The Promise Your Store Can't Keep

Show Notes

Omnichannel fulfillment is becoming one of the biggest challenges in modern retail, but what happens when the customer promise gets ahead of the supply chain? In this episode, Joe Perkins, Brent Hillabrand, and guests Alex Haines and Aaron Lambe, from Toyota Automated Logistics, break down how retailers can balance store inventory, distribution centers, fulfillment costs, and customer expectations without creating unnecessary complexity. You’ll learn why real-time inventory visibility, flexible automation, and smarter fulfillment strategies are critical to keeping same-day, curbside, and e-commerce promises.

The conversation explores how retailers are turning stores into fulfillment nodes, the hidden costs of store-level picking, the role of AI and supply chain orchestration, and why order profiles should influence automation and distribution center decisions. Alex and Aaron also share practical insights on inventory allocation, replenishment, warehouse design, data quality, and when retailers should optimize what they already have instead of investing in new facilities or technology.

In this episode, you will learn: 

- Understand how omnichannel fulfillment impacts inventory, stores, distribution centers, and the customer experience

- Learn why disconnected systems and inaccurate inventory data can undermine fulfillment promises

- Explore the tradeoffs between store fulfillment, distribution center fulfillment, and localized fulfillment nodes

- See how automation, AI, and supply chain orchestration can improve inventory visibility and fulfillment efficiency

- Learn why your order profile should guide warehouse design, automation, and capital investment decisions

Don’t risk making customer promises your supply chain can’t keep. Learn how to build a more flexible, efficient omnichannel fulfillment strategy that works in the real world.

Timestamps

0:00 Cold Open & Setup

1:12 The Core Problem Explained

3:05 Why This Matters Now

5:18 Real-World Example

7:42 Common Mistakes People Make

10:15 What Most People Get Wrong

13:08 Better Way to Approach It

16:20 Key Takeaways & Wrap-Up 

Transcript

The Promise Gets Made Far From the Floor

Somewhere inside a company, someone promises the customer delivery in two hours, same-day service, or curbside pickup in five minutes. Too often, nobody walks down to the operation and asks whether that promise can actually be kept.

That is the omnichannel problem in one sentence. The promise gets made in a marketing or sales meeting, but it gets kept or broken on the floor.

Promotions can create the same disconnect. Marketing may feature a specific SKU without warning the people responsible for inventory and fulfillment. The operation has no opportunity to position the product, prepare labor or adjust replenishment before demand arrives. Social media has made the problem even less predictable. An influencer can mention a product and create an immediate spike that affects stores, distribution centers and transportation networks simultaneously.

The operation then has to determine whether that demand is a one-time event or the beginning of a lasting trend. Either way, the customer expects the promise to be honored.

Inventory Visibility Is the Foundation

Real-time inventory is not simply an IT upgrade. It is the foundation of the customer promise.

Customers do not care where an item is located. They care whether it arrives when the retailer said it would. If demand is concentrated on the West Coast while the available inventory sits in a Georgia distribution center, that is the retailer's problem to solve.

The consequences become visible when a website shows an item in stock, accepts the order and later announces a delay. The customer may have purchased the last available unit online at the same moment someone else picked it up in a store. Both customers believed the product was theirs, while the retailer was left to reconcile competing claims on the same inventory.

A retailer can often recover the order by shipping the product from another location, but the recovery may erase the profit. The company keeps its promise by using an inefficient and expensive fulfillment method. That may protect the customer relationship in the moment, but it is not a sustainable way to run a supply chain.

Orchestration Connects the Network

Modern fulfillment depends on systems that were often implemented at different times for different purposes. Warehouse management, purchasing, inventory, marketing, replenishment and labor systems may all contain part of the answer. Some communicate well, while others remain disconnected.

Supply chain leaders are increasingly focused on orchestration: creating visibility across those systems so they can understand where inventory is, how accessible it is and how it should move through the network. The goal is not to move inventory constantly. It is to rebalance it intelligently, forecast where it will be needed and reduce the frequency of stockouts and expensive last-minute recoveries.

Software and AI can help identify demand shifts and recommend how inventory should be redistributed. Automation can improve both the customer experience and the cost of fulfillment, but only when the underlying systems and data reflect reality.

Inventory Must Move With Demand

When demand changes by region, inventory may need to move with it. That creates a second operational challenge: replenishment and fulfillment processes must be flexible enough to support the new flow.

If a product stops selling in one location, the retailer has several choices. It can repackage the product and return it to the network, ship online orders from the store, discount it or move it to another node. Each option changes labor, transportation and handling requirements.

The difficulty increases when inventory was pushed to stores for retail demand but is suddenly needed for e-commerce. If store fulfillment was part of the original plan, the operation can be designed around it. If it was not, store associates are abruptly asked to pick, pack and ship orders in a space that was never designed for warehouse work.

A Store and a Warehouse Serve Opposite Goals

Retail stores are designed to influence the shopper's journey. Staple products may be placed at the back so customers move through more of the store. Similar products are grouped together to make the shopping experience intuitive.

A warehouse is designed around a different goal. Fast-moving items are positioned to reduce travel, concentrate activity and complete orders as efficiently as possible. The same grocery order that requires a store associate to walk nearly every aisle may require only a small portion of a distribution center's pick path.

