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The Current and Future State of the Omnichannel Supply Chain

The retail landscape has undergone an extensive transformation in the past few years as eCommerce has spurred heightened expectations and demands from customers. Traditional retailers must modify their way of doing business to compete with emerging companies that have taken advantage of the possibilities afforded by the digital age or risk being left behind.

Creating a superior customer experience across all of a business’s channels is the driving force behind the concept of the omnichannel supply chain. Today’s consumer demands a higher level of service that those of the past. According to supplychain247.com, some of the expectations of the modern shopper are:

• The ability to make online purchases and return items in-store.
• Coupons or promotional materials sent to their smartphones when they are in or nearby brick-and-mortar stores.
• Making online purchases and picking up their items from a local store location.

Fulfilling their customers’ desires demands that companies adopt new strategies that incorporate the omnichannel paradigm in their retail offerings. This requires changes to their supply chain to service the various channels that customers will be using to make purchases and returns.

The Current State of the Omnichannel Supply Chain

OmnichannelWhile most major companies realize that they need to embrace the omnichannel strategy in order to remain competitive, making the necessary adjustments to their business practices has not proven to be a simple undertaking.

According to veridiansol.com, in 2016, 75% of businesses expected omnichannel solutions to be critical to their continued success and their ability to grow. More than a third of the companies surveyed had experienced delays and issues while attempting to implement an omnichannel sales strategy. Almost half of the companies that expect omnichannel to be vitally important to their company’s future have not yet made the investment in a true omnichannel supply chain.

Many companies are trying to cope with their customers’ demands with a legacy, multichannel supply chain strategy. Businesses that offer both online and in-store experiences for their customers often developed separate warehousing and transportation systems for each distinct purchasing channel. While this separation may have worked initially, it leads to a silo mentality and increased costs that could be minimized with a true omnichannel supply chain.

One of the major challenges facing retailers looking to institute a full omnichannel supply chain solution is in combining their multichannel supply streams into one overarching system that can service all of their customers. They may have to revisit their current supply chain networks and make considerable changes in order to keep up with consumers’ demand for real omnichannel shopping choices.

To fully institute an omnichannel strategy a business essentially needs to have immediate access to its inventory no matter where it is located. They require the flexibility to have this inventory delivered to stores, distribution centers, and directly to consumers. This demands a level of coordination that goes far beyond the traditional supply chain issues related to keeping shelves stocked for in-store purchases.

The Future of the Omnichannel Supply Chain

To remain competitive in the 21st Century, retailers will have to move toward an omnichannel supply chain strategy. According to supplychain.fedex.com, there are four key areas that companies need to focus on when developing their omnichannel plan.

Simplify inventory management – Inventory management can quickly become extremely complex with the introduction of multiple methods to fulfill orders and return products. A warehouse management system (WMS) is an essential component in designing your omnichannel strategy. Using a WMS allows you to better track product demand patterns and manage inventory placement in your warehouse.

Improved speed and accuracy of order fulfillment – New technologies need to be employed to meet the rising demands of your customers for timely delivery. While at one point in time, five-day delivery may have been sufficient, the trend is toward next-day and eventually same-day delivery to consumers. Automated systems to streamline packaging and delivery will be vital to your omnichannel supply chain.

Optimize your operations – Warehouse design can have a positive impact on your ability to meet customer demands. Logically placing items throughout the facility can lead to decreased picking times when fulfilling orders. Proper design can eliminate the need to expand your physical footprint as you make better use of your current capacity. Retaining a well-trained team is essential to your success and can be instrumental in the success of your business.

Institute easy return policies – Increased returns are a by-product of eCommerce, and customers expect an easy return process. Managing returns can be complex, but the payoff is in increased customer loyalty. Allowing shoppers to return items purchased online at an in-store location creates an additional sales opportunity.

Instituting an omnichannel supply chain demands an investment in your company’s IT priorities as well as substantial changes to the way you currently supply your retail locations. The goal is to create a totally seamless customer experience where purchases and returns can be made interchangeably through any of your organization’s commercial platforms. When fully implemented, an omnichannel supply chain will allow you to service your customers in the manner they demand and keep your business a step ahead of the competition.

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