Like many retailers, Bed Bath & Beyond had to shut its doors to customers during the COVID-19 pandemic. But instead of leaving more than 1,000 stores dormant, the company turned them into virtual warehouses and distribution centers. Store associates fulfilled online orders by picking items directly from shelves, and packing and shipping them.
The company adapted a "from anywhere to anywhere" shipping strategy, said Alex Zelikovsky, vice president of e-commerce technology at Lowe’s Companies, who previously directed BB&B's omni-channel and supply chain strategies.
"Every store became a warehouse and every warehouse became a store," he said. "Inventory was available for sale from every location, and the inventory visibility was provided to shoppers during their shopping experience on the web."
About 70 percent of Bed Bath & Beyond's online orders were shipped from stores, Zelikovsky said, and its digital sales exploded, matching Black Friday volumes for four straight months in 2020.
"The company continued to operate simply because it was flexible to be able to expose its inventory and use every asset within its supply chain as a shipping location," he said.
Zelikovsky was speaking at the spring conference of Krannert School of Management's Global Supply Chain Management Initiative, sharing his insights on the resilience of supply chains in the retail sector with students, faculty and industry leaders. Held virtually on Feb. 19, the conference was entitled “Supply Chain Resilience in the COVID Age."
The retail strategies that companies adapted during the pandemic will continue to drive sales, Zelikovsky emphasized.
"They will become the new norm for competition," he said. "Companies that embrace these options will create new opportunities to succeed in the emerging environment."
He highlighted three main strategies that companies such as BB&B, Walmart and Kroger have employed: virtual inventory pooling, last-mile delivery, and omni-channel technology.
Virtual inventory pooling allows stores to fulfill customer orders from every possible location.
"Basically you liberate your inventory," Zelikovsky said. "All the assets that you have in the supply chain should have the visibility of available inventory and all of those assets can become fulfillment locations. The strategy is, ship from anywhere to anywhere."
Zelikovsky's cited Walmart's curbside delivery as a "very innovative" last-mile strategy, using geo-fencing and the store's app to ensure that customers have their orders placed in the trunks of their cars in a timely and efficient manner. The system is flexible, allowing Walmart to make substitutions for out-of-stock items, such as one brand of potato chips for another.
"It really optimized inventory for Wal-Mart by being able to sell like-items to customer, which was very beneficial, both to the retailer and the consumer," Zelikovsky said.
Omni-channel technology is critical for the supply chain to work in this new retail environment, he said. "Information within the supply chain is the key for things to flow smoothly, for items to arrive on time. The better information you have, the more timely information you have, the more effective and efficient your supply chain becomes, and this information is provided by technology."
Omni-channel technology not only allows customers to order items in several ways, it also offers a number of delivery options, including curbside delivery, in-store pickup and home delivery. Items can be shipped from stores, warehouses or vendors. Customers can make changes to their orders before delivery or pickup, and they can return items through whichever channel they find convenient.
Zelikovsky outlined the major components of omni-channel technology's enterprise order management: virtual inventory pooling, allocation, orchestrating omni-fulfillment, order changes and order visibility.
Allocation strategy is one of the more important functions of order management, he said. "Allocation is really the best strategy of where the order is going to ship from, and the system is very configurable."
