Evaluation of Order Fulfillment Options in Retail Supply Chains

Evaluation of Order Fulfillment Options in Retail Supply Chains Retailers face a major operational challenge in fulfilling online orders while managing their traditional store‐based distribution processes. In this context, the following order fulfillment options available to retailers are considered: store‐facing distribution centers (DCs), dedicated order fulfillment facilities (DTC), retail stores, and direct‐fill by vendors. A framework for the online order fulfillment process is developed to evaluate these options using operational and financial measures collected from a large U.S. retailer. The study presents managerial insights regarding each fulfillment option and identifies operational and cost thresholds where a particular fulfillment option would be preferred. The results show that due to better order fulfillment efficiency, distribution facilities (DC and DTC) out‐perform fulfillment from stores and vendors. However, retailers can leverage their network of stores to overcome the shortfall in store‐based fulfillment costs by focusing on the order delivery process. The analysis presented in this article is useful for practice as it helps retailers identify options that best suit their order fulfillment strategy. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Decision Sciences Wiley

Evaluation of Order Fulfillment Options in Retail Supply Chains

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Publisher
Wiley
Copyright
Copyright © 2018 Decision Sciences Institute
ISSN
0011-7315
eISSN
1540-5915
D.O.I.
10.1111/deci.12277
Publisher site
See Article on Publisher Site

Abstract

Retailers face a major operational challenge in fulfilling online orders while managing their traditional store‐based distribution processes. In this context, the following order fulfillment options available to retailers are considered: store‐facing distribution centers (DCs), dedicated order fulfillment facilities (DTC), retail stores, and direct‐fill by vendors. A framework for the online order fulfillment process is developed to evaluate these options using operational and financial measures collected from a large U.S. retailer. The study presents managerial insights regarding each fulfillment option and identifies operational and cost thresholds where a particular fulfillment option would be preferred. The results show that due to better order fulfillment efficiency, distribution facilities (DC and DTC) out‐perform fulfillment from stores and vendors. However, retailers can leverage their network of stores to overcome the shortfall in store‐based fulfillment costs by focusing on the order delivery process. The analysis presented in this article is useful for practice as it helps retailers identify options that best suit their order fulfillment strategy.

Journal

Decision SciencesWiley

Published: Jan 1, 2018

Keywords: ; ;

References

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