May 2007 | Commentary | Checking In

Customers Handle the Final Mile for Wal-Mart?

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The first job of my post-college career included replenishing inventory at a large book distributor's New York City warehouses.

Like many urban warehouses, the multi-storied building took advantage of a vertical footprint, rather than the horizontal footprint of today's warehouses. All inventory moved in and out via the dreaded "freight elevator." Dim lights, no air, few lift trucks—what fun.

While these types of warehouses are still in use today in a few places, others continue to evolve. Inbound Logistics has reported on continuing advances in public and private warehouse operations, of course, but we have also covered some unusual developments: "condo" warehouses; FedEx Kinko's and the UPS Stores' new small-business warehousing services; and the old standby for small businesses—using local mini-storage facilities to hold the stock they sell via the Internet across the United States and around the world.

Now comes Wal-Mart's Site-to-StoreSM service, another Internet-driven "warehousing" evolution. The service offers "a larger assortment of products through our virtual shelf space by combining Wal-Mart's world-class logistics network with its nationwide footprint of more than 3,300 retail locations," according to Mike Smith, Wal-Mart director of store integration.

Here's how it works. Consumers log on to Wal-Mart's web site, and can view 50 flatscreen TV or baby crib choices, rather than the few available in any given store. By having their orders shipped to the store instead of their home, customers save substantial shipping charges.

Once the customer places a web order, the Site-to-Store demand signal melds into Wal-Mart's extremely efficient store delivery process. The customer receives an e-mail alert when the shipment arrives at the local store and is ready for pickup.

Besides having access to many more products than available in Wal-Mart stores, Site-to-Store customers might do some additional shopping of the off-line variety when they pick up their web order.

Customer as Order-Picker?

While this evolution would not be doable without one key element-the Internet-the human element comes into play, too. From accessing inventory and originating the demand signal, to in-store pickup and handling the final mile delivery, the consumer actually becomes part of Wal-Mart's efficient supply chain.

Having Internet-savvy customers self-train to perform these functions in a "world-class logistics network" has helped Wal-Mart open 3,300 mini-warehouses to complement its big box warehouses across America, and allows it to sell many products it doesn't stock in stores.

That's one heck of an evolution in "warehouse" operations.

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