Lost Pines Outfitters (LPO) is a company that sells clothing at low prices both online and offline. The inventory and the single warehouse are shared by the online and offline stores. The CEO of LPO has identified two major problems that negatively affect the company’s productivity. The first problem lies in the discrepancies between the inventory database and the inventory tracking at the shop, because of which the potential customers cannot obtain relevant information on product availability. The second issue is that the warehouse staff members use one computer to perform several functions. For this reason, delays in the processing of orders are not an exception. The present essay describes the current LPO’s system and suggests recommendations to solve the two aforementioned problems.
The present system utilized by LPO’s online store consists of the website, the warehouse, its staff members and their computer, the fulfillment department and its associates, the United States Postal Service, and customers. The interactions between the parts of this system are initiated with a customer’s request to purchase a certain good through the website. This request is proceeded by the warehouse’s personnel, who tracks the incoming orders, locate the requested goods in the inventory, and pass the orders to the fulfillment department. The department’s associates, in turn, ensure that the order will be delivered to the customer via the United States Postal Service. Besides, these workers collect feedback from the clients who have received the order.
The LPO retail system is less complicated than one of LPO’s online. The parts of this system are customers, the store, and the warehouse. Before coming to the point of sale system, the clients can visit LPO’s website to check if the needed products are available. The purchased items are tracked in the warehouse database that is checked by the managers once a week. Offline customers can become LPO’s loyalty program members and receive gift cards and coupons. LPO’s retail system is visualized in picture 1.
From this description, it becomes clear that the critical loop of LPO’s system is that the associates of the single warehouse should process online orders and control goods purchased in the offline stores using one computer. These enormous slowdowns in the working process lead to delays and, in turn, decrease the customer’s satisfaction. Below, the paper presents several recommendations on how LPO’s problems could be solved.
The first recommendation is to replace the single warehouse that both offline and online stores use with a dual-channel warehouse. The essence of such warehouses is that one zone is dedicated entirely to online orders, whereas another one serves the needs of retail stores (Cardenas & Bohorquez, 2020). The introduction of a dual-channel warehouse will significantly increase the quality of LPO’s services (Alawneh & Zhang, 2018). That is because the separation between online and offline aspects of LPO’s trade will reduce warehouse associates’ workload. Besides, it will become easier to update the availability of products in retail stores on LPO’s online platform. The significant change in the overall LPO’s system is that it becomes branched because the online and offline orders are processed separately in two different warehouse zones. However, installing a dual-channel warehouse brings no changes in the FLO’s online and offline systems per se.
At the same time, it should be noted that the introduction of a dual-channel warehouse has some hidden dangers. Alawneh and Zhang (2018) emphasize that such warehouses might cause time uncertainty. Undoubtedly, there might appear a problem that one of the zones operates faster than another one and, hence, the issue of irrelevant information on the website remains unsolved. Nevertheless, this risk could be mitigated through the thorough control of the working process and the establishment of strict deadlines.
The second recommendation is rather apparent but still immensely effective. More precisely, it is necessary to install three computers in the zone of warehouse related to the online orders. One computer is needed to track the incoming order, the second one – to locate ordered items in inventory, and the third one – to pass the orders to the fulfillment department. This recommendation also requires the expansion of the staff and the strict distribution of the responsibilities between the online zone of the warehouse’s associates. This way, when a customer makes an order on the online platform of LPO, it is received and tracked by the employee on the first computer who passes the order to the colleague who locates the items in inventory. Finally, the third person sends the order for fulfillment. The following steps of LPO’s online store’s system remain the same as described in the third paragraph.
Considering the recommendations stated above, the online system of LPO looks as follows. When a customer makes an order on the website, it is sent directly to the section of the warehouse dedicated to online shopping. The order is tracked via one computer that is not used for other tasks. Then, the associates of the online zone of the warehouse take the required items from the shelves. Afterward, associates use one computer to locate these items in inventory and another to pass the order for fulfillment. Then, the associates of the fulfillment department pack the order and send it via US Postal Service to the customer. When the fulfillment department receives a tracking number, it updates information on the order and informs a customer when the order will be delivered and how to track it. Finally, they provide a customer with an opportunity to leave feedback on LPO’s performance. The model of the LPO’s retail system after the implementation of the recommendations outlined above remains unchanged. The minor difference is that the information on product availability is proceeded by specialists in the offline section of the warehouse.
The present essay analyzed the problems existing at the LPO and discovered that they could be solved by separating the warehouse into offline and online sections and installing three computers in the latter. The problems were analyzed by applying system thinking that enables analysts to look at the same situation from different perspectives. Within a business environment, such a tool as system thinking ensures that all possible interdependencies between parts of systems are considered (Kutty et al., 2020). In the case of LPO, the system thinking approach was applied to discover the reasons for the delays in online orders processing and late update of information on LPO’s portal. As a result, it became clear that employees cannot process orders faster because they have to use one computer to perform different functions. Hence, it is necessary to install two more computers. Additionally, the dual-channel warehouse is needed to separate the responsibilities and increase staff performance effectiveness.
Alawneh, F., & Zhang, G. (2018). Dual-channel warehouse and inventory management with stochastic demand. Transportation Research Part E: Logistics and Transportation Review, 112, 84-106.
Cardenas, F. A. T., & Bohorquez, C. E. D. (2020). Dual channel warehouse sizing under a piecewise linear warehousing cost structure. In P. Golinska-Dawson, K. Tsai, & M. Kosacka-Olejnik (Eds.) Smart and Sustainable Supply Chain and Logistics–Trends, Challenges, Methods and Best Practices (pp. 347-361). Springer.
Kutty, A. A., Abdella, G. M., Kucukvar, M., Onat, N. C., & Bulu, M. (2020). A system thinking approach for harmonizing smart and sustainable city initiatives with United Nations sustainable development goals. Sustainable Development, 28(5), 1347-1365.