The Path to Shelf-Ready Fulfillment
A Self-Assessing Guide
Leading retailers are boosting revenue, increasing efficiencies, and cutting costs with
shelf-ready fulfillment—the delivery of display-ready merchandise to the retail store.
What do these retailers know about improving overall business performance with shelfready initiatives? This article provides a self-assessment model to help you know where
you stand in relation to the leaders and what steps you can take to gain competitive
advantage using these strategies.
Leading retailers are enabling shelf-ready fulfillment to
boost sales and margins, increase efficiencies, and reduce
costs. They are reducing touches (and store labor)
required to replenish store shelves by performing VAS
and shelf-preparation tasks further upstream in the
supply chain. They are shipping products to the store
organized for faster putaway. And they are reaping
revenue and other rewards from coordinated shipping of
launch and “go-together” sets precisely aligned with
promotions and merchandising plans. Enabling these strategies frees up store associates to focus on cross-selling and the
customer experience, which drives higher sales and fewer markdowns. If you are looking for ways to improve business
performance, this article provides a self-assessment model to help determine whether these strategies are right for you
and where to begin.
“Shelf-Ready Fulfillment is the
delivery of display-ready
merchandise to the retail store to
optimize business performance.”
Self-Assessment: Shelf-Ready Fulfillment
Do you want to know how your company compares to early adopters across the five key characteristics of shelf-ready
fulfillment? Fortna developed this self-assessing guide to provide a view of how shelf-ready pioneers are gaining
advantage across five key areas. What does the path to Shelf-Ready Fulfillment look like for your company? Review the
self-assessment and discover your next steps.
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Shelf-Ready Fulfillment: Self-Assessment
Receipts
Receipts, verifying inventory received at the store against what is reported on the delivery manifest and the accompanying
exception handling are still being managed through manual processes in some retail environments despite advances in
systems and technology that allow for Advance Shipping Notice (ASN) and RFID tagging. The journey from Stage 1 to
Stage 3 represents the largest leap for most companies where stage 1 is characterized by disorganized backrooms, paperbased checks and additional data entry required to check individual items and Stage 3 is carton-level verification with SKUlevel validation for exception cartons only. Additional time spent on verifying receipts takes time and focus away from
store associates’ ability to sell products and provide better customer service.
The transition to Stage 5 requires a fully automated, system-driven process with limited manual intervention. To enable
the most advanced store receiving processes, retailers will have developed supply chain fulfillment processes that provide
the assurance of accurate carton contents.
Stage 1
•100% detailed item receipt
•Paper based check
•Requires Data Entry
•Complex process for exception reporting
Stage 2
•100% detailed item receipt
•Hand held scanner to speed process
•Improved exception reporting
Stage 3
•Carton IDs verified confirm item count
•Only exception cartons require detail SKU receipt
Stage 4
•Carton level receipt supported by ASNs to store
•Vendor/DC applied ASN carton labels
•Scan carton ID to complete receipt at store
Stage 5
•Shipment-level ASNs with appointment scheduling at store
•RFID tags to eliminate scanning
•Item RFID to support flow to POS
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Shelf-Ready Fulfillment: Self-Assessment
Product Organization
Product organization, where merchandise arrives at the store organized by department, category, brand and/or according
to the store planogram for efficient putaway, is often overlooked though it represents the greatest potential impact among
shelf-ready initiatives. It has significant upstream impact to the distribution center (DC) processes and systems and often
requires alignment with suppliers, as well as between the distribution center and store operations. But improvements in
this area can both speed up the shelf replenishment process and reduce the amount of time store associates spend on this
non-value-add task.
For most companies enabling better product organization starts with selecting the appropriate fulfillment strategy,
technology and systems at the DC, especially as you understand the value and impact of speed to the shelf and the
overall impact to the business. Do you want your store associates sorting or selling? What does a delay in getting product
to the floor cost you in terms of lost sales due to out-of-stocks?
