Omnichannel: What Logistics Management should know

February 12, 2016 Pieter Kinds

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In this blog, we reveal the key success factors for supply chain and logistics managers towards a successful omnichannel-model adoption.

Logistics is becoming a key-enabling function rather than a back-end function to optimize the direct engagement with consumers and meeting their growing expectations. In this extensive post, we look at key functions, strategies, AND two omnichannel reports, highlighting competitive advantage business cases of companies that master omnichannel fulfillment.

What is omnichannel retailing?

Multichannel retailing, or mostly referred to as omnichannel retailing, is a business model that implies using of a variety of channels in a customer's shopping experience including research before a purchase. Such channels include retail stores, online stores, mobile stores, mobile app stores, telephone sales and any other method of transacting with a customer. Omni comes from the word Omnis which means all or universal and is all about the true continuity of customer experience.

Practically, for retailers, the shopping experience of their customer is no longer linear. Shoppers switch between physical stores, online stores, mobile / tablet devices, and social media channels with just the flick of the finger, scrutinizing the internet for the best possible deal.

The Omnichannel journey

Modern-day Retailing distribution infrastructure

First of all, it’s important to understand that both omnichannel and e-commerce are global trends that not only impact retailers, but also manufacturing companies and distributors. Adrian Gonzales of Talking Logistics recently described the situation powerfully: “Traditional distribution networks and processes that were built around yesterday’s consumer — who shopped almost exclusively at stores and malls, and who didn’t mind waiting 3-5 days for delivery — are now giving way to new distribution networks and processes designed for a new generation of consumers, who will shop more online (especially on mobile devices) and expect same-day shipping and delivery, or click-and-collect within an hour, as a standard offering.”

supply chain design omnichannel commerce

Omnichannel distribution infrastructure

As Digitalist magazine points out very clearly, a modern, responsive website and mobile application alone is not going to cut it. It is a real-world infrastructure that makes omnichannel commerce possible and moreover, successful. The key is to have a supply chain that can fulfill the promise of omnichannel commerce profitably. Omnichannel commerce adds a number of complexities that are usually not present in traditional retail or stand-alone e-tailers:

• Online ordering and in-store pickup
• Product availability in stores for online order fulfillment
• Integration of non-traditional, low-cost, last-mile delivery options
• Inventory positioning
• Retail store as a warehouse
• Returns processing
• Short-term inventory rebalancing

What logistics managers need to know about omnichannel

Omnichannel Logistics
Omnichannel fulfillment, the integration of online and offline sales, implies that companies must find a new multi-channel approach to logistics. Because of the needs and expectations of customers to choose when, where, and how their products are delivered to them, there are certain components of the logistics network becoming increasingly important:

- Accurate inventory management
- Fast delivery is now a imperative part of the shopping experience
- Flexible returns and payment methods for customers
- Multi-channel warehousing

The above mentioned are naturally speaking very important to in terms of customers service and delivery management, but the process starts off course at the warehouse level. For more information regarding omnichannel warehousing strategies, IntegraCore wrote a resourceful blog highlighting 4 key warehousing features.

To obtain more knowledge about omnichannel logistics, we have added two great reports to our hub for you to read.

1. Omnichannel Logistics

In December 2015, DHL published an interesting report revealing supply chain and logistics as the most critical success factor in the omnichannel business model. Furthermore, you will find valuable case studies. The takeaways from this report:

• Markets and consumers are moving towards an omnichannel model but most companies are not yet ready
• Companies that master omnichannel will gain significant competitive advantage
• Latest trend report finds that supply chain and logistics are the key enabler for omnichannel success and essential for fulfilling customer promises

DHL Omni-Channel Logistics report

11 Ways to effectively reduce logistics costs

2. 2016 Omnichannel Retail Survey

The second report we'd like to offer is concentrated on retailers. KPMG’s 2016 Omnichannel Retail Survey analyzes key trends and their impact on the supply chain. Over 250 retailers participated in the survey. The following trends will pass the review:

- The Black Friday discount week is easing the burden on peak logistics
- Savvy consumers are defining the delivery model
- Consumers are shopping late and bringing the fitting room home
- Free returns are driving extra online purchases and additional store

Omnichannel Retail survey 2016

Adapt or die?

Retailing companies must respond and reshape their distribution and logistics network in orde to respond adequately to the growing power that consumers poses current today. Rather than interacting with groups, it's important to understand how to meet the demands of an individual.

About ControlPay - Global & EMEA Freight Audit

As a global freight audit provider, we at ControlPay attach importance to disruptive developments in the logistics & supply chain industry. with a strong heritage in logistics and roots in the freight forwarding industry, ControlPay is nowadays the largest Freight Audit provider in Europe and an important Global provider. For daily insights in logistics cost reduction and supply chain topics, please visit and subscribe to our Logistics & Supply Chain hub.

Sources:
DHL - Omni-Channel Logistics report
Digitalist magazine - Omnichannel Is Only As Good As The Supply Chain
Talking Logistics - The Impact of Omni-Channel on Logistics
KPMG - 2016 Omnichannel Retail Survey
Sources:

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