Successfully reported this slideshow.
We use your LinkedIn profile and activity data to personalize ads and to show you more relevant ads. You can change your ad preferences anytime.

Ship from Store: How to Optimize with Predictive Analytics

838 views

Published on

Getting ‘Ship from Store’ right is tough. And it's not just about reducing your logistics and transportation costs. That's just the tip of the iceberg.

Your consumers demand fast delivery, while you struggle to balance multiple (often conflicting) fulfillment objectives: to meet customer expectations, keep delivery costs low, minimize canceled orders, reduce safety stock, and maximize inventory turns.

To deliver profitably, Celect optimizes order fulfillment objectives in real-time with predictive analytics to get the best total outcome. This means you can realize gross margin gains by improving inventory turns and speed to customer, while still reducing shipping costs. It’s a win-win for you and your customers.

Published in: Retail
  • Login to see the comments

  • Be the first to like this

Ship from Store: How to Optimize with Predictive Analytics

  1. 1. Ship From Store How to Optimize with Predictive Analytics
  2. 2. Welcome! Sean Gouldson Dir of Retail Technology Celect Todd Harris Dir of Marketing Celect Jim Bengier Chief Customer Officer Bridge Solutions Group © 2017 Celect, Inc. All Rights Reserved. jim.bengier@bridgesgi.com sean@celect.com todd@celect.com 2
  3. 3. Background • Predictive analytics SaaS platform to help retailers optimize inventories through data- driven decisions. • We leverage a groundbreaking advance in Machine Learning and Optimization. • An MIT Artificial Intelligence Lab Top 50 Technology Innovation © 2017 Celect, Inc. All Rights Reserved.3
  4. 4. • How optimization of typical order management works and why it’s not enough • Why optimizing your inventories is the key to your success as a retailer • How to make your Ship from Store program profitable © 2017 Celect, Inc. All Rights Reserved.4 WHAT WE WILL COVER TODAY
  5. 5. Many retailers ship-from-store. © 2017 Celect, Inc. All Rights Reserved.5 Is it working to their advantage?
  6. 6. Well, it’s a double-edged sword … Store location puts you much closer to the customer, but: ‒ Does the store have the right inventory? ‒ Can the store successfully pick and pack? ‒ Do you know the forward looking demand for the store? © 2017 Celect, Inc. All Rights Reserved.6
  7. 7. © 2017 Celect, Inc. All Rights Reserved.7 Order Management Systems are rigid and limited by rules.
  8. 8. Insights into why optimizing your fulfillment program is critical to success. © 2017 Celect, Inc. All Rights Reserved.8 BRIDGE SOLUTIONS GROUP
  9. 9. © 2017 Celect, Inc. All Rights Reserved.9 Typical Order “Optimizer” One Key Quantifiable Benefit Reduces Transportation Costs
  10. 10. © 2017 Celect, Inc. All Rights Reserved.10 IT’S NOT JUST ABOUT COSTS. DELIVERY SPEED ORDER DELAY SPLIT SHIPMENTS
  11. 11. Shipping: Delivery Windows © 2017 Celect, Inc. All Rights Reserved.11 Source: IBM 2016 Consumer Expectations Study In general, how important is each of the following delivery windows when deciding whether or not to place an online/mobile order? {Important/Very Important} 0% 20% 40% 60% 80% 1-2 Hour Same-day Next-day 2-day 45% 52% 61% 72% Importance of Delivery Times For Making a Purchase NOTE: Males 13-39 consider 1-2 hour delivery to be more important that females of the same age. Females 50+ consider it more important than males 50+.
  12. 12. Shipping: Importance of Speed of Delivery Choice of Retailer © 2017 Celect, Inc. All Rights Reserved.12 Source: IBM 2016 Consumer Expectations Study; Q27 52% 60% 73% 80% 86% 81% 60% 71% 72% 79% 79% 78% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 60+ 50s 40s 30s 20s 13-19 AgeRange Female Male
  13. 13. Shipping: Free Shipping – Choice of Retailer © 2017 Celect, Inc. All Rights Reserved.13 Source: IBM 2016 Consumer Expectations Study; Q23 77% of consumers will buy from a retailer who offers free shipping vs one who doesn’t, even if they have never ordered from them before $ Shipping FREE Shipping 13-39= 78% 40+= 75%
  14. 14. Shipping: Costs – Forfeited Sales © 2017 Celect, Inc. All Rights Reserved.14 Source: IBM 2016 Consumer Expectations Study; Q24 83% of consumers have chosen not to purchase because of shipping costs 88% 84% 80% 77% 71% 78% 87% 87% 86% 88% 79% 88% 0% 20% 40% 60% 80% 100% 60+ 50s 40s 30s 20s 13-19 AgeRange Female Male
