Connecting Omnichannel Retail Operations for a Fashion & Lifestyle Brand

Overview

About the Client

This client operates a clothing and lifestyle retail company that operates fourteen physical locations, as well as a brand-name online store and live listings across three marketplaces in the country. Despite its strong brand recognition and a growing number of online shoppers, however, the company was unable to meet demand due to the fragmentation of back-end processes.

Their inventory management was managed independently for each channel. Their loyalty program was an independent tool that had no connection to the purchase data, and their merchandising department didn’t have a single overview of what was being sold in which location, at what price, or at the right price.

Challenges Faced

• Inventory was handled separately for stores for retail, websites and marketplaces, causing the identical SKU to display different inventory counts across all channels and resulted in cancellations and overselling.
• Forecasting seasonal demand was performed manually by the merchandising staff using sales from prior years, and no model based on data, which led to massive overstocks in periods of slow sales and a decrease in sales during peak times.
• The loyalty program used to track points was an entirely separate CRM system that has no real-time sync with purchases, which led to frequent errors in the calculation of points as well as customer complaints.
• The lead times of suppliers and purchases were tracked using spreadsheets, which made it difficult to plan the reorders in line with the demand for forward orders.
• Management was not able to see a unified overview of margins, sales performance or the value of inventory across all channels on one dashboard.

Recommendations by Blueflame Labs

Blueflame Labs conducted a six-week multichannel retail assessment that looked at the technology landscape of the client, including inventory workflows, as well as sales data from every channel. Our recommendation was to implement an integrated ERP environment that can serve as the central point of information for stock across the various channels, as well as integrated connectivity with the online platform as well as feeds from marketplaces. We recommended creating an internal loyalty engine that is custom-built inside the ERP instead of having a separate CRM tool and suggested automated replenishment logic that is driven by real-time sell-through rates. We created a gradual launch plan that prioritized the first step of unification of inventory to address the most impactful pain point prior to initiating forecasting of demand and integration with loyalty.

Solution Around ERP

We created a retail-oriented ERP system with real-time inventory sync across all 14 stores and the e-commerce platform, as well as three market channels. A marketplace connector that was custom-designed was created to push live updates on stock every 15 minutes and pull confirmed orders directly into the fulfillment queue. It was redesigned inside the ERP to calculate and apply points in real-time when the customer is at their point of purchase, as well as checkout online. An engine for forecasting demand was created with 36 months of historical sales data to create automatic seasonal reorder suggestions. Portal access for suppliers was set up to allow vendors access to open purchase orders and anticipated delivery times.

Implementation & Integration

The implementation was carried out in a three-phase process over eight months. Phase one was the creation of a master catalogue of products, which was unifying SKU codes for all channels, a major data harmonization effort that covered 4800 active SKUs. Phase two brought inventory synchronization as well as e-commerce integration and integration with Blueflame Labs developers, deploying custom API connectors to all three market platforms. Phase three launched with demand forecasting, loyalty, and the portal for suppliers. Blueflame Labs provided on-site support at five flagship stores throughout the go-live of loyalty in order to answer customer-facing questions. A workshop on the planning of merchandise was also held to assist the team in using the latest forecasting tools efficiently.

Result

• Reducing stockouts by 45% in the initial 90-day period due to an integrated inventory management system and the elimination of duplicate channels.
• Transparent revenue across channels in just 90 days from the date of go-live, and allowing the merchandising department to track sales-through rates and stocks in real-time.
• Automated reconciliation of inventory, which reduces the previously lengthy monthly process of two days to an overnight process.
• Accuracy of reorders improved by 28% over the first buying season, while reducing the risk of overstock or missed demand.
• The customer’s satisfaction increased with the loyalty program after the live-streaming of the points engine, and complaint volume decreased by more than 60%.