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Connecting eCommerce Sales and Supply Chains with Channel Allocation

January 31st, 2014 Ranjit Goray No comments

Merchants in today’s connected world face a market where the buyer has access to a lot of information for making a purchase decision. Merchants need to play a facilitating role in decision-making processes, and then offer a price which is competitive for different markets. To help the purchase decision, the merchant needs to have presence on the web, on devices, on phone, and in the physical world (retail outlets for B2C merchandizing). These are what we call “Demand Channels” in Ignify eCommerce.

Sometime purchase decisions are influenced by stock availability, time taken to deliver, or more complex requirements that require a closer engagement via the sales quote process. All these influencers are tied to what we call “Supply Channels” in Ignify eCommerce.

Both demand and supply channels have come much closer over the last decade, thanks to technological advances in connectivity. For a merchant to become successful in an eCommerce world, it’s important that both demand and supply channels are appropriately modelled in their eCommerce platform.

Ignify eCommerce has incorporated the concept of these channels into the eCommerce platform, providing merchants with a way to keep an efficient supply chain as they connect and service customers at multiple levels. These channels are designed to operate as a simplified plugin to merchants using Microsoft Dynamics ERP and CRM products. Merchants can also use the Ignify eCommerce platform without Microsoft Dynamics, and add Microsoft Dynamics ERP or CRM products in the future as revenues grow and there is a need for capabilities that Microsoft Dynamics brings.

Demand and Supply Channels

In Ignify eCommerce, the channels are categorized into two different groups: sales channels that are essentially demand channels, and service channels that are supply channels.

Sales channels are the ways in which a customer can interact with the merchant’s brand and potentially purchase items or services. Supported sales channels in Ignify eCommerce are:

  1. Web Store,
  2. Retail Store,
  3. Call Center.

Service channels are the channels that are involved with servicing the customer’s post-purchase needs. So a service channel could be a:

  1. Retail store,
  2. Warehouse,
  3. Or a Call Center for electronic delivery/non-physical goods.

The sales order acts as the bridge between the sales and service channels. An Ignify eCommerce order is shown below with both sales and service channels captured on the two fields called “Placed At” and “Fulfilled By”. “Placed At” is the sales channel while “Fulfilled By” is the service channel for an order. In this case, the order was placed on the website.

“Placed At” is the sales channel while “Fulfilled By” is the service channel for an order

“Placed At” is the sales channel while “Fulfilled By” is the service channel for an order.

Setting Up Channels

This classification of sales and service channels helps build a multi-channel framework in Ignify eCommerce. Shown below are different types of channels that have been configured in Ignify eCommerce. Each channel has a Channel Manager who has the visibility (and can get notifications) for various events occurring in his channel.

A merchant’s Manager Panel showing different types of sales and service channels used by the company

A merchant’s Manager Panel showing different types of sales and service channels used by the company.

Channel Allocation Rules

As explained earlier, the “Placed At” channel on a sales order is simple – this is the sales channel through which a sales order was accepted. The “Fulfilled By” channel on a sales order is more dynamic. Ignify eCommerce gives the merchant control on deciding how each order should be fulfilled through “Channel Allocation Rules”. These are rules that determine which service channels will be linked with the sales order – for physical goods this translates to which warehouse(s) will fulfill which sales orders.

Some examples of the types of channel allocation rules that merchants use can be based on:

  1. Zip Code: A merchant can specify that orders shipped to a certain zip code are to be fulfilled by a specific warehouse.

Automated channel allocation by ship-to zip code

Automated channel allocation by ship-to zip code.

  1. State: A merchant can specify that orders placed in a certain state are to be fulfilled by a specific warehouse.

Automated channel allocation by ship-to state

Automated channel allocation by ship-to state.

  1. Country: A merchant can specify if orders placed by customers in different countries are to be fulfilled by different warehouses.

Automated channel allocation by country

Automated channel allocation by country.

  1. Customer Class:  A merchant can specify that orders placed by customers belonging to different customer classes can be fulfilled by different warehouses.

Automated channel allocation by customer class

Automated channel allocation by customer class.

  1. Channel: A merchant can specify that orders placed by customers in certain channels are fulfilled by different warehouses.

Automated channel allocation by channel

Automated channel allocation by channel.

  1. Sales or Customer Service Representative: A merchant can specify that orders placed by certain customer service representatives are fulfilled by certain warehouses.

Automated channel allocation by sales or customer service representative

Automated channel allocation by sales or customer service representative.

Stock Availability

Within Channel Allocation Rules, a merchant can also prioritize how these rules should be evaluated. Each rule is evaluated and a corresponding service channel (warehouse) checked for stock availability. If the stock quantity is available, then service channel assignment logic stops and the warehouse gets assigned to the order.

But if stock quantity is not available in that warehouse, then the next Channel Allocation Rule is evaluated to decide the next preferred warehouse in a stock outage scenario.

Automated channel allocation rules with priority

Automated channel allocation rules with priority.

By allocating different fulfillment channels according to different channel allocation criteria, you can automate the connection between sales channels and service channels. This offers a competitive edge since orders can get fulfilled faster, leading to not only happy customers but also lower inventory carrying costs.

Legal Compliance and Accounting Book Updates

One critical difference between the sales channel and service channel is the completely different set of legal requirements that need to be satisfied. While sales channels have broader flexibility and a fewer set of legal requirements, service channels need to satisfy a stricter set of requirements, such as collecting taxes on the government’s behalf and accounting book maintenance.

To automate these legal requirements, Ignify eCommerce provides a Company/Legal Entity framework. This allows a merchant to define all of their legal entities in the Ignify eCommerce platform. These companies are tied to Microsoft Dynamics ERP and CRM product suites via readymade integrations.

Ignify eCommerce allows a merchant to define all of their legal entities in the Ignify eCommerce platform. These companies are tied to Microsoft Dynamics ERP and CRM product suites via readymade integrations

Ignify eCommerce allows a merchant to define all of their legal entities in the Ignify eCommerce platform. These companies are tied to Microsoft Dynamics ERP and CRM product suites via readymade integrations.

These companies own various service channels (such as warehouses and retail stores). A sales order assigned to individual service channels is routed to the respective companies for invoicing and payment collection.

If you would like more information on how Ignify eCommerce can help connect your demand chain to you supply chain via eCommerce, please email us at ecommerce@ignify.com.

Ranjit Goray is Vice President of Customer Satisfaction at Ignify. Ignify is a technology provider of ERPCRM, and eCommerce software solutions to businesses and public sector organizations. Ignify has been included as the fastest growing business in North America for 5 years in a row by Deloitte, Inc Magazine and Entrepreneur Magazine and ranked as one of 100 most innovative companies in the world in the Red Herring Global 100 in 2011.