As online sales continue to soar, companies are failing to match the growth in demand by depending on antiquated methods to fulfill orders, leading to lost time, revenue, and customers, according to a study by digital consultancy Perficient which examined the utilization and benefits of intelligent order management systems and automated supply chains among US companies.
In the September 2020 edition of Forrester’s Opportunity Snapshot study (entitled ‘Get Supply Chain Right’), the company surveyed more than 200 inventory management decision makers based in the US about their intelligent order management practices and rate of adoption. Many respondents reported having an intelligent fulfillment system in place for managing supply chains and fulfilling orders.
In practice, however, the study found that 88% of companies rely on at least one manual or rules-based process, which demonstrates a gap between respondents’ perception of intelligent ordering and their established practices.
“Fulfillment infrastructures are complex, and they require sophisticated order allocation to fulfillment centers for rapid delivery. Intelligent ordering systems can help companies adequately balance demanding service expectations with inventory holding costs across a large distribution network,” explained Sean Breeze, director of management consulting, Perficient.
The study also found that firms base their operational strategies and decision-making on metrics that distort incentives, citing a preference to secure the lowest unit cost by buying in bulk, rather than accurate demand forecasting, improved customer service, or return on inventory investment.
Companies that invest in optimization strategies to overcome their inventory management challenges report strong results. Specifically, the study found that the top benefits have the clearest ties to business results:
- 76% increase in revenue.
- 66% increase in profit margin; and
- 61% improvement in customer loyalty.
“Our study found that seven in ten firms say one delayed order is enough to lose a customer. The margin of error is razor thin, and it’s only going to become more challenging,” said Pawan Gupta, commerce solutions principal, Perficient. “Successful order management systems are unique in their ability to create brand loyalty and generate new revenue streams. When executed correctly and optimized with intelligent fulfillment, they demonstrate a unified commerce approach for sellers spanning all points along the customer purchase lifecycle.”