Supply and demand

The era of the “push” supply chain, where retailers do their best to determine consumer demand well ahead of time and offer a select assortment, is ending. E-commerce platforms that offer a nearly limitless supply of inventory, along with a high degree of digital customization, have changed consumer expectations across all channels.

Even in brick-and-mortar stores, consumers now expect to be able to “pull” the items they want, when and where they want them. If a product is out of stock, consumers expect it to be fulfilled from another store or a warehouse. Consumers also do not differentiate among shopping channels, meaning features like picking up online orders in stores are now a “must have” instead of a “nice extra.”



Here are two retailers that are working to transition to a demand-driven supply chain.



Lowe’s: Lowe’s Companies Inc. is among the first users of an omnichannel fulfillment solution that is being jointly developed by JDA Software Group Inc. and IBM. The application combines JDA intelligent fulfillment and labor productivity solutions with IBM Commerce and order management technology.



Lowe’s is employing the fulfillment tool to create an omnichannel and transparent supply chain by synchronizing comprehensive order capture and order management with precision retail planning, efficient labor productivity and intelligent fulfillment.



By applying knowledge of the retailer’s inventory planning and allocation during order processing, the combined solution helps resolve such issues as in-store pickup of online orders and fulfilling orders from alternate store locations in the background, in real time.



“[Lowe’s is enabled] to deliver exceptional omnichannel fulfillment services, which gives our customers more flexible options to shop with us,” said Robin Bornkamp, Lowe’s VP inventory and demand planning.



Home Hardware: Canada’s Home Hardware chain has tapped Shopatron to complete an implementation of an in-store pickup platform. Through Shopatron’s e-commerce fulfillment platform for in-store pickup, Home Hardware customers can order online for same-day in-store pickup, or have products shipped directly to a local Home Hardware store or building center location for local pickup. The retailer completed a national rollout to its stores across all provinces in 2014 and is considering an expansion to ship-to-home capabilities.



“The addition of in-store pickup e-commerce at Home Hardware has been a tremendous success,” said Jack Baillie, director of marketing at Home Hardware. “The strong majority of stores are reporting growth in new customers and frequency of returning customers. We are seeing in-store- pickup customer demand expanding from standard merchandise to include niche/specialty products not normally stocked and sold at local stores.”



Similarities: There are a few similarities between Lowe’s and Home Hardware’s efforts to align supply chain with consumer demand. First, it is no coincidence that two DIY/hardware retailers are among the pioneers in this area. This space has fewer overall SKUs than many other retail verticals, as there is less variation in factors such as size and color, making it easier to track inventory in real time.



The relative lack of SKU variety also makes DIY/hardware an excellent area for in-store pickup of online orders, as there is less need to see, touch and feel items before purchase.



In addition, both Lowe’s and Home Hardware are using demand-driven supply chain as a pillar of store-centric omnichannel retailing. Increased customer control of product availability is being used as a mechanism to drive traffic to the store, which offers opportunity for incremental and add-on sales no other channel can deliver.