November 2020 | Commentary | The Lean Supply Chain

Omnichannel and Supply Chain Work Together for Competitive Advantage

Tags: Inventory Management, Retail, E-commerce

The days of going to a department store to shop for a TV, viewing the options, and making a purchase now seem quaint. The emergence of the internet, smartphones, social media, and other technologies has opened a world of new options for consumers and businesses to review, research, and buy online with ever-increasing delivery choices.

Paul A. Myerson, instructor, management and decision sciences at Monmouth University and author of books on Lean and the Supply Chain for McGraw-Hill, Pearson, and Productivity Press, 732-571-7523

The emergence of e-commerce has resulted in omnichannel marketing, in which customers engage with companies in a variety of ways—in a physical store and online via websites and mobile apps.

This puts the supply chain front and center, as increasingly demanding consumers browse, buy, and return goods through various channels, not just traditional brick-and-mortar.

Accomplishing omnichannel retail with high service levels, while remaining profitable, requires real-time inventory visibility across the supply chain and a single view of the consumer as they continuously move from one channel to another.

While omnichannel retail is a boon to consumers, it has made the already complex global supply chain even more challenging to manage.

The 2020 pandemic has accelerated the omnichannel trend as consumers need even more ways to order and receive deliveries, such as curbside pickup. The pandemic has exposed a lack of supply chain flexibility and readiness, resulting in shortages of everything from toilet paper and meat to personal protective equipment and ventilators due to capacity and inventory allocation issues.

Bullwhip Effect in Action

The pandemic has been a real-life example of the bullwhip effect in action. Variability at the consumer end of the supply chain results in increased variability upstream toward distributors, manufacturers, and suppliers, creating shortages and misallocations, and increasing costs.

An omnichannel retail strategy provides an integrated and consistent shopping experience across different channels and devices. Making this strategy a reality requires your supply chain to provide a smooth, positive experience for customers regardless of where and how they interact with your brand.

Companies have to decide when and how to invest in realigning their supply chains to accommodate an omnichannel pipeline. When e-commerce emerged, most retailers could use a small section of an existing distribution center to fulfill online orders. As demand grew, many retailers opened fulfillment centers dedicated to picking and packing individual orders.

"Omni" means that you must be present on the channels where your customers are. Your omnichannel retail and supply chain strategy must clearly set goals for what you want to accomplish, identify where your customers and prospects are, and determine your strengths, weaknesses, opportunities, and threats.

The benefits will be numerous: increased supply chain visibility with optimized inventory, more fulfillment options to reach more customers, a seamless shopping experience with greater customer service, fewer returns, and more opportunities to engage customers and increase sales.


Excerpted from: www.routledge.com






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