Omnichannel Supply Chain Strategy - Its 3 Defining FeaturesOmnichannel supply chains have become integral to addressing customer needs, but what characterizes an omnichannel approach exactly?

Now more than ever, with the astounding growth in e-commerce, omnichannel supply chains have become a necessity for many companies. This is because, in addition to speed, customers are seeking flexibility and visibility in their shopping experience. By combining the channels that come with offering virtual and physical buying options into a single supply chain, companies give their customers that freedom.

Customers gain the ability to shop in both a physical and online store and have buying options across both purchasing mediums. Moreover, they are also given the opportunity to see the availability of what they want across both mediums, giving them a more complete picture of their buying options. As such, given the importance of such a supply chain strategy, it’s critical to understand the components that make it function.

This ebook goes over the main traits of an omnichannel approach as well as the most significant benefits that come with them.

What Supply Chain Components are Integral to an Omnichannel Strategy?

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Omnichannel Supply Chains - What are They and What do They Look Like?

Omnichannel supply chains are the future, yet there remains some confusion surrounding them—just what are they and what characteristics do they display?

The more customer expectations get detailed, varied, and complex, the more companies have to adapt. Omnichannel supply chains are such an adaptation. In the domain of retail, a transition is taking place from exclusively brick-and-mortar stores to both brick-and-mortar and online stores. As such, single channel supply chains are quickly becoming a thing of the past. With that said, what is an omnichannel supply chain exactly and how does it differ from one that is multichannel? Moreover, in practice, what does it look like?

This article by Morai Logistics covers just what an omnichannel supply chain is as well as the most prominent features it displays.

What is a Omnichannel Supply Chain?

Simply put, an omnichannel supply chain is a single supply chain where consumers have more than one option to fulfill their orders. For example, in the case of a pizza shop, they might want to provide two avenues for their customers to purchase their pizzas, online and in person. In turn, their supply chain would have two different considerations for fulfilling orders.

In many ways omnichannel is similar to a multi channel supply chain. However, there’s a key way in which it’s different and thus stands out. An article from River Logic explains:

Although the terms multichannel and omni channel are often used interchangeably, there are distinct differences. Multichannel refers to multiple supply chains used to satisfy each type of shopping experience. Each channel is separate. The online catalog is different from items stocked in physical stores, and pricing may differ. Each store has its own stock, often jealously guarded, and the organization’s online store is a separate entity from retail stores. Omni channel supply chains are completely different in that there’s only one supply chain.

So, with the broad strokes of what an omnichannel supply chain is covered, what are some of the most common components that make it up?

Integrated

No dimension of an omnichannel supply chain is more important than operational integration. All its processes need to managed on a single software platform. With the added complexity that comes with having numerous channels, those channels then need to be kept track of. A unified platform that tracks all the data and fulfillment avenues is critical as a result. By extension, digitization is also a must.

No Silos

As a consequence of the necessary integration, ominchannel channel supply chains also tend not have silos. These could be operational silos, data silos, or business silos. The main thing is, just like a modern day supply chain should have visibility throughout its chain, so should an omnichannel. Perhaps more so, due the various channels it has to contend with. With a greater possibility of complication should come a greater need for simple and straightforward oversight.

Flexible & Efficient

Due to the nature of an omnichannel supply chain, it needs to have inventory on the ready, particularly in the case of online orders, at locations nearest to the customer. That means running a supply that is precise with its analytics and forecasting so it can be flexible in meeting the demands placed upon it.

As highlighted in the preciously mentioned River Logic article:

In both instances [retail stores and online], carrying excess stock is costly and inefficient. What’s needed is supply chain agility together with analytics that help determine future demand with some degree of accuracy and an ability to balance conflicting demands while managing distribution costs.

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Omni-channel strategies prove to be an effective method for meeting on-demand delivery for consumers and providing efficient solutions for shippers.

On February 22nd, 2018, Morai discussed the exponential growth of the Canadian ecommerce market. Research presented supports an industry shift from traditional to Omni-channel strategy, finding that it enables third party logistic (3PL) providers to offer all distribution initiatives. By facilitating a customer-focused supply chain, companies can effectively meet the growing demands of their consumers.

Current issues facing the supply chain and logistics industry include the capacity crunch, an increase in freight rates and the impact of government regulations. Globalization and the expansion of markets, pushes 3PLs to implement intermodal transportation solutions that ensure efficient processes are available.

This article identifies the benefits of implementing Omni-channel strategies and intermodal transportation, and how this enables 3PLs to deliver optimized solutions.

