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Supply chains in omni-channel retailing

We will be exploring the complexities involved in omni-channel logistics and discuss how omni-channel suppliers/retailers adapt to customer demand.
By now, you would appreciate the complex logistics of omni-channels from the scenario presented in the previous video. In this video, we will explore the complexity in greater detail. Consumers can purchase products and services using smart devices, websites, even call centres. But customer orders must be relayed in a timely manner. In order to facilitate real-time exchange of customer data along the supply chain, businesses must leverage IT platforms, such as RFID, barcodes, and electronic data interchange. In an online environment, customers may be local or international. So businesses need to consider a cost-effective and time-efficient delivery process. Companies that re-evaluate their business model may outsource non-core competencies to enhance their last-mile deliveries.
With omni-channels, physical distribution and order fulfilment takes on a whole new perspective. If companies are to fulfil customer orders through a centralised single distribution centre, it will ultimately reduce operation costs. However, centralisation sacrifices lead time when all customer orders must go through the single point of contact. Conversely, companies can use more distribution centres or involve their retail outlets in order fulfilment. Through this approach, the lead time for delivery would decrease as the delivery’s delegated to the nearest outlet. However, this would increase operating and inventory costs. Proliferation of products in the past two decades means customers have a wide range of product choice.
And businesses not only compete on lowest pricing, but they also need to hold stock in both offline and online stores. Today’s business environment has become intensely competitive, which implies greater demand uncertainty and greater supply chain radiation. A lean supply chain may address those uncertainties. But to achieve a lean supply chain, companies must continuously look to increase information visibility while reducing lead time to customers. Understanding customer demand through big data and analytics will enable businesses to avoid overstocking and to streamline their supply chain.

In omni-channel retailing, the order fulfilment process within the distribution channel becomes more complicated, particularly the last mile logistics and costs. The channel of distribution encompasses organisations or individuals who participate in the flow of goods, services, information, and finances from the production point to the final point of consumption.

Traditionally, suppliers have mainly focused on the timely but intermittent replenishment of goods at the retail stores. However in omni-channel environments, consumers may opt to purchase online but pick-up their goods at a physical “bricks and mortar” store, or purchase online with goods delivered to their homes. Retailers and suppliers alike need to ensure that inventory levels at the various points within the distribution channel are sufficient to meet customer demand.

Read the blogpost ‘Omni-Channel Supply Chains Are Changing Everything You Ever Learned in School’. Robert Handfield, from North Carolina State University, discusses insights on major shifts occurring in global businesses resulting from the emergence of omni-channel supply chain.

As the blog says, this view of the supply chain is focused primarily on how we get inventory to the customer. Supply chain issues will be THE issues to resolve as omni-channel purchasing expands. As such, take the opportunity to explore the others links in the section below.

Identify one complexity in omni-channel supply chain logistics, then describe the way an omni-channel supplier could adapt (or has adapted) to cope with it in order to better fulfill the demand of customer orders.
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Business Futures: Understanding Omni-channel Retailing and Supply Chains

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