling orders that won’t meet customer expectations.
3. Accepts Preorders & Backorders
Neither brands nor consumers benefit from shipping delays. However, open communication about any type of delay helps level set expectations and reduce potential frustration.
As a creative alternative during delays, brands are giving customers the option to preorder their favorite items at a future date. This option not only helps keep customers in the know about when they can expect their next order, it also helps retailers plan for future inventory volume and predict sales outcomes.
With the right OMS, retailers can automate all the payment transactions, customer communication, and inventory allocation that comes with preorders and backorders. This lessens operational distractions and keeps teams focused on delighting their customers.
4. Bulk Cancel Items
Imagine a brand is facing a raw material shortage and has to cancel all orders containing a particular part (i.e. chip shortage for new vehicles) — including the hundreds of orders that have already been placed. Instead of having the customer service team spend all day manually updating orders one by one, with a single click in their OMS, all items can be updated in bulk to cancelled status on the orders that can’t be fulfilled.
Customers will quickly receive an email if their item won’t be arriving. And the customer service team can focus on serving their customers rather than clicking around in their order management system.
Tips for Handling Peak Season Amid Supply Chain Challenges
Because of supply chain challenges coupled with record-high volumes, many retailers are choosing to extend their peak-shopping windows to create more time to fulfill orders.
Historically, shipping timelines would dictate how long a sale or promotion was available to online orders (i.e. “order by Dec. 14 to get items in time for Christmas”). However, with an omnichannel strategy, brands can take advantage of a wider promotional window by providing alternative fulfillment options to collect last-minute sales — so any supply chain hiccups are minimized downstream.
Here are a few practical tips for handling peak seasons amid the current supply chain situation:
- Plan for the worst, hope for the best.
- Leverage a “system agnostic” order management system to streamline order fulfillment and strengthen other technology systems and partnerships (i.e. 3PLs).
- Display estimated shipping dates on the storefront to set realistic expectations for delivery times.
- Expose inventory availability for fast-moving products so consumers can see what is in stock.
- Leverage preorders and backorders to recover potential lost sales.
- Offer omnichannel pick-up methods such as BOPIS (buy online pickup in store), curbside pickup, and ship-to-store to extend shipping deadlines so retailers can capitalize on revenue up to the last day of the promotion.
- Use retail stores as micro-distribution centers to fulfill (including printing shipping labels in-house) and ship local orders to expedite shipping times and leverage in-store inventory.
- Automate the returns and reverse logistics processes to get products back on the shelves faster — while also freeing up customer service teams.
Optimizing the fulfillment process (including customer communication) despite circumstances outside of your control is critical for brands — especially during high-volume seasons. A comprehensive order management system gives brands the ability to adapt to these changing environments, prevent internal frustration, mitigate financial loss, and ultimately curate the ideal customer experience.