There is yet another research study reinforcing the high costs that retailers and their supply chain’s bear in supporting today’s Omni-channel online customer fulfillment requirements. A study conducted by EKN Research in partnership with Aptos, Inc. adds additional data reinforcement of the higher costs and added complexities being driven by today’s Omni-channel requirements.
We raise awareness to this study because EKN describes itself as a boutique research advisory firm catering to the retail, consumer goods and other services industries.
According to this study, retailers spend 18 cents of every dollar of revenue in satisfying current customer expectations related to Omni-channel fulfillment. The study revealed 8 in 10 retailers indicating in increase in order management and fulfillment costs compared to the prior year, with an average year-on-year increase of 5.07 percent.
That finding is consistent with other conducted surveys related to Omni-channel customer fulfillment. As Supply Chain Matters readers are aware, the 2015 holiday period presented retailers with higher parcel transportation and logistics costs since both FedEx and UPS elected to raise shipping and surcharge rates just prior to the beginning of the fourth quarter. Added to these unplanned costs were those associated with trying to support a seamless Omni-channel customer experience with processes and systems that were not originally designed to do so. We recently called reader attention to the third annual PwC Viewpoint study involving 300 retail and consumer goods CEO’s that concluded that less than 20 percent of Retail CEO’s believe that they are fulfilling orders profitably, while the majority of these executives were still attempting to breakdown the organizational silos that were hampering a singular Omni-channel customer fulfillment process.
EKN researchers found that many retailers struggle with inconsistent or undefined workflows for each order type which leads to inconsistencies on order management. An observation in the report indicates:
“In the next 12-24 months, 23% of retailers plan to offer next-day delivery, and same-day shipping is expected to reach 75% saturation. With speed comes complexity. And complexity tends to put severe pressure on the entire organization. In the past, when face with competitive pressures for speed and/or flexibility, too many retailers responded with processes that were thrown together quickly, with an eye to fulfilling customer service expectations and much less regard for scalability, efficacy or cost.”
Further noted were three challenges that are of the highest concern, which include:
- The need to improve order cycle time productivity.
- Alignment of inventory, order and supply chain operations as retailers are forced to be more reactive to quickly changing customer fulfillment needs.
- Broader visibility across order functions and processes because of existing sales channel silos or lack of standardized processes across channels.
More and more of this survey data continues to consistently point to the need for unified leadership, strategies and initiatives related to Omni-channel fulfillment, supply chain response and systems support strategies.