Micro-fulfilment in store! – Supply Chain Game Changer™

Decades ago, a customer could call their local grocery store and order the goods they wanted for either store pickup or home delivery. This order fulfillment option had been adopted by some in previous decades. However, this micro-fulfillment has only become a more ubiquitous and dominant option because of the pandemic, which has shut down or curtailed traditional in-store retail.

Last mile shipping and in-store pickup have been known for some time, but there were pre-pandemic reasons that prevented their adoption.

Let’s take a closer look at in-store micro-fulfillment.

An experience

With the overwhelming tsunami of Amazon’s presence sweeping through virtually every type of retail business, it’s been important for businesses to seek every opportunity to compete against this behemoth.

Amazon has distribution centers throughout, allowing it to offer same-day delivery service in most major urban centers. Next day delivery is available to even wider geographical circles.

So, to compete with Amazon, companies must offer equivalent capabilities, a unique offering, or some other blue-ocean strategy. Most companies cannot mimic the distribution center footprint set up by Amazon. But brick-and-mortar retailers have one capability they can use to their advantage, and that’s the physical footprint of their retail stores.

It was in this environment that I found myself in retail. Amazon’s domineering presence was emerging. They had more geographically dispersed distribution centers than we ever could. They went to market with fast delivery options that we couldn’t possibly match with a limited, centralized distribution center infrastructure. We needed a competitive last mile delivery strategy?

As I thought about how we would compete in this situation, I remembered that we have over 250 brick-and-mortar stores across the country. While they didn’t have the endless distribution center inventory, each store had on-site inventory levels that typically covered 80-90% of a given customer’s typical needs. This broad footprint and inventory coverage was actually better than anything Amazon could offer if only we could leverage this structure.

If we could go to market with a “ship from store” or “pick up in store” service offering, we could ship most of our product offering faster than Amazon anywhere. The stores already had the processes and systems in place to receive, store and dispense goods. We only had to connect the branches to our online order management system. This could be a profound go-to-market game changer for us.

I presented the situation and strategy to the leadership team, including the CEO and the Head of Retail Operations. I expected the solution to gain wide acceptance with its intuitive benefits to fight our competition. But the answer I received was exactly the opposite. The Head of Retail Operations was skeptical at best, and the CEO agreed.

They were concerned about the amount of extra workload being placed on store staff. Their guess was that the extra workload would result in higher costs and workloads at the busiest times of the day. As opposed to how to make it work, her short-sightedness stopped the strategy.

Over time, Amazon continued to expand its distribution center to create a competitive gap that the company couldn’t overcome without this strategy. That is, until the pandemic.

Like many businesses, the company has been forced to take action due to pandemic-related lockdowns and closures. If it was going to keep doing business in this environment at all, it had to use this ability. It quickly set up in-store delivery, in-store pickup, and curbside pickup functionality. Necessity, actually survival, tore the company out of its indolence and antiquated thinking.

Not only has this new offering allowed much of the company to remain profitable, it has allowed the company to meet customer needs with a new, improved service offering that has made it much more competitive than it has been in many, many years.

Micro fulfillment considerations and next steps

Retail executives’ short-sightedness served to block changes that would have been in the interests of the company. It would have given them a huge advantage over their competition, driving growth and profitability.

But as with many changes and innovations, there are those who resist change despite the projected benefits. You have to deal with it and not shy away from this negative reaction. Whether their concerns are real, perceived, or fabricated, they need to be understood, addressed, and addressed.

So, what concerns need to be addressed to establish a viable and well-functioning micro-fulfillment operation in store:

  1. Seamless system connectivity between the order management system and the in-store order fulfillment system
  2. Workload levels and planning associated with staffing solutions and procedures
  3. Robustness and training of business processes
  4. Customer-friendly order pickup features (e.g. online notification, curbside pickup signage, in-store pickup lockers, etc.)
  5. Financial management system, tracking and reporting
  6. Prioritizing employee workload and incentives
  7. Customer Experience Training
  8. Inventory placement to support increased in-store orders, including rapid replenishment mechanisms
  9. Forecasting and planning optimization considering demand and fulfillment of traditional and online in-store orders
  10. Prices, discounts and sales synchronization between store and online channels

All of these points are real concerns that need to be addressed. When these issues aren’t properly managed, they lead to disastrous results and detrimental, irreversible customer experiences.

In addition, the blockers and naysayers can come out with full force. There is no alternative but to address their concerns, whether rational or not, as they can slow down your project and jeopardize the survival of your business.

Change leadership paired with an appropriate change management workstream are an essential part of successfully introducing a micro-fulfillment solution into your retail channels.

Originally published May 11, 2021.

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