SCM Fulfillment Methods

Advantages of flow-through fulfillment

- Eliminates the inventory conflicts between store sales and internet sales - No cost of "last mile" transportation - Store level inventory status not required - Returns handled through the retail store

Same day delivery disadvantages

- High transportation cost - Possible impact on store operations - Forces more "each" picks in the DC networks - Requires faster turns between DC and store inventories - Geographic area served limited by DC/store locations

Same day delivery advantages

- Improves retailers "share of wallet" opportunities with select demographics - Gives shoppers more shopping opportunities - Drives more shoppers to retailer web site/stores

Integrated fulfillment means

The retailer operates one distribution network to service both "brick-and-mortar" (retail stores) and "click-and-mortar" (internet site) channels

Dedicated Fulfillment meaning

The retailer operates two separate distribution networks to service retail stores and internet sites

Advantages of integrated fulfillment channels

- Low start-up costs for retailers - Workforce efficiency - Cheaper

Disadvantages of integrated fulfillment

- Order profile changes - Unavailability of product in eaches - "Fast pick" or broken case operation requirements for unit pick (each pick)

Direct store disadvantages

- Possible reduction of inventory visibility of the products to the retailers - Requirements of close collaboration and agreement between manufacturer and retailer

Disadvantages of store fulfillment

- Reduced control and consistency over order fill - conflicts between store and internet over inventories - requirements of real-time visibility to in-store inventories - requirement of stores' space to store and stage products for pickup

Advantages of Store fulfillment

- Short lead time to the customer - Low start-up costs for the retailer - Returns handled through the retail store - Product available in consumer units

Disadvantages of flow-through fulfillment

- Storage space at the store for pickup items - Longer fulfillment lead time

Same day delivery meaning

- Uses store fulfillment model - Probably uses regional inventory pools - Selected geographic areas, specific SKUs

Disadvantages of dedicated fulfillment

- duplicate facilities - duplicate inventory * remember dedicated fulfillment is two separate channels

Store fulfillment meaning

1) The order is placed through the internet site. 2) Order is sent to the nearest retail store where it is picked up 3) Put aside for the customer to pick up or the store can arrange for delivery

Flow-through fulfillment meaning

1) The product is picked and packed at the retailer's distribution center 2) Sent to the store for the customer to pickup or have delivered.

Advantages to dedicated fulfillment

Elimination of most of the disadvantages of integrated fulfillment

Direct store delivery meaning

Involves a manufacturer delivering its product directly to a retailer's stores, bypassing the retailer's distribution network

Direct store advantage

Reduction of inventory in the distribution network

Pool distribution meaning

Small retailers use third party logistics companies for store delivery, allowing them to achieve efficiency of a truckload shipment for the line haul and the effectiveness of allowing stores to receive LTL orders on a regular schedule