Omni-Channel Fulfilment

Supply chains are becoming more complex. Australian retail supply chains today must be capable of managing increasing customer expectations (lead-times, pricing, options), channel diversification (online, store, multi-channel, omni-channel) as well as increasingly complex product sourcing strategies.

A step-change in supply chain design and capability is required if retailers are to remain competitive in the long-run. Omni-channel sales provides a seamless and uniform experience for the customer no matter which channel they choose. This key differentiator from multi-channel increases complexity which many businesses are ill equipped to handle.

Challenges

There are significant challenges in enabling omni-channel fulfilment in a cost effective and profitable manner. Because of the seamless nature of omni-channel, businesses must also develop a culture of cross functional synergy, breaking down the silos. Omni-channel fulfilment is as much a challenge of cultural change as it is a challenge of system or process change. Many brick and mortar (B&M) retailers are taking their offerings online. In this rush, companies with supply networks designed to support their B&M stores cannot adequately serve their online customers without impacting their bottom lines. The challenge is making ecommerce work for the consumers and the business.

Online complexities:

  • Greater choice and transparency in price and product; with information readily accessible, consumers are more informed than ever about the products they want. From online reviews and comparisons customers have already made up their mind on what they want to buy before going to a store website.
  • Highly competitive delivery offerings with free shipping and prompt shipping offered by most online retailers. Studies have indicated almost half of all carts are abandoned due to shipping charges and respondents said shipping charges weighed heavily on their choice of on line retailer. Getting the delivery offering right can be a competitive advantage.

Planning becomes even more pivotal to success:

  • Ranging and availability to offer same or next day delivery means optimal stock must be on hand. Warehouse space is limited, when ranging for online, SKUs have to be carefully selected to offer the customer value but must also have sufficient margins. Servicing customers profitably and range planning for each channel is vitally important if a retailer is to survive e-commerce profitably.
  • Stock transparency is crucial, giving customers the assurance that any orders placed will be fulfilled in a timely manner. This requires an IT infrastructure that will allow for up to the minute inventory tracking. Proper inventory tracking will also allow the business to be more agile and smarter about stock management.

Execution and physical network requires re-design:

Less tolerance exists for getting it wrong as reverse logistics can be expensive, unit pick costs are inflated and stock transparency via real-time data as well as managing excess stock becomes more critical.

  • Picking costs are higher since items have to be picked at the unit level. Traditionally done by the customer in-store, unit picking for online sales have to be done by staff as an added cost.
  • Reverse logistics can be handled by B&M stores or via return shipping; with the aim of returning sellable products to inventory quickly. How do we ensure a seamless and pleasant experience for the customer at a moment where we can either earn their loyalty or lose future sales?
Opportunities

Omni-channel fulfilment will give customers constant access to your business thereby also providing your business with constant access to existing and potential customers. This ‘constantly on’ mentality provides great potential in increasing both your customer base and revenue.

  • Enter new markets and interact with new customers. The reach of online retail is only limited by the reach of your supply chain networks. There is greater opportunity to grow your customer base as your supply chain matures.
  • Availability of real time transactional data is one opportunity that has been leveraged by many retailers. Even greater opportunities are offered by real time browsing data. Leveraged effectively, this insight can offer greater supply chain agility and ensure the right products are available in the right volume at the right time.
  • New KPIs such as lost sales can now be tracked. Insight into previously hidden avenues can be utilised to evolve customer value propositions.
Approach

GRA recognises that omni-channel fulfilment is the next stage in supply chain evolution. We will work with you, looking at business goals, competitors, and future trends to determine the best omni-channel strategy suited to your business.

Enabling the strategy are the People, Processes, Systems and Data. Opportunities will be identified for closer alignment between your supply network and your business strategy through a review of current systems and processes, as well as benchmarking against best practice.

Working with you we will provide recommendations on strategy and execution and assist on the journey towards best practice omni-channel fulfilment.

Benefits

Businesses that do omni-channel fulfilment well will see increased customer satisfaction, gains in market share and greater brand awareness while maintaining or improving margins.

 

Further information

E-Commerce - Transforming Australian Supply Chains

This whitepaper explains why online retailing is so challenging, what can be learnt from overseas, and how retailers can be positioned to profit through their online business. Download the whitepaper E-Commerce - Transforming Australian Supply Chains

Retail Supply Chain Whitepaper - Part One

This presentation outlines three topical supply chain investments which if implemented effectively can substantially transform an organisation's supply chain into a competitive advantage. View the presentation Retail Supply Chain Whitepaper - Part One

 

Find out who we have worked with in the Retail industry.

– BACK TO CONSULTING

Testimonials

"I have and would continue to recommend GRA to companies reviewing either their supply chain strategy or day to day operations.”

– Mark Chapman, Supply Chain & IT Director at Pepkor

Typical results

  • 20-40% inventory investment reduction
  • increased service levels ranging up to 99.9%
  • 10%-15% reduction in supply chain operating costs
  • 5%-20% spend management savings
  • the ability to fund business initiatives from operating cash flow (OCF) improvements
  • improved return on capital employed (ROCE)
  • a minimum 3:1 ROI (10:1 to 30:1 typical)