Even the simple act of applying a visual cue like a label to each carton indicating the department and keys items inside
can make sorting cartons and identifying time-sensitive promotional items easier for store personnel. You may already be
organizing some products by major department category as you pick and pack at the DC, but have not yet achieved a
seamless flow where goods arrive organized by sub-category and free of excessive packaging. If you are already doing
these things as part of Stage 3, you may want work toward Stage 5 which involves removing individual polybags at the DC
and packing product with a single carton liner poly bag to get the least number of touches from the door to the shelf.
Stage 1
•Product arrives mixed in carton for the entire store
•No organization by style or subdepartment
Stage 2
•Product arrives organized in carton by major store department category
Stage 3
•Product arrives organized in carton by major store department category
•Carton labeled with contents to speed handling to shelf
Stage 4
•Product arrives organzied by store sub department category
•Items remain in individual polybags
Stage 5
•Product arrives organized in carton by store display/style
•Individual polybags removed and items bagged in groups for rapid placment
at point of sale
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Shelf-Ready Fulfillment: Self-Assessment
Presentation Ready
Presentation ready merchandise, with value-added services (VAS) like price ticketing, security tags, hangers inserted
and/or folded to shelf-specifications, is what most often comes to mind in discussions about shelf-ready fulfillment. It’s
one of the basic building blocks of the strategy based on the cost savings and efficiencies associated with utilizing DC
labor to perform these tasks more efficiently. But the way we see it, the opportunity to reduce the amount of expensive
real estate backroom operations take up with processing and storage and unburden store associates with these tasks,
allowing them to focus on the customer experience, arguably represent the real benefits of presentation readiness. Sales
per square foot improvements may be a significant element in the business case for your company.
If you are still applying price tickets, hang tags and security devices at the store level, consider this; a best practice among
leaders is 70% to 90% of the merchandise received is point-of-sale ready from the distribution center. That is, prepared
to full specifications including folded in a shelf-ready manner with hangers, price tags, and perhaps even RFID tags
already applied.
Stage 5 leaders also benefit from improved store allocation procedures with localized assortments prepared for each store.
Think: no more will there be a glut of sweaters in the balmy South Florida spring season while lost sales abound due to
out-of-stocks in northern regions. Look at the types of VAS services you typically perform in the store and consider not
only whether those could be performed more efficiently at the DC, but the time that frees up for sales associates to
engage with customers and perform store maintenance tasks.
Your company size and volume may influence where value-added services are to be performed. Large retailers may have
the clout to require key suppliers to perform some of these value-added tasks for them, while smaller companies may
have to consider whether they can afford this level of organization.
For a moment, consider the impact to store merchandising by
combining product organization and presentation-ready:
• An employee takes a carton to the point of sale
• Removes an organized group of items from the
carton
• Removes one master polybag
• Places the items folded to spec (or on hangers)
and ticketed to the planogram-specified point of
sale
• Returns the carton and poly to the backroom
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Shelf-Ready Fulfillment: Self-Assessment
Stage 1
• No upstream presentation preparation
• Store applies price ticket, hangs and tags
Stage 2
• Price ticketing is applied to item
• No additional upstream presentation preparation
Stage 3
• Generic hangers placed in box
• Price ticketing is applied to item
• Security tags applied if required
Stage 4
•
•
•
•
Apparel folded to shelf-ready fold spec
Hangers placed in box
Price ticketing is applied to item
Security tags applied if required
Stage 5
•
•
•
•
Localized assortment and price ticketing (item priced by region or store type)
Branded or customized hangers inserted (size rings as needed)
Security tags as needed
Apparel folded to shelf-ready spec
Season Initials
Season initials arriving just prior to display date, coordinated with promotions and organized in cartons ready for display
can mean the difference between a home run and a single. When products arrive out of sync with promotions, both sales
and customer trust is quickly eroded. And because companies don’t have good way to measure that opportunity cost, the
impacts are usually grossly underestimated. This is especially critical during peak seasons when busier store associates
combined with higher shipping volumes can lead to backroom chokepoints that delay product from getting to the sales
floor in a timely manner.
Season Initials are an often overlooked area where big gains can be made with additional effort upstream in the supply
chain – either at the supplier or at the DC. Do you have the ability to prepare unit pre-packs at the DC or further upstream
at the supplier or consolidation centers so that product can be cross-docked at the DC to eliminate touches?
