Why a Flexible and Robust Order Management System is Key for Post-Pandemic Retail Survival

The negative effect of the COVID-19 pandemic on global supply chains and the retail sector has been colossal.  This, in turn, has had a major impact on the global economy.  According to the leading insight company, Global Data, the pandemic will reduce global retail spending by over $500 billion in 2020. 

There is, however, blue sky on the horizon for the retail sector thanks to companies that adapt to the changes in consumer behaviour and build supply chain resilience.  Discover in this blog how retailers can survive in the new world of post-pandemic commerce.

Boom & Bust
There’s no doubt that social isolation has resulted in shoppers opting to spend even more time buying online.  Deloitte reported that global eCommerce growth, at the beginning of May, had increased by 68% to 47% of total retail sales.  Sadly, however, this didn’t fill the revenue gap caused by the shortage of foot-fall.  Proof of this has been the recent announcements of the major retailers collapsing into administration such as TM Lewin, Cath Kidson, Laura Ashley and Victoria’s Secret.  

Gearing up the Supply Chain

Those retailers that have survived are now opening up their stores again … the digital channel is turning into omni-channel once more and the supply chain is gearing up for the increase in demand.  The challenge is, however, COVID-19 has had a catastrophic effect on every tier in the supply chain resulting in unavailability of products both in store and online.   

Post-pandemic Retail Challenges

Just to add to the chaos, over the past few months the massive increase in online sales has also resulted in an exponential increase in returns.  In addition, retailers are struggling with the fact that many goods that are either tried on or tested – and not purchased – now have to be placed in quarantine for a minimum of three days in case they’re contaminated.  How can retailers cope with keeping tabs on the large amount of unavailable stock?  And how can they cope with not knowing whether they have sufficient stock to return to store or the distribution centre to fulfil new demand? 

To add to this, retailers also have the challenge of a large amount of stock that wasn’t sold in the Spring due to the pandemic.  They need to make the decision – do they sell it off cheaply, do they mothball?  Whichever option is considered, a lot of valuable space will be used up in both their warehouses and stock-rooms when it would be more lucrative to store higher-priced, new and more popular goods.   

Of course, mothballing hasn’t always been commercially viable.  It’s not earning any extra value, it costs money to store stock and there’s even the risk that it could be destroyed.   In the extreme recent circumstances, however, this has been an option seriously considered by the retailers – especially when, according to Forbes, many organisations are facing 70-80% of their inventory being marked down below cost, just to get it out of stores. 

Worryingly, many consumers haven’t even returned their unwanted goods, yet, as many retailers extended their returns policy periods.  Retailers are drawing a deep breath as there’s bound to be a spike of returns as the deadlines approach which will create even greater chaos in the supply chain.  Not only will they need to deal with quarantining the returned items, but they’ll need to ensure they stick to their consumer promises to replace the goods or set up refunds within the time limit.  The last thing they’ll want to do is upset their customers who could kick up a fuss on social media and also turn to competitors. 

Preparation & Contingency for Future Disruption
These challenges have made retailers realise that they need to be better prepared and more resilient for any future disruption and protect future crisis loyalty.   Retailers can’t afford to lose customers due to poor availability across all their channels, as well as a poor returns and refunding set-up.  They need to ensure that they set up strong contingency plans and have operational flexibility that protects them from any potentially harmful trading effects.  Only a flexible and robust omni-channel Order Management System (OMS) can address these post-pandemic requirements. 

Managing Complex Customer Fulfilment Requirements

 The pandemic hasn’t only increased online sales, but it has also increased the number of retail channels including click and collect, ‘kerbside pick-up’, drop shipping and direct home deliveries. Amid increased competitive pressure and growing customer demand, fulfilling orders across multiple customer engagement channels has become increasingly complex.  A flexible and robust OMS can help retailers manage these complexities, allowing their organisations to improve supply chain efficiencies and business responsiveness by cost-effectively orchestrating product and service fulfilment across the extended enterprise. 

In order to survive, retailers need robust, omni-channel order management functionality with the ability to intelligently broker orders across many disparate systems, provide a complete view of inventory across the supply chain and help them make changes to business processes on the fly. Through the use of an intelligent sourcing engine, a central order repository, and the aggregation of global inventory, OMS can help retailers increase revenue and become world class by cost-effectively orchestrating end-to-end order and service fulfilment across the extended enterprise. More than ever, customers are now demanding a unified shopping experience, creating a far more complex supply chain.  With the recent introduction of even more customer fulfilment requirements, plus new competitive pressure, retailers are forced to incorporate new processes that support holistic omni-channel visibility and customer order fulfilment.  

As orders are fulfilled across multiple internal entities as well as external partners, it becomes very difficult to efficiently manage all the processes needed to provide a uniform customer experience. Many retailers still rely on inefficient manual processes to complete transactions that cross channels. Simultaneously, a lack of inventory visibility across all locations can result in exceptionally high stock-outs, as well as inefficient inventory utilisation.  An advanced OMS can address the distinct concerns of today’s extensive order and fulfilment processes – such as one that has an intelligent sourcing engine that can look across all locations, including external partners, to determine the best location to fulfil each line on the order.  The OMS can identify the applicable fulfilment process for each order, and seamlessly splits and/or consolidates order lines and then sequences activities. It brokers documents and requests to the appropriate internal or external fulfilment participants and incorporates user-defined events to effectively track fulfilment activity based upon the distinct conditions of each order line.

Slick Returns Processes and Inventory Utilisation Optimisation
OMS also enables retailers to efficiently manage the returns process. Pre-defined business process flows ensure that returned products are consistently handled in the proper manner and no items are lost or forgotten in the process. This enables retailers to efficiently utilise all inventory, which reduces retailers’ overall inventory costs.  OMS can also give retailers a single comprehensive view of inventory information by aggregating inventory from locations and providing a view of what is available internally as well as at partner locations, what is being supplied, what is in transit, and what the current demand is. This extensive visibility helps ensure that retailers are giving their customers a more accurate promise date for their orders and their inventory is being utilised in the most efficient way. 

Achieving Omni-Channel Excellence

The robust functionality of an OMS can be utilised across all the multiple selling channels, each of which will use an OMS to place or modify orders, determine order status, check inventory availability across locations and manage the returns process. Utilising these channels will allow retailers to provide enhanced cross-channel services to customers and partners, allowing them to begin any type of transaction in any channel, and complete it in another channel. For example, a customer can begin a shopping transaction on a web storefront and complete the transaction with the help of a store employee.  Or, as another example, or they can order items over the phone and return them through the web storefront.   An OMS can help retailers manage the complexities of expansive order fulfilment, allowing retailers to achieve true omnichannel excellence.

A flexible, robust omni-channel OMS is the only solution for retail survival in this new commercial age.   Contact GSOT to find out how, we can simplify the approach to complex order management requirements while delivering powerful consumer experiences.