In the quest for perfect last-mile delivery, retailers often overlook a critical factor: the first mile.
While discussions around optimal replenishment and streamlined fulfillment are gaining traction, the crucial link between the two — ensuring inventory is optimally located for that final leg — remains underexplored. This connection is essential for meeting evolving consumer expectations around speed, convenience and sustainability. This is especially true with shoppers demanding ultimate agility at the lowest possible price, forcing retailers to consider diverse fulfillment options like click and collect, ship from store, micro-fulfillment centers, and various logistics models.
However, these strategies can only succeed if inventory is already close to where demand truly lies. Optimized inventory planning, therefore, means prioritizing the last mile first. This is where a robust Order Management System (OMS) becomes paramount.
To help you perfect last mile delivery, we’ve rounded up five key considerations for achieving inventory optimization with your OMS.
1. Location, location, location: aligning demand and fulfillment
At present there is a split between how demand and fulfillment locations are measured. For example, if you’re a fashion retailer with your stock of summer clothing located in a region that is expecting rain for the next day, while demand is actually coming from hundreds of miles away in the middle of a heatwave, you may have planned overall replenishment effectively, but speedy fulfillment will be a challenge.
The way retailers are currently using siloed planning data to replenish and drive inventory placement is going against the grain of convenience for the customer. Adapting to real-time events and resultant demand hotspots, in real time, is likely to be too late.
Instead, an OMS integrates anticipated surges in demand into initial inventory placement planning through a combination of data analysis, forecasting and flexible inventory allocation. Rather than reacting to demand, OMS uses intelligent forecasts and scenario planning to provide a proactive approach, reducing delays and maximizing customer satisfaction by ensuring stock is available where and when demand is expected to surge.
2. “Speed and convenience” are more than just buzzwords
It sounds obvious, but it’s worth banging the drum one more time for those who think they already have a better grasp on consumer demand in the omni-channel era. The adoption of artificial intelligence (AI) tools to better respond to consumer demand is a step change, for sure, but the interconnectivity of supply chain solutions, across planning and order management, is where decision makers should now be looking.
Note: Convenience doesn’t just mean “as quick as you can.” Sometimes, it might mean: “right now,” and you can only meet that demand if your inventory is nearby.
3. The “right now” requirement
If replenishment is being planned according to where demand really is and where optimum fulfillment can be achieved, you will naturally improve delivery speed. But what this improved planning also buys you is a level of flexibility to respond immediately to customer needs.
Customer situations can change according to the weather, regional events, spontaneous decisions, unforeseen breakages or losses. If you’re constantly fulfilling from rigid and static points of replenishment, you’re not just tarnishing cost and environmental efficiencies — you’re missing the convenience boat altogether.
Getting inventory in the right place from minute one is cheaper, more sustainable and allows for the “right now” purchases that customers are increasingly seeking. Connecting planning with OMS aligns last-mile fulfillment and improved inventory placement with real-time delivery capacities, markdown objectives and optimal stock utilization
4. Be more “holis-tech"
Typically, retailers are looking at order management and the orchestration of fulfillment options in one column; and planning as a second, disconnected function.
Left out of the equation altogether is inventory placement, which is not currently seen as part of a traditional order management platform. What is critical moving forward, is a more holistic view of tech infrastructure, to bring fulfillment trends into the initial inventory planning process.
To simplify this notion, think of future order management as three legs of a tripod, peaking together at the top:
- Replenishment of inventory in the right location
- Orchestrating the correct fulfillment location
- Executing that fulfillment with the requisite scope of choice and logistics partners in tow
This integrated approach is the hallmark of a modern OMS.
