Top four supply chain strategies to create the omnichannel experience
The need for omnichannel capabilities is a major force affecting modern supply chain management. Here are four ways to get strategic, so you won't be left behind.
Companies strive to give their customers a seamless omnichannel experience. Yet, the modern, multifaceted, multiplayer supply chain makes achieving this goal seem nearly impossible. All it takes is for one component -- procurement, supply or shipping -- to fall out of place, and a company's omnichannel presentation can be exposed as a fragmented system that seems behind the times.
At its essence, omnichannel is an approach that aims to give customers a seamless shopping experience. In other words, companies seek to use many touchpoints -- mobile apps, websites, social media and old-fashioned brick-and-mortar stores -- to present the right offer at the right time, which is what today's customer increasingly expects.
It's no coincidence that the companies that seem to have perfected omnichannel capabilities also seemingly never have supply and demand issues. Look no further than Amazon, which ranked third among the top 25 supply chains in 2016, according to Gartner.
Omnichannel works when the supply chain extends beyond the store and treats inventory as an extension of the real-time, singular view the company has of its customers, according to experts. This means transforming inventory into a flexible and data-driven process -- one that requires stores, online operations, warehouses, suppliers and shipping to all work on one page.
The question is, how? Luckily, supply chain experts have shared best practices for creating a successful omnichannel strategy. Here are the four most important points.
1. Get rid of silos
Omni means all or in all ways and places, and it requires unity.
That's easier said than done, but omnichannel truly becomes a channel of one when the departments of a company collectively approach the supply chain, according to Gartner analyst Mike Griswold. Companies fail to grasp the omni aspect because they're still separating product responsibilities. One group handles online sales, for example, while another group oversees in-store sales.
Departments have "gotten good at perfecting their piece of the business," he added. "It takes leadership to say, 'We need to optimize the supply chain from an end-to-end perspective and not do what's best for just the warehouse.' It has to be east to west, and not north to south."
Best Buy does the horizontal approach well, Griswold said. Just as omnichannel started to take off, the retailer invested in sound supply chain management and e-commerce technologies, incorporated their own processes and developed more sophisticated demand management strategies.
"Best Buy recognized the nature of products and promotions, how they fit into cross-channel strategies, and focused on figuring out how demand planning and in-store execution can relate to omnichannel," Griswold said. A key to this success was abandoning silos and determining supply chain responsibilities.
But not everyone has reached the level of Best Buy and Amazon. (And both have their share of struggles.) More often than not, the companies that fall short haven't properly integrated inventory using an omnichannel strategy, said Ann Grackin, CEO of ChainLink Research.
"Companies thought, if they built a cool website, customers will come," she said. "Well, they do. Now the difficulty is responding to what they want."
2. Seek technology and technological help
Websites and mobile apps have given customers a broader perspective of a company's offerings; now companies need to make sure they harness technology to accomplish what customers expect. Companies need to closely review their shortcomings in the supply chain, and then find the vendors that can solve the problem, Griswold said. But it can be difficult to decide which technology meets the hype.
The technology for the retail market is particularly fragmented and harder to figure out, with many midsize and boutique vendors offering various components that might not mesh with a company's current systems.
A consultant can pinpoint a company's supply chain deficiencies and recommend the appropriate technologies, Griswold said. But companies should be wary that some consultancies have financial relationships with vendors, and might push their products. That's why it's essential to vet consultants before hiring them; otherwise, you run the risk of not getting objective advice.
Grackin encourages companies to embrace technology vendors as part of the learning process. Even though you might want to avoid technology salespeople because they're pushing a product, it still doesn't hurt to quiz them about how their offerings fit into the particular niches of the supply chain. She also suggests attending supply chain conferences to hear case studies and meet others who have had the same omnichannel struggles.
Learning from others can also help when it's time to implement supply chain technology to provide an omnichannel experience.
Lisa Anderson, a supply chain consultant in Claremont, Calif., recommends having a diverse set of stakeholders -- those in merchandising, the warehouse, delivery and more -- and thoroughly testing applications and systems before implementing them. When testing, include anyone who is outside of the daily supply chain process -- say, a manager who doesn't have direct involvement, or even a customer. Those outside the process, Anderson said, will see limitations and loopholes that those who regularly use the technology might not immediately recognize because they're too deep in the weeds.
3. Focus on inventory management
"Product accuracy and availability is the name of the game," Grackin said. "If something is on your website, you have to have it somewhere in the network so that you can accurately promise it to the customer. The warehouse system, store-level inventory and supplier inventory may all be in the mix here."
If something is on your website, you have to have it somewhere in the network so that you can accurately promise it to the customer.
Ann GrackinCEO of ChainLink Research
To better grasp inventory, companies should consider technologies that provide clear visibility of order fulfillment and inventory tracking, according to Grackin. She recommends order fulfillment software that can look across distributed order management sites and determine the best approach to satisfy an inventory order.
JDA Software, for one, is a supply chain platform that fits nicely into the omnichannel technology picture because it handles warehouse fulfillment well. Manhattan Associates, another vendor, has great warehouse management technology that accommodates omnichannel demands, according to Grackin.
"Improving inventory availability improves demand because, if items aren't available when people want to purchase and receive them, they move on to another option," Anderson said. "If you are known for having availability, it will increase your demand. And, if you are known for having easy returns and other features that are attractive, demand will increase."
4. Find new ways to deliver
Many companies can't handle time-specific deliveries, even if they're using reputable services such as UPS and FedEx, because their products have many physical components, such as furniture and electronics, that strain the supply chain before delivery, Grackin said. Some companies are attempting to restore order in the supply chain by reclaiming delivery transportation, either by doing it themselves or by contracting with a regional carrier company.
If your company travels this route, it should know exactly how customers want their goods delivered, Grackin said. Ask them directly after a delivery how the process went, and, in short time, you'll have rich data on customers' time preferences on types of products segmented by geography, income and other factors.
This insight will shape delivery strategies and enable your company to pursue the delivery successes of Amazon. The trick is to not try it all at once, Grackin said. Even Amazon started delivery in one area and slowly spread to others.
For that matter, companies can't go wrong studying how Amazon aligns omnichannel with supply chain management, Grackin said.
Of course, it's a tall order to live up to those Amazonian expectations, but considering these four steps will at least help your company start to understand how to better handle price and availability.