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Shelf-Ready Fulfillment: Self-Assessment
Season Initials (continued)
Leaders in Stage 5 are taking advantage of supply chain postponement strategies to optimize their pre-pack allocations
and delivery timing for the ideal store season initial deliveries. They are using “ship to mark for” labeling to flow cartons
through the DC and asking suppliers to perform value-added services like kitting and garments on hanger. If you’re not
there yet, you can start by aligning the supply chain, planning and store operations teams on the potential business
impact.
Stage 1
•Season initials are mixed with other merchandise in cartons
at store receipt
Stage 2
•DC prepares seasons initial assortment packs for store delivery
•Provides organized product to store, but with longer lead time
and increased cost
Stage 3
•Original allocations do not change DC cross docks pre-allocated
assortments (vendor prepack cartons)
•Some less than case quantities are still fulfilled by DC as needed
Stage 4
•Original vendor prepack allocations can change in transit to DC
•Store allocations are updated upon DC receipt (in yard or in receiving)
•Automated inline scanning and relabeling of prepack cross dock cartons
•No less than case initial assortments filled by DC
Stage 5
•Localized assortment and price ticketing (item priced by region or store type)
•Branded or customized hangers inserted (size rings as needed)
•Security tags as needed
•Apparel folded to shelf-ready spec
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Shelf-Ready Fulfillment: Self-Assessment
Go-Togethers and Launch Sets
Similarly, shipping of go-togethers or launch sets can be coordinated to ensure that the slacks your Merchandising team
went around the world to source for the Fall promos don’t languish on the markdown rack because the matching jacket
sold out before the rest of the ensemble arrived at stores. Marketing and merchandising teams work to create optimal
floor display and promotion plans. And those plans hinge on the precision of having the products arrive at just the right
time for a complete display. The potential for lost sales increases exponentially when coordinating items arrive in separate
shipments. Something as simple as holding product at the DC for a coordinated launch of go-togethers can mean a
greater likelihood that the store will adhere to those merchandising and marketing plans, which should drive higher sales
and better margins.
Look for opportunities to marry coordinating products from separate suppliers in your DC and hold those until all the
components have arrived. Work with suppliers to optimize delivery timing. More advanced retailers can take advantage of
Fast Flow or JIT/ready modules to quickly fill temporarily held portions of a set upon receipt of the balance of goods.
Stage 1
•Product arrives at store over a period of time
•Go-together merchandise is mixed in cartons with other merchandise
Stage 2
•Product arrives over a period of time
•Go-together product is segregated in cartons
Stage 3
•DC holds product for coordinated launch
•Depending on sourcing, supplier delivers product organized by carton and/or
DC fulfills launch product and ships complete
•Product arrives at store at specified time, in segregated cartons
Stage 4
•DC, Consolidation Center or Depot holds product for coordinated launch
•All separate go-together product is organized for store shipment at specified time
•All go-together product arrives at specified time and ready to hang
•Individual poly bags removed, organized and bagged for rapid point of sale presentation
Stage 5
•Supply chain postponement to optimize delivery timing of ideal store allocations; some product
bypassing DC when appropriate
•Complete automation within DC to bypass fulfillment processes, including possible RFID or
inline scanning
•When appropriate, DC fast flow process for postponement designed to minimize product
touches and optimize quick response fulfillment
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Shelf-Ready Fulfillment: Self-Assessment
Getting to the Next Stage
Achieving the most advanced level, Stage 5, is not the right answer in all categories for all retailers. A more detailed
analysis is needed to define the best approach for your business.
Keep in mind that shelf-ready initiatives are often overlooked due to functional business silos. While store operations
enjoy remarkable benefits, the investment and increased cost to deliver the results lie within the supply chain
organization. Leading companies have overcome these challenges—by bringing together executive, store operations and
supply chain leadership—to gain a broader view of the business benefits and focus on shared metrics for results.
After determining where your business lies on the assessment scale, it is important to determine the benefits and costs of
getting to the right level for your business. There are plenty of roadblocks to adopting a best-in-class shelf-ready
fulfillment strategy, ranging from big-picture issues around development and deployment, to potential costs, inventory
concerns, and partner relationship issues.