Omni-Channel Strategy

The accessibility of global ecommerce markets has transitioned Omni-channel strategies from an ideal concept to a necessary solution. According to Statista, the number of digital shoppers is expected to rise from 19.5 million in 2013 to 22.5 million this year. Reports show that 54% of Canadian shoppers participate in ‘cross-border ecommerce’. The top two reasons for an increase in Canadian international purchases include cheaper online pricing and a wider selection of goods.

How does this impact the supply chain? While an increase in revenue is the end goal of any company, the supply chain and logistics industry recognizes that an increase in consumer demand for immediacy should be a primary focus. Leading ecommerce platform, Spotify, outlines the top benefits of implementing an Omni-channel strategy as :

  • A reduction in shipping times and costs
  • An efficient management of inventory
  • Delivering a seamless experience throughout the shipment lifecycle

They comment on the importance of offering a tailored experience to consumers, stating:

By optimizing the locations, sourcing, and fulfillment of your products…Omni-channel logistics ensure reduced costs, faster delivery, and a better customer experience.

Companies should establish an effective approach that focuses on the customer journey by choosing third party logistics providers offering intermodal transport options.

Intermodal Transportation

Capacity crunches increase the need for companies to have appropriate partners in supply chain management. Harsh weather seasons and a reduction in drivers can cause inefficient deliveries and poor customer service. 3PLs understand the unpredictability of the supply chain and logistics industry and steer companies from making costly decisions.

To offset these inconveniences that ultimately affect the end-to-end user, 3PLs utilize intermodal transportation. Intermodal transport is defined as the integration of different modes of transportation, including rail, truck, air and sea. Inbound logistics identifies the top benefits of using intermodal transportation for shippers:

  • Alternative methods of shipment
  • Lower freight rates
  • Predictable pricing
  • Reduction in handling costs

Research identifies that in comparison to road transport, “rail transportation is more energy efficient”. The implementation of an intermodal fleet has been found to be an eco-friendly and environmentally sustainable solution. This approach also ensures that shippers pay less, while optimizing the safe-handling of goods.

Companies looking to provide seamless, efficient and affordable options for their customers should understand the demand of ecommerce markets. By implementing Omni-channel strategies into business models, consumers will have alternative options that reduce wait times at affordable costs. 3PLs who offer optimized, intermodal transport options, can help shippers meet consumer demands while reducing expenses.

If you liked this blog post, why not subscribe to our blog? If you’re interested in what we do as a 3rd party logistics provider, don’t hesitate to check out our services (as expressed above, we are very pro finding you the lowest total cost!). We’re also in the twittersphere, so give us a follow to get the latest logistics and supply chain news.

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November is almost at an end. As December nears, the holiday peak looms for many distribution centers. The season will be the busiest for us in logistics and transportation thanks to Black Friday, Cyber Monday, Christmas Eve, and Boxing Day.

Customers will be expecting to receive their purchases and gifts with little hassle. This means that for many organizations, the sole focus of the winter peak will be to customer satisfaction. Thanks to the increasing number of people shopping online, the winter peak is especially volatile for orders.

Proper planning for the winter holiday peak should have started months ago. Some businesses go all-hands-on-deck as early as August, or October. While strategic planning is important for a smoother peak, it doesn’t guarantee it. There are several ways the plan can become derailed.

This week we’ve decided to focus on the five ways to help make sure your business stays on track.

1. Clarify Your Expectation to the Staffing Providers

As Deborah Ruriani of Inbound Logistics points out in her article, planning for the holiday peak should have involved your staffing providers. With the winter peak so close, it’s important that the expectations of your relationship are re-communicated. Turnover is likely to be high until the peak is over. Staffing providers need to ensure that new hires are of the same standards as those they are replacing.

2. Audit the Preparedness of Your Organization on All Levels

As the holiday season approaches, it might be tempting to hunker down and only focus on your work until it passes. Doing so puts your organization at risk. Fulfillment centers can only succeed if all its parts are all working smoothly and towards a common goal. Any weakness in the management, operations, support, HR or other departments can lead to a domino effect.

3. Regularly Check the Morale of Your Employees

It’s normal for stress levels to be higher during the holidays. A lot is expected of the staff and they’ll have tight deadlines in which to accomplish these tasks. Stress levels can’t get too high however. Too much stress over too long a period will cause mistakes. Too many mistakes will cause more stress, growing and extending the cycle.

4. Check and Update the 5S Lean or Other Quality Initiatives

The 5S Lean Methodology is a strategy on how companies organize a work space for efficiency and effectiveness by identifying and storing the items used, maintaining the area and items, and sustaining the new order. By this time of year, your company should have a detailed space utilization plan in place. But remember, this time of year is volatile so your plan may need tweaking. You’ll need to check which variables have changed since the plan was drafted and adjust accordingly. Flexibility is crucial in this area.

