Retail’s “golden quarter” – the three-month period preceding Christmas every year – is a vital time of year for all retailers. For example: in the USA, the National Retail Federation (NRF) has noted that approximately 19% of annual retail sales occur during November and December, with even higher numbers for gift-associated categories like jewelry.
Making sure that customers' expectations are met during times like these is key, both in stores and online. Sure: during Sales season, customers might be more lenient having just got a great deal - but around Christmas, high levels of frustration can result from missing products or missed deadlines. In this post, we share best practices for retailers to deliver on their promise and better manage their stocks.
To retailers in what we might broadly term ‘the West’, the golden quarter is of such importance that all website development work has likely ceased until, at least January, with code frozen to avoid even the possibility of website downtime. Meanwhile, marketing departments are executing carefully laid plans to deliver the maximum sales possible. By this point in the year, every system already in place needs to be running as optimally as possible.
Aside from monitoring the performance of your website and other systems like a hawk, to make sure nothing in the system is failing, that makes now a good time for managers to pay attention and question themselves: what are we missing? What can we do better next year? And what could possibly be more topical or important than thinking about how, next year, your business executes the “golden quarter” even better than this year?
Depending on the answers, your priorities for next year will change. Here are a few options, and how to improve.
It’s obvious, right? But what’s less obvious is how to achieve that. Order Management Solutions perform this very function: the end-to-end management and execution of customer orders.
Configured to the specific supply chain situation of the company, an OMS will determine the optimal way to fulfill any order. It takes into account costs, lead times, and any other important criteria based on a set of rules depending on the company’s priorities, and adapts in real-time to the capacities of the supply chain.
When a customer prepares their basket on your e-commerce website, the OMS orchestrates the order in real time: where the products are sourced, do the pickers in each location have the capacity to prepare the order, when will the transporters go round… All this, depending on whether it’s a delivery, Click & Collect or any other type of omnichannel journey. This information is then sent to the e-commerce website and displayed to the customer.
Usually, if you promise a 48-hour delivery, your supply chain is organised so that you are always able to provide that service. If, for exceptional reasons, this isn’t the case, you’d want to let your customer know before they order. During peak season, like Christmas, letting them know beforehand that it’ll be a bit longer, while guaranteeing they’ll get their order before December 24th, is likely to be sufficient to make the sale without angering your customer by not delivering on your promise.
Keeping your promise to your customer means making sure the their order is available to them both when they wanted it, and where they wanted it.
You think that an ERP can manage that? Actually, no: an ERP is a great way to plan ahead and to get into the best conditions to have a successful season - but that’s only the first step. The best planning can’t help when an impromptu situation arises that requires real-time flexibility. That’s what an OMS brings to the table: being able to adapt in real-time to incidents like inventory errors, unexpected transport unavailability or sudden HR shortages.
If such a situation does arise, an OMS immediately and automatically reverts to the second-best option for fulfilling the order. It also informs all the stakeholders involved in the process, without the need of human intervention - so no panicked phone calls or anxious customers waiting for news about their order. That gives all orders the best shot at being fulfilled on time.
A positive side-effect is improved margins for a sector in which margins are almost always under pressure, and during that time of year when "fulfill orders at all costs" is a high priority directive. The ROI of an OMS is thus quickly proven.
So, there’s a best practice for you: implement an OMS into your information system. It may not sound like an easy task, but with these kind of projects, an MVP can be done quite quickly, and deployment can be done with a phased approach.
During peak season, limiting the number of missing products or shortages is the best way to maximize conversion and keep your customers satisfied. But more orders means more inventory movement, bringing increased complexity to inventory management. Inevitably, this requires optimal inventory management, ensuring you’re able to adapt to this increased complexity and find the right balance between under- and over-stocking.
The best way to avoid selling an out-of-stock product is to have a reliable real-time inventory management system, to which all other systems are connected and send updates with each sale - whatever the channel. That’s omni-inventory synchronization: a single source of truth for stock levels enabled by real-time visibility of all your inventories, whatever the location. And “real time” is what makes all the difference: you can play with security stock to make room for mistakes or delays in updates, which are part of life; but, without a real-time system, this approach is not viable.
The other side of that same coin is overstocking. If you’re too careful about not displaying products that might be out of stock - or simply didn’t know you had it - you can easily end up with unsold stock which, frustratingly, you could have sold. There are several ways to deal with that.
First, with an inventory management system that provides omni-inventory synchronization, you have a better chance to sell everything you can. Imagine having a customer in one part of the country, asking online for a very specific product that’s not available in their favorite store. With omni-inventory synchronisation, you can offer this product in a timely manner - by sourcing it from one of your warehouses or another store.
Second: we all know that product returns are part of life. This can lead to situations in which a product appears to be out of stock but, actually, inbound returns of that product are due in the upcoming days. An OMS joins up this information, meaning you can make the product available to sell without waiting for the products to be physically returned to stock - always being clear with the customer about when they can expect delivery. Better for a customer to be able to reserve imminently available stock than to expect them to return every day to see if it’s back in stock, or check their email for a “back in stock” notification.
On a similar note, should you realize that you’re going to be unable to meet demand at some point – potentially a huge own-goal – you can quickly adjust the offer to customers. For example: enable a shopper to “pre-order” from the stock yet to arrive; such orders can even be prioritized. This is a proactive approach, both to ensure customer satisfaction and to not losing a sale.
Ambitious plans - but how to implement these best practices? Well, as well as providing optimal order management, an Order Management System also provides everything we’ve mentioned regarding inventory management. It’s actually a core capability of an OMS: it needs complete and real-time visibility of all inventory to be able to provide the flexibility and reactivity we’ve discussed for order fulfillment. One tool to manage both: talk about a Christmas miracle!
Christmas season is one of those moments where stores are apt to be swamped by excited customers. Fulfilling online orders is all very well, but it’s not a good look for your brand if there are out-of-stock products in-store.
Auto-replenishment of in-store stock is a great idea - as is adapting your plans to the activity peak when needed is a must. But even the best auto-replenishment strategy is unlikely to be sufficient if you’re accustomed to using your in-store stock to fulfill online orders, and you don’t plan on pausing or limiting this strategy during peak season. Not only does it increase your risk of shortages in store, it raises your costs: it generates additional replenishment, requiring more preparation, more transportation, etc.
With an OMS, you can implement auto-replenishment (and optimize the source of these replenishments) and set up these specific rules for order fulfillment, helping to find the right balance between sourcing orders from warehouses and stores. This can be done with a high degree of granularity, so you don’t end up with excess stock at the end of a season, while not missing sales online either.
How you respond to any given peak season, stock-related challenge is up to you. But using the right tool, namely an OMS, provides you the flexibility to create tailor-made, precise and advanced strategies for your operations and customer experience during peak season - and allows you to easily implement them. All in all, what an OMS provides is insight that gives you the agility to respond to those challenges and the reliability that operations will go smoothly during these strategically critical sales periods.
Find out more about Kbrw's OMS here.