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The Challenge of “Click and Collect” Supply Chain Planning

By Jeff Bodenstab29 Sep 2015

“Click and Collect” lockers and sales kiosks are becoming increasingly popular methods of order fulfilment, and for good reason. Customers order items any way they want and pick up the goods at a location convenient to them. It is the ultimate in easy on-line shopping and quick and convenient fulfillment.

  • Lockers refer to lock boxes where goods can be placed for pick-up at the customer‘s convenience, such as on the way home from work. The customer is usually given a one-time code to gain entry to the locker to pick up their goods.
  • Kiosks refer to locations where the sale and the delivery are made at an unmanned location. Think of a vending machine-type setup in the airport that sells travel supplies like headphones and travel pillows.
  • Other imaginative solutions are emerging. Volvo now offers a vehicle that allows you to give a one-time digital combination to your car’s trunk lock so that a delivery person can deliver goods to the trunk of your car.

This trend is part of the drive towards omni-channel and automated fulfilment. Consumers expect outstanding service, so ease of delivery and consumption are now retail differentiators and selling points.

“The idea of the locker is the latest addition to the growing menu of e-commerce delivery options,” says Kent Savage, CEO at Apex Supply Chain Technologies. “It can be located outside of a store, within a retail outlet, at a railway station, in a parking lot, or even within a multi-tenant apartment building. Or it can be placed at the location of a special event.”

Real-time communication ties together the orders and fulfilment steps. But the result is intricate channel profiles and distribution networks—and granular, intermittent, and harder-to-predict demand.   Of course, none of this matters to customers. They just want service. “The retailer must be able to make a promise to the customer, and keep that promise,” Savage says.

Supply chain planning can address this added complexity. For example, Costa, the UK’s largest coffee shop brand, uses integrated telemetry for real-time reporting on machine performance and drink sales of their unmanned coffee bars. A demand and replenishment planning system also analyzes point-of-sale data from the coffee stations to forecast demand, optimize inventory, and generates nightly replenishment proposals for distribution and procurement.

To insure accurate stock replenishment at the order-line level, the system tracks demand surges, and highlights replenishment exceptions for frequent, low-volume/low-value deliveries. The replenishment plan enables Costa to optimally manage the supply of ingredients—coffee, flavored syrup, cups, and lids—from a warehouse to partner sites.

“We can now manage stock replenishment across nearly 5000 Points of Sale (POS) in four countries with less than two people,” says Chris Clowes, Costa’s supply chain manager. “We also push stock out more accurately, so we can respond to seasonality.”

That confidence to sense demand and manage fulfillment—based on real-time machine feedback via the Internet of Things (including lockers and kiosks)—opens opportunities for demand shaping. One drinks company recently introduced a machine with a built-in camera that can recognize your demographic to drive promotions.

Telecom giant Nokia estimates that within 10 years the Internet of Thing (IoT) will grow to a real-time network of 50 billion connected devices. Having a lot of data can be highly valuable, but also can pose a big challenge. Machine learning-based analytics help model the many roots of demand variation for more precise predictive commerce. Machine learning algorithms “learn” from data, building and constantly refining models that improve demand forecasting at the detailed channel level.

Costa is a believer. “We want to unlock the power of our data,” Clowes says. “We want 100 percent of our machines talking to us 100 percent of the time.” It’s the right attitude for any “Click and Collect” provider.