Rise of omni-channel supply chains

It was believed that e-commerce would eventually eliminate traditional bricks and mortar stores. Interestingly, the opposite is happening! The growth of omni-channel retailing has warranted the adoption of a new customer-centric, demand-fulfilment mindset. With this, the bricks-and-mortar stores have a new role as optional order fulfilment centres as well as experience shops. So while omni-channels have shaken up conventional supply chains, the old physical ‘stores’ now also augmented the virtual experience of online shopping with the real “feel-and-touch” experience of product sampling.

John Phillips, SVP Customer Supply Chain & Go-To-Market, PepsiCo, and co-chair of The Consumer Goods Forum Supply Chain Committee, further elaborates on the nature of the change:

“Omni-channel has placed supply chain firmly on the front line. With consumers now expecting to browse, purchase and return goods across a variety of channels, the supply chain has to reach beyond the retail store to the consumer’s home and dedicated pick-up points. This requires real-time, channel-agnostic visibility of inventory across the supply chain and a single view of the consumer as they hop from one channel to another”. (EY 2015, p.2)

1. Omni-channel purchasing and retailing have outmoded the old concept of supply chain operations: moving goods from producers to distributors, and distributors to consumers in a linear manner; and
2. Supply chains operating in an omni-channel environment have to embrace a network approach to servicing customers, where all supply chain members work together in an integrated manner to extend that seamless shopping experience from confirming the purchase (i.e., payment) right to product delivery.
For a thorough explanation, find the full article in the links section below.
How do Omni-channel Supply Chains Satisfy Customer Demands?
In the omni-channel retailing environment, product availability is important. Compared with offline shopping at bricks-and-mortar shops, distribution centres have to handle single-item picking on a large scale. Ultimately, to ensure that customers obtain the products they purchased at the expected time, retailers have to find as many alternatives as possible to fulfill the orders.
Relegating part of the storage (and hence picking) function to retail outlets is one way to meet the expectation of omni-channel customers. As a result, in the omni-channel supply chain, the bricks-and-mortar retail outlets perform functions traditionally undertaken by distribution centres.
In turn, warehouses and even some distribution centres have also been transformed into retail outlets. As such, the functional divide between these two supply chain entities has become blurred.
Now explore the way in which omni-channel has impacted order management and solved a supply chain issue.

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Activity

Take a look at the video ‘IBM omni-channel Order Management’. It shows how IBM’s omni-channel order management system solved a supply chain issue and eliminated barriers to inventory visibility, giving its customers the experience they expect.

Now identify a situation where intermittent large orders present a problem, and work out how an omni-channel approach could in some way simplify the order process.

Post your thoughts in the Comments area below.

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