  15. 15. Shipping: Delayed Delivery © 2017 Celect, Inc. All Rights Reserved.15 When you experience a delayed delivery of an online/mobile purchase from a particular retailer, how likely are you to not shop that retailer in the future? {Likely/Very Likely} Source: IBM 2016 Consumer Expectations Study; Q29 0% 10% 20% 30% 40% 50% 60% 70% 13-19 20s 30s 40s 50s 60+ 58% 66% 56% 38% 34% 23% 44% 51% 48% 25% 25% 22% Shipping Delays Prevent Future Purchases Male Female
  16. 16. Provides quantifiable benefits across your organization Increase Store Throughput Decrease Markdowns Reduce Weeks of Supply Reduce Time to Ship Reduce Unit Shipping Cost Fulfillment Optimization © 2017 Celect, Inc. All Rights Reserved.16
  17. 17. • Utilize Celect’s proven ability to predict customer demand to determine which stores have more inventory than demand requires. • Balance multiple, competing objectives simultaneously, attempting to get as close as possible to the optimal value on each separate objective. © 2017 Celect, Inc. All Rights Reserved.17 FULFILLMENT OPTIMIZATION
  18. 18. Why is optimizing fulfillment so important? © 2017 Celect, Inc. All Rights Reserved.18
  19. 19. Real-Time Optimization is Impossible with Traditional Order Management Systems © 2017 Celect, Inc. All Rights Reserved.19 Issue #3: Not Predictive. Cannot organically adapt to and optimize against pick declines. Issue #2: Short-sighted. No way of ‘sacrificing now’ for a future gain. Impacts splitting shipments, shipment costs, and delay. Issue #1: Priority Rule Driven. Unable to balance shipping costs against metrics that help increase product turn.
  20. 20. It’s Usually One Extreme or Another with Traditional Order Management Systems WEEKSOFSUPPLY (INVENTORY) THROUGHPUT These systems are unable to balance competing objectives – to maximize inventory turns and utilization. OMS RULE: Maximize Throughput OMS RULE: Look for available inventory © 2017 Celect, Inc. All Rights Reserved.20
  21. 21. What Our Real-Time Optimizer Does 5% WEEKSOFSUPPLY (INVENTORY) 8% Real-time Optimization True Demand across all channels THROUGHPUT • Attempts to maintain a close-to- optimal balance across multiple objectives • Underlying algorithms recognized by multiple patents and academic awards © 2017 Celect, Inc. All Rights Reserved.21
  22. 22. Optimized Ship from Store Scenario © 2017 Celect, Inc. All Rights Reserved.22
  23. 23. Faster time to customer Improve Inventory Turns Capture In-Store Lost Sales Reduce Cancellations Prioritize stores with higher weeks of supply Reduce pick declines Increase throughput Reduced ship delay Fewer split shipments Lower shipping cost Results in Opportunity © 2017 Celect, Inc. All Rights Reserved.23 BENEFITS: METRICS:
  24. 24. In the first year. $3.5M Big Returns from Optimizing Fulfillment © 2017 Celect, Inc. All Rights Reserved.24
  25. 25. Celect Case Study: Fashion Footwear Retailer • Objective: Compare current Order Management System rules against Celect © 2017 Celect, Inc. All Rights Reserved.25 When implementing Celect, comparisons against the status quo are used to understand impact of prioritization, further ”train” the model, and quantify ROI.
  26. 26. Summary of Results Optimizing across all the factors below with the main objective of maximizing throughput, we see significant overall improvements in weeks of supply, net pick decline rate and split shipments. Metric Timeframe Baseline Celect % Change Total Throughput 20,471 28,433 28% Average Weeks of Supply 7 15 114% Total Split Shipments 1261 741 -41% Average Daily Unit Shipping Cost $3.09 $2.93 -5% Average Daily Net Pick Decline Rate 35% 26% -25% Average Daily Load Balancing 33% 44% 29% OPTIMIZATION FACTORS: 1. Throughput (main objective) 2. Pick Decline Rate 3. Split Shipments 4. Weeks of Supply 5. Load Balancing 6. Shipping Costs 7. Delay © 2017 Celect, Inc. All Rights Reserved.26
  27. 27. KEY TAKEAWAYS: 1. Optimizing fulfillment is more than just transportation costs 2. Order Management Systems are a necessity but can’t optimize against multiple objectives in real-time 3. Huge financial gains possible in a short timeframe © 2017 Celect, Inc. All Rights Reserved.27
  28. 28. THANK YOU! © 2017 Celect, Inc. All Rights Reserved.28 Questions? info@celect.com More webcasts and information celect.com/resources Twitter @celect Email jim.bengier@bridgesgi.com sean@celect.com todd@celect.com

×