205: Understanding Fulfillment Models – The Buyer`s

205: Understanding Fulfillment
Models – The Buyer’s/Seller’s
Perspective
Bill Gratke, Lamps Plus
Tom McGraw, Gates Corporation
June 3, 2015
TODAY’S AGENDA
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Omni-Channel Defined
Gates Corporation Background
Lamps Plus/Pacific Coast Lighting Background
Fulfillment Models
Fulfillment Challenges
Questions
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OMNI-CHANNEL DEFINED
Single Channel
Multi-Channel
Cross-Channel
Omni-Channel
• Customer reaches a
retailer that only offers
a single shopping
platform. (Store only,
Web Only, Catalog
Only)
• Customer sees
multiple independent
locations to do
business with a
retailer.
• Retailer’s channels
operate independently
• Customer sees
multiple touch points
as the same brand
• Retailer has a
unified view of
customer but operates
in silos
• Customer has a
holistic brand
experience
• Retailer strategically
leverages a unified view
of the customer
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GATES BACKGROUND
• Gates Corporation is a 100+ year old company* with 106 locations
globally and over 14,000 employees
• One of the largest players in the $300 billion automotive aftermarket
industry, maintaining over 203,000 GTINs.
• Major retail customers are NAPA, O’Reilly, CARQUEST/Advance Auto.
• Customers order using EDI, fax, phone or 2 web sites.
• Orders are processed and fulfilled at 4 major sites in the US using
Oracle Order Entry system.
• Industry typically uses electronic catalog services and PIES data to
distribute GTINS and product information
• GTIN is the primary identifier in the industry, but not always used at POS
because of electronic catalog features.
* = multi-channel or cross-channel
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LAMPS PLUS/PACIFIC COAST LIGHTING
• Established in 1976 in Los Angeles
• Brands – Kathy Ireland and 22 internal brands
• Multiple Channels
– Retail
• 40 Stores – 7 States
• Catalog
• Online
– LampsPlus.com, 55DowningStreet.com,
EuroStyleLighting.com, LampsPlusOpenBox.com
– Wholesale
• Pacific Coast Lighting
– Sells to other retailers
• Pacific Coast Contract Lighting
– Hospitality Division
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LAMPS PLUS/PACIFIC COAST LIGHTING
• Supported by one central order management system for all
businesses
• Fulfillment
– Distribution Center 800,000 Square Feet Redlands, CA
• Retail Inventory
• Wholesale Inventory
– 350 Vendors Supported by:
• 850/860/855 – PO related documents
• 846 – Inventory
• 832 – Catalog
• 856 – ASN
– Stores
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OMNI-CHANNEL FULFILLMENT MANTRA
• Our customer has the power!!!
– She buys:
• what she wants
• where she wants
• when she wants
– Our challenge
• We need to:
– have access to what she wants
– deliver the product anywhere she wants
– pick up or deliver the product when she wants
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FULFILLMENT MODELS
• Past
– Store
– Catalog
• Present
– Ship to home from factories, vendors, wholesalers, e-tailers,
retailers, etc.
– Pick up from stores
– Pick up from lockers
• Future
– Drones
– 3D Printers
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FIND THE RIGHT MODEL FOR THE SHIPMENT
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FIND THE RIGHT MODEL FOR THE SHIPMENT
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KEYS TO ECOMMERCE FULFILLMENT
SUCCESS
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Determining e-commerce requirements
Managing items and reporting inventory position
Managing e-commerce orders and order changes
Streamlining drop shipping and
transportation
• Simplifying, managing or automating
returns, order tracking and vendor scorecards
• Change is constant!!!
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FULFILLMENT CHALLENGES
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Collaboration
Inventory – Product Information and Feeds
Purchase Orders
Calculate Optimum Fulfillment Origin
Consumer Ready Merchandise
Payment processing
Return Process
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COLLABORATION
• Challenges
– Many different partners to connect
• DC, Supplier, Store, Transportation Companies, Factory,
software companies, 3PL’s, etc.
• Standards are needed!!!!
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INVENTORY – INFORMATION AND FEEDS
• Catalog and Inventory Feeds
– Total visibility and minimum maintenance level of stock: at
Suppliers, In transit, at DC’s & in Stores
– Incorrect Information
– Changes/Updates/Discontinued
• Accuracy
– Real-time shipment based inventory & Method of updating
available stock
– Out of Stocks
– Available vs Total Inventory
• Available inventory by warehouse or vendor site
• Available inventory by bin-stock item or parent item that can be
made ‘store-ready’.
• Items ordered using EDI that are not available are handled manually
by a customer-service specialist.
• Inventory does not often reflect returns.
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PURCHASE ORDER
• Challenges
– Many small orders
– Multiple ship to addresses
– Customization
– Personalization
– Shipping and handling fees
– Corrections
– Cancellations
– Confirmations
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CALCULATE OPTIMUM FULFILLMENT STRATEGY
• Cost to deliver each SKU & Means/Methods to determine
ideal origin(s)
• Transportation Methods
• Capabilities at Supplier, DC’s & Retail locations
• Web users have a default shipping method that can be overridden when order is submitted and can select nearest
vendor.
• Same day delivery not available thru our DCs, but some local
vendors can provide.
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CONSUMER-READY MERCHANDISE
• Branding
– Packing Labels, Cartons, Packing Slips, Return
Documentation, Coordinating Items, Carrier Labels
– Documents developed by IT, based on customer
requirements and printed using WMS at time of
shipment, selected by shipping location, not
customer.
– Shipping documents requirements are passed with
order data to partner sites that do not use standard
WMS.
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CONSUMER-READY MERCHANDISE
Value Added Services (VAS)
• Private Labels, Holiday Messages, Gift Cards, Product
Literature
• Re-labeling and re-branding
• Thousands of “store-ready” items are “parents” to otherbranded “child” items.
• Managed by order number and internally-developed finishto-order systems based on GTIN-12 scan.
• Applications follow business processes closely so that we
can expand work-force as needed using temps.
• Re-packaging
• Some customers require specific item or over-pack
packaging, determined by finished product SKU.
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GATES CUSTOMER BRANDING 1
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GATES CUSTOMER BRANDING 2
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RETURN PROCESS
• Return Process Challenges
• Different return policies for each retailer and supplier
• Physical Returns
– Customer Returns
• Supplier
• Retailer
• 3rd Party Return Center
– Returns from Retailer/3rd Party Return Center to Supplier
• Electronic Data Exchange
– Request for a return
– Return Authorization
– Credit for returns
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AFTER FULFILLMENT
• Expeditious Collection of Delivery Charges
– Freight Audit
• Invoice
– Many small invoices
• Remittance
– Many small invoices/documents reported on the voucher
• Debit/Credit
– Adjustments
– Rebates
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AFTER FULFILLMENT
• Order performance
– Designed to measure KPI’s over time (on time delivery, order
changes, fill rates, data quality, etc.)
– Across dimensions (product, vendor)
– Across levels (SKU, product, category)
• DC/Store/Supplier Scorecard
– Timely shipments
– Fill rate performance
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CONCLUSION
• Fulfillment is a competitive environment and the web forces us
to compete!
• It is all about the customer!!!
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QUESTIONS
• Tom McGraw
– Tom.McGraw@gates.com
• Bill Gratke
– bgratke@lampsplus.com
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