5. Continue to Audit your Building’s Processes for Best Practice Research

Peak is an important time for many organizations. This is why a record of what worked and what didn’t needs to be kept during and after every peak. Each peak brings with it the opportunity to do things a little bit better.

The winter peak is a stressful time for many of us in the logistics industry. Our customers expect us to deliver so they can have a happy holiday season. It’s because of our customers that we need to ensure that both the planning and execution of peak plans are done with the utmost dedication and care.

That’s it for us this week! If you liked this blog post, why not subscribe to our blog? If you’re interested in what we do as a 3rd party logistics provider, don’t hesitate to check out our services (as expressed above, we are very pro finding you the lowest total cost!). We’re also in the twittersphere, so give us a follow to get the latest logistics and supply chain news.

On February 4, 2014, we released a white paper detailing the different ways the logistics landscape had changed. Developments in the industry had created new challenges and opportunities all along the supply chain, shifting the world of transportation.

The last few years has seen many developments in the realm of logistics. The recent carrier, port, and labour issues; rate instability, primarily in ocean carrier; and rising costs in other areas of the world, specifically China, has led a number of global companies to reconsider their outsourcing strategies.

This week on the blog, we are taking a look at these changes in the logistics landscape and what progress has been made since 2014.

White Paper: Third-Party Logistics and Mexico Nearshoring Still Growing

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That’s it for us this week! If you liked this blog post, why not subscribe to our blog? If you’re interested in what we do as a 3rd party logistics provider, don’t hesitate to check out our services (as expressed above, we are very pro finding you the lowest total cost!). We’re also in the twittersphere, so give us a follow to get the latest logistics and supply chain news.

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With so much discussion over omni-channel fulfillment being the future, it is interesting then that only 19% of the top 250 retailers are currently fulfilling omni-channel demand profitably, according to a new the third annual Sands Future of Retail Report.

Despite such a small percentage of top retailers making a profit from omni-channel fulfillment, the service is in high demand by customers and growing.

For example, for nine out of ten consumers, free shipping was reported as the top incentive to shop more online. This number has grown to become the top consideration. One-day shipping (69%) and free returns (68%) also continue to be top drivers.

The Future of Retail and Logistics

There were other key findings of note in the study:

  • Nearly a third of consumers (31%) now shop online at least once a week, an increase of 41% from two years ago.
  • Only 9% of consumers have used same-day shipping in the past year, but almost half (49%) say same-day shipping would make them shop more online if it were offered more frequently.
  • 40% of consumers expect to receive their first drone-delivered package in the next two years or less. Less than a third (31%) think it will take more than five years.
  • Among consumers who don’t trust drones to deliver packages, theft and damaged packages are the top concerns (72% each), but safety (68%) and privacy (60%) seem less risky than they were a year ago.

A theme throughout the study from customers was the expectation of greater and greater speed of the supply chain. This can be seen by the finding that consumers who shop online more than twice a week are twice as likely to be persuaded by same-day shipping as consumers who shop online only a few times a year (63% vs. 32%).

The main reason that so few top retailers are yet to make a profit from omni-channel fulfillment is simply that they have yet to figure out how.

According to the 2015 Third-Party Logistics Study, fully one-third of all respondents (nearly 800 manufacturers, retailers and 3PLs) say they’re not currently prepared to handle omni-channel fulfillment.

Tim Foster, managing director, Asia-Pacific, with supply chain consulting firm Chainalytics weighed in on the discussion.

“Forester believes manufacturers and retailers will address this market transformation by eliminating non-value-adding activities within the supply chain. He cites the example of pharmaceutical distribution, where the traditional supply chain flow from manufacturer to wholesaler to retail pharmacy is being replaced by either a direct flow from manufacturer to retailer, or a loop with the 3PL in the center” summarizes Material Handling and Logistics News in this article.

3PLs have some time to catch up to customer demand. Privacy and security concerns are hampering the demand for omni-channel distribution in the areas of mobile phone payment. “This could explain why adoption has essentially remained flat year over year, with about a third of consumers having used these applications. Still, U.S. mobile payment transactions are expected triple in 2016 to $27 billion, a sign that a few eager early adopters and the growth of Apple Pay could eventually force more widespread changes in consumer behavior” concludes the article.

That’s it for us this week! If you liked this blog post, why not subscribe to our blog? If you’re interested in what we do as a 3rd party logistics provider, don’t hesitate to check out our services (as expressed above, we are very pro finding you the lowest total cost!). We’re also in the twittersphere, so give us a follow to get the latest logistics and supply chain news.