Blog | Nov 22, 2021

Managing Successful Fulfillment Execution to the Last Mile

Managing Successful Fulfillment Execution to the Last Mile

Fulfillment may come last in the customer’s order and delivery process, but it comes first in importance. Failure to fulfill orders creates real frustration and disappointment for customers, endangers loyalty and introduces damaging reputational risks.

In contrast, successful execution enables excellence in fulfillment operations across a retailer’s physical and digital assets by using real-time analysis and reconfiguration of inventory, labor and processes. Inventory is optimized, commerce experiences are unified and customer satisfaction increases. Profitability improves for the business overall.

Top of the agenda

Excellence in fulfillment execution has become a top priority for retailers. Driving factors include the significant rise in e-commerce during the last 18 months and the increase in consumer expectations for more reliable experiences. However, just 18% of organizations report fulfillment accuracy rates of 95% or better, according to a recent Gartner ‘last mile’ survey.

The company writes: “Last-mile order fulfillment is defined as the process by which a consumer and the products they order come together. That includes customer collection, delivery options and customer expectations regarding service and experience. Logistics leaders need to view and structure last-mile operations as a micro end-to-end supply chain process that is responsible for the success or failure of their customer service experience.”

Gartner’s data further indicates that, for several Tier 1 retailers, more than half of online orders are now handled by a nearby store through click-and-collect or store fulfillment, which entails shipping direct from the store.

Adopting new formats

Wherever the goods come from, customers want to search, transact, acquire and consume products and services safely and easily across a retailer’s entire ecosystem. To create this fluid experience for customers while simultaneously managing costs, retailers need strong store teams and robust technology in place.

Retailers should expect long-lasting post-pandemic demands for greater online purchasing and prompt delivery. Many retailers are working to remodel physical locations by reducing selling footprints, alongside increased on-site fulfillment and curbside capabilities. For customers, this improves the online shopping experience by giving them confidence they’ll get what they need, when they need it, via a channel most convenient to them.

The impetus for retailers to reassess and redesign their physical locations will see them evaluating and incorporating new format types that allow for fluid execution and a truly unified commerce model. These include buy online, pickup in store (BOPIS), buy online, pickup curbside (BOPAC) and buy online return in store (BORIS) services.

Gartner’s 2020 research shows the inability to accommodate special requests and lack of agility to react to short-notice requests as top barriers to optimal customer fulfillment. Carefully balanced human-machine teams and intelligent automation applied within these new formats are likely to hold the key to tackling some of these issues.

Investing in the future

US group Target is an example of a retailer that’s built on its strengths in fulfillment execution. More than 95% of the company’s sales in the third quarter of 2020 were fulfilled by Target stores, for example. The retailer continued making improvements throughout 2020, building on its 2019 store investments and car parking facility enhancements to support fulfillment.

Among these improvements was an accelerating curbside grocery pickup service, which led Target to be the first retailer to offer curbside pickups in all 50 states of the USA, encompassing more than 1,750 locations.

Target also doubled the number of parking spaces and store associates dedicated to curbside pickup, and rolled out same-day and one-hour delivery options via Shipt, which is available from Target.com and the Target app. Shoppers can now check Target’s website to see if there’s a queue outside of their store and reserve a spot ahead of a visit.

Next steps in fulfillment execution

The first stage for many retailers is to identify all the data requirements to support complex end-to-end, cross-channel processes such as BOPIS, BOPAC and BORIS. Knowing what’s needed makes it possible to evaluate the ecosystem of integrated solutions required to support increased online demand.

A second stage is to optimize customer order fulfillment by improving real-time inventory visibility. This includes improving the management of on-hand inventory, avoiding dead inventory and reducing waste by leveraging IoT technologies such as RFID and smart shelving.

Changes introduced and accelerated by the pandemic, including the wider adoption of online shopping, curbside pickups and store fulfillment will not disappear as retail patterns return to normalcy. Nor will the higher expectations from customers for a seamless, convenient and predictable shopping experience go away.

Now is the time for retailers that haven’t already done so to consider how they can adapt their operations to the new realities of fulfillment execution, how technology can support new fulfillment models and how human teams can collaborate with digital workers to meet the last-mile needs of customers.

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