Top 5 Ways to Ensure Success in Your Endless Aisle Program
By Steve Norris, Director Supply Chain Collaboration, TrueCommerce, Inc.
In today’s omni-channel retail environment, savvy customers will quickly find the item they want somewhere else if it’s not at your store. According to Forrester, about 10% of retail store sales are lost due to stockouts.
To give shoppers more options and keep more of those sales, retailers are employing endless aisle strategies. By drop-shipping products direct to consumers through a network of vendors, you can appear to always have a potentially huge range of products “in stock.” Endless aisle sales are growing, and currently represent somewhere between 1% and 10% of store revenue for brands like Macy’s and Home Depot with proven endless aisle programs.
But building a successful endless aisle program is an elusive goal for many retailers. Offering a greater product assortment means managing more vendors and more data. That can easily lead to inconsistencies, errors, inability to keep brand promises, and an overall unsatisfying shopping experience.
How can you ensure your endless aisle doesn’t turn into an endless hassle? Here are the top five approaches that lead to success.
One: Establish a clear and consistent supplier onboarding playbook
Hands down, the key to a successful endless aisle program is strong supplier relationships. You need to communicate efficiently and consistently with suppliers, ideally through automated means. Moreover, you need to integrate suppliers’ supply chain systems with your own, so you can access their inventory data in real-time and also receive documents directly into your accounting or ERP system.
That all starts with supplier onboarding, which includes outreach, facilitation and management of the relationship along with testing and monitoring message flows, validating data and training staff. It further includes setting clear expectations for things like inventory management capability and shipping efficiency. Consistent onboarding also helps ensure alignment in critical areas like service level agreements (SLAs), mapping product data attributes and meeting requirements for branded packaging.
Upfront consistency ultimately reduces the chance of errors and inconsistencies that impact consumers, while helping to scale an endless aisle program as you add more vendors.
Note that consistency doesn’t necessarily mean “one size fits all” across your many vendors, large and small. Instead, you need flexible processes to accommodate vendors’ differing technology capabilities while landing data and documents in the right places and formats on your end. Offering vendors a portal where they can easily enter invoices electronically, which are then converted to EDI documents and imported directly into your ERP system is an example.
Two: Create a centralized repository for all supplier communications
To track and update drop-ship order, fulfillment and inventory status across multiple sales channels and multiple vendors, it makes sense to manage supplier communications from a central point. Otherwise you’ll be looking for data in different places depending on who sent it, and that’s a juggling act that just won’t scale.
For example, some vendors can invoice you using electronic data interchange (EDI), while others want to send PDF documents via email and still others might want to use Bill.com or mail you a paper invoice. Plus you’ve got to send each vendor a PO, get a PO acknowledgement back, and so on.
Does the data on those documents match up? If you have multiple communication repositories, it becomes a lot harder to answer those basic questions.
Three: Receive timely notifications when suppliers are delayed, out of stock, and/or out of compliance
When you undertake drop-shipping, you entrust your brand reputation to the supplier that is responsible for fulfilling the order. Therefore, you need to know right away if an order is delayed, the supplier doesn’t have the product in stock after all, or some other aspect of the transaction is out of compliance (e.g., the invoice data is incomplete or doesn’t match the PO).
Getting an alert the minute something goes wrong is the first step in ensuring that negative customer experiences are minimized. It’s also a key support for supplier performance measurement and scorecarding. Conversely, if you aren’t alerted when something goes wrong with a drop-shipped order, you’re sure to incur whatever costs and reputational damage follow.
Four: Gain better visibility into supplier inventory levels
A lack of visibility into suppliers’ inventory levels pretty much guarantees inventory management issues that will cost you sales and reduce customer satisfaction and retention. Given today’s high consumer expectations for your omni-channel fulfillment performance, it’s critical to have an automated way to accurately exchange or replicate inventory data with suppliers in near real-time, both at regular intervals and on-demand.
You can accomplish this by exchanging documents (e.g., the EDI 846 Inventory Inquiry) or by direct integration with suppliers’ inventory management platforms. Of course, the data you receive will be only as good as the suppliers’ awareness of their own inventory positions. This is another reason why getting to know suppliers’ capabilities and setting clear performance expectations at the start of onboarding is important.
Five: Decrease/eliminate manual touch points
What’s the status of that order? When will it ship and when will it arrive? The last thing your company needs is to lose time and money trying to answer questions like those in frustrating runarounds with suppliers over fax, phone and/or email.
Processes based on manual touch points are inherently inconsistent (if not downright chaotic), don’t scale and lead to errors and poor customer experiences. To handle a growing volume of supplier communications without adding staff, you need to automate all possible aspects of your endless aisle program. That includes document exchanges, business process controls, alerts and getting data in and out of different applications.
Ultimately, a successful endless aisle program means digitizing your supply chain so that all participants can share key data at high velocity to serve the end customer. With appropriate communication and automation, your supplier community will become a source of competitive advantage that drives more sales, greater customer loyalty and improved operational efficiency.
Steve Norris, Director Supply Chain Collaboration, TrueCommerce, Inc.
- 16+ years of Supply Chain Management Solutions | TrueCommerce
- Certified Project Management Professional
- Supply Chain Collaboration Master