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Order management solutions for the grocery business - Part 2

In the first part of this blog, I had described some of the differences in the order management /fulfillment process for grocery (food) retailers' vis-à-vis non-food products and also highlighted the opportunities and challenges faced by retailers. I will continue the discussion below.

1. The shelf life available to promise (ATP) is an important aspect of the grocery business. Since some food items are perishable, the available to promise and the delivery date promised to the customer may be constrained by the product expiry date. An example is milk for which the delivery date for an order from a particular store is a function of its sell by date.

2. An interesting aspect of the grocery business is product substitution that could occur as the store picker picks an online order within the store. (Of course, product substitution preference is typically captured in the customer profile.) To continue on the example of milk, Mrs. Thomas may order a pack of Brand A 1 liter Whole milk, and depending on her substitution preference, it may be substituted (due to non-availability of the 1 liter pack) by the store picker by two packs of Brand A 500 ml Whole milk or by a 1 liter pack of a different brand B.

3. Since substitution is a norm, payment processing involves a few more complex scenarios when compared to non-food items. The amount displayed to customer (and authorized) at the time of order confirmation may be an approximate amount. The Brand B whole milk pack may be $2 more than that of Brand A; hence the $2 would have to be collected from the customer before the order is shipped. Also, for items such as meat, fruits and vegetables, the price is dependent on the weight. For e.g.: The price paid by one customer for a dozen apples may vary when compared to another customer ordering the same dozen apples as the size of the apples picked may vary.

4. An interesting side effect of the substitution process is the complexity in the returns process; retailers need to be flexible in allowing the customer to return the substituted product at their doorstep during delivery. To continue the example explained above, Mrs. Thomas may not be a big fan of Brand B, and hence may choose to return the Brand B 1 liter pack to the delivery person and expect a refund for the same.

Grocery order management processes are a niche process within the order management space. I will be interested to hear if you have any comments on this blog.

Comments

Hi Amit - a good blog. The variables you have pointed outare very valid. The additional dimension that can be considered comes around catch weight items. Please see here for more details: http://www.infosysblogs.com/supply-chain/2011/08/catch_me_if_you_can_the_contin.html#more

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