Using a retail space as a warehouse therefore creates an inherent conflict. Large picking carts and online-order totes compete with shoppers for aisle space. Store employees take on warehouse responsibilities, while customers encounter congestion in a space intended to serve them.

Retailers must weigh the value of being close to the customer against the labor and experience costs created inside the store.

Store Fulfillment Has Hidden Costs

Fulfilling an online order from a nearby store can appear to be the obvious answer. The retailer already has the building, inventory and employees, and the location may reduce final-mile distance. But the cost does not disappear; it often moves into a different part of the operation.

Distribution centers can consolidate work. If one product will be sold to 25 customers, a distribution center can pick those units efficiently. When the same demand is divided among multiple stores, each store must complete its own smaller picks, packing and shipping steps. That creates additional work at every location.

The retailer may need dedicated space, better batch picking, new replenishment methods and clearer labor standards to make store fulfillment economical. Without those changes, a lower transportation cost can be offset by higher handling costs and a weaker in-store experience.

The Last Mile Shapes the Strategy

The final leg of delivery is often the most expensive and difficult to automate. Moving goods between major hubs can be efficient because transportation capacity already exists along those routes. Moving an individual order from a local node to the customer's door is more complex.

That makes stores valuable assets. A retailer with locations close to customers can use those nodes to shorten the final mile. But proximity alone does not create an efficient fulfillment model. An item picked from the sales floor may be purchased by an in-store shopper moments before an online associate reaches it, creating another broken promise.

The answer is often a hybrid strategy. Retailers may fulfill some orders from stores, optimize selected locations for picking or establish dark stores and small dedicated nodes in markets with enough concentrated demand. The right model depends on volume, customer expectations, inventory behavior and the true cost of every handling step.

Build Only What the Economics Support

Micro-fulfillment was once presented as the inevitable future of retail. The concept remains useful in the right conditions, but duplicating localized fulfillment hubs across many markets is expensive. Not every retailer has the volume or network to make that investment work.

The better question is not whether stores or distribution centers should win. It is how each part of the network should be used. If stores will fulfill more online orders, the upstream distribution center must replenish them more frequently and efficiently. Goods can be sequenced to match the store planogram so associates can put inventory away with less travel and disruption.

Leaders are also asking how to stay in the buildings they already own. A new facility can require an investment of $100 million, $200 million or even $300 million. High-density storage, vertical lift modules and other space-saving approaches may allow an operation to increase capacity without immediately committing to a new building.

The same discipline applies to inventory. More product in every store may feel safer, but inventory ties up capital and consumes space. Some retailers have shifted bulky items such as appliances out of the back room and into centralized inventory, giving customers access to the product without requiring every location to stock multiple units.

Order Profiles Determine the Right Solution

Many projects stall because the broader network strategy is unresolved. Leaders may not know where future nodes should be, how much inventory each one should carry or whether additional distribution centers will create enough value to justify the cost.

The order profile is especially important. A facility replenishing 600 stores looks very different from one processing 10,000 e-commerce lines per hour. Associates may pick cases, eaches, poly bags or store-ready loads. The destination, package type, sequence and service expectation all influence the process and the capital investment.

Automation selected for a stable retail profile may struggle when demand shifts toward e-commerce. Flexible solutions are more valuable because they can adapt as the mix changes. Before choosing equipment or technology, the operation must understand what it processes today, how that profile could change and which parts of the system need room to adjust.

Fix the Data Before Buying the System

Technology cannot compensate for inaccurate data. If an operation does not understand what is wrong today, automation will reproduce the problem faster and at a larger scale.

In a Handled It audience poll, 41 percent of respondents said broken same-day or curbside promises usually begin with disconnected systems. Another 31 percent pointed to an unrealistic promise from the start, 24 percent selected inaccurate inventory and only 3 percent chose the building or layout.

The answers are more connected than the percentages suggest. An unrealistic promise may come from inaccurate inventory. A building may be unable to hold or move the inventory required to fulfill the promise. Disconnected systems may prevent leaders from seeing either problem until the order fails.

A strong warehouse management or warehouse execution system can help disparate equipment and processes communicate, but the data flowing through it must be reliable. Paper pick tickets and isolated scanners cannot provide the visibility required across a modern omnichannel network.

Visibility Must Extend Beyond the Building

True orchestration reaches beyond the four walls of the distribution center. Leaders need to understand where inventory is at the supplier, in a warehouse, on a truck or inside a container in transit. They also need to know how that inventory should be allocated across the network as conditions change.

This broader view is sometimes described as a supply chain control tower. The term matters less than the capability: connecting systems, creating shared visibility and helping the organization make coordinated decisions instead of optimizing one location at the expense of another.

Omnichannel fulfillment is not one technology decision or one facility project. It is an operating strategy that connects the customer promise to inventory, data, buildings, labor and transportation.

Final Takeaway

The customer experiences one brand, not a collection of stores, systems and distribution centers. Keeping the omnichannel promise requires those parts of the business to operate as one network.

Start with the order profile and accurate inventory data. Understand the real cost of fulfilling from each node. Protect the store experience, design replenishment around the work being added and invest in flexible solutions that can adapt as demand changes.

The best answer is not always a new building, more inventory or another system. It is the strategy that makes the promise achievable before the customer ever places the order.