Common Challenges
Is Shelf-Ready Right for Your Business?
Shelf-Ready fulfillment initiatives face some common
challenges:
1. These initiatives require broader thinking to
rationalize benefits. Aligning company leadership and
obtaining buy-in across traditional organization silos
is the key—but that’s never easy. These projects are
most often successful when deployed as part of
supply chain transformation projects impacting
merchandising, supplier, transportation, and
distribution operations.
2. In moving from lagging to leading, there are
potential costs involved that must be reconciled
across the entire business against the service and
bottom line benefits, including:
• Labor
• Systems
• DC Impact
• Transportation
3. Key shelf-ready drivers, revenue lift and lost sales,
involve metrics that are challenging to isolate with
many factors influencing them.
4. Another major challenge is determining where the
value-added services that power shelf-ready
fulfillment should be performed. Should hangers,
security tags, and tickets be applied at a retail DC,
consolidation center or further upstream with
supplier partners?
Shelf-Ready fulfillment strategies require holistic
thinking across the organization. Retailers
considering them should look at their product
attributes and packaging, the volume and complexity
of the business, and the impact of speed, then
assess the cost, benefits, and risks when deciding if
shelf-ready is a good fit.
• Are your products fast moving or seasonal?
• Do promotional sale products drive your
business?
• Are there lost sales opportunities or increased
markdowns due to delayed delivery of time
sensitive product?
• Do your products have a short lifecycle?
• Are you currently using a high number of
touches to get products to store shelves?
• Are you constrained for space in your retail
backroom?
• Do you run lean in labor and/or inventory?
• Do you believe in the merit of strict about
adherence to merchandising planograms?
Getting Started
There are several crucial steps in the journey from considering shelf-ready fulfillment to putting it into action. These
projects are usually part of a larger business transformation strategy that considers the upstream and downstream
impacts. This five-step process can help ensure organization alignment—a key predictor of success. By identifying the
potential benefits, defining the impact of shelf-ready fulfillment and testing the water with a pilot before fully committing,
companies can avoid the organizational disconnect that often kills these ambitious projects.
© Fortna Inc. All rights reserved.
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Shelf-Ready Fulfillment: Self-Assessment
1. Examine the characteristics of companies that are likely to benefit from shelf-ready fulfillment.
2. Assess where your company lies on the scale of shelf-readiness and determine the challenges and benefits of
getting to the next stage.
3. Understand the business case, determining which value-added, presentation-ready services you want to adopt,
and where those services should be performed. The business case should examine not only the costs and benefits, but
inclusion of the opportunity costs associated with the status quo.
4. Do a pilot to validate business case. Successful implementation requires a phased approach to align the organization
and gain confidence. A pilot is the best means to that end.
5. Consider how shelf ready may fit into your broader supply chain strategic planning.
Is shelf-ready fulfillment on your radar? If not, consider that the benefits are real and are already being reaped by early
adopters. Get started now.
How Can We Help?
Fortna helps companies evaluate the costs and benefits of shelf-ready fulfillment, benchmark against best practices and
develop a roadmap to supply chain transformation that leads to competitive advantage. We help align cross-functional
teams around a business case and implement from pilot to project success.
Call:
Email:
Web:
800-367-8621
[email protected]
www.fortna.com
Don’t miss these other articles on our website:
Shelf-Ready Fulfillment: Moving Beyond Tagging and Ticketing for Bottom-Line Benefits
Ship-from-Store Distribution: Reducing the Impact of an Imperfect Forecast
5 Steps to Designing Omni-Channel Fulfillment Operations
About Fortna
For over 60 years, Fortna has partnered with the world’s top brands—companies like ASICS, O’Reilly Auto Parts and MSC—
helping them improve their distribution operations and transform their businesses. Companies with complex distribution
operations trust Fortna to help them meet customer promises and competitive challenges profitably. We are a professional
services firm built on a promise—we develop a solid business case for change and hold ourselves accountable to those
results. Our expertise spans supply chain strategy, distribution center operations, material handling, supply chain systems,
organizational excellence and warehouse control software.
© Fortna Inc. All rights reserved.
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