5 Factors Dictating Success of Omnichannel Supply Chain:


May 19, 2021
5 MIN READ
Vinculum
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Vinculum
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Since 2010, online shopping has been steadily increasing. It became a necessity as a result of the global pandemic. The ease of online shopping – ordering items while at home and having them delivered within a few days – encouraged consumers to develop a new habit.

It was evident from the numbers that the new habit had taken hold. From 2010 to 2020, e-commerce sales grew from 4.2% to 11.8% in the US. In Q2 of 2020, it reached 16.1%.

It is expected that online sales will not recover to pre-COVID-19 levels even after COVID-19 ends. The pandemic prompted many businesses to prioritise omnichannel initiatives.

Customers are now looking for retailers that offer speedy delivery, availability, and convenience. As a result, the focus shifted from serving online customers to leveraging the store network. In addition to fulfilling orders from stores, their omnichannel capabilities enable customers to picktheir convenience instead of shipping to e-commerce fulfilment centres. To do this, data and processes need to be integrated across the network, resulting in additional IT investments, operational work, and shipping and handling costs.

Advanced analytics are necessary for efficient omnichannel fulfilment, which involves many tactical, strategic, and operational supply chain decisions.

If your company is involved in omnichannel planning, here are some critical factors to consider:

1. Compiling Purchase and Sales Data 

Several factors need to be considered, including the fulfilment cost, selecting stores for omnichannel fulfilment, operational requirements, and customer expectations regarding delivery timelines and numbers of shipments. To track all of these factors, the sales transaction should include the selling location (where the demand comes from), the fulfilment location, the delivery date, the fulfilment date, and the receiving date.

2. Estimating and managing returns in forecasting and inventory decisions

The fulfilment location is typically not the same as the return location. Since returns significantly impact store inventory levels, they must be considered when planning inventory.

Remember that different retailers process returns differently. Most retailers accept returns on the same day. At the same time, some go through a longer sanitisation and quality assurance procedure and make returns available 24 hours after receiving them. In contrast, others return them to the e-commerce fulfilment centre. These restrictions must be defined and recorded in the data accordingly.

3. Using store transfers to improve response time and reduce costs

It takes extra time and money to fulfil orders when the fulfilment location is different from the selling location. The products are usually shipped to the selling location before being sent directly to the customer. The products are then shipped from the selling locations to customers. Fulfilment stores can send a small volume of products to selling locations in response to demand. However, adding automated transfers every day or each week would result in economies of scale. By transferring stock between stores, the stores will have products on hand, reducing waiting time for customers.

4. Using batches to optimise omnichannel fulfilment

It is common for companies to establish business rules. As a result, the fulfilment locations for a specific order are determined immediately when an order is placed. It is nonetheless possible to optimise fulfilment decisions when orders are processed in batches. If you combine fulfilment locations, you can run optimisation “n” times a day while following company rules instead of deciding on them every time an order comes in. “N” depends on the number of orders and the required response time for customers. Delivery of the orders will lead to enhanced transportation efficiency and multi-stop routing options.

A key consideration is to minimize the number of packages that customers receive. Customers may prefer receiving all line items from the order as a single package, so shipping everything will help ensure customer satisfaction.

5. Choosing fulfilment locations strategically 

Consider conducting a network analysis before opening all of your store networks for omnichannel fulfilment. Performing a network optimization model can determine the location’s role and capacity. Rather than being made every day or every week, you can revise this decision several times a year. Through this process, certain places can only be sale sites to ensure maximum returns on investment for potential fulfilment locations. Therefore, deciding how many fulfilment centres to have could benefit offline customers.

Easy-to-use Omnichannel planning 

It is necessary to incorporate business rules, consider fulfilment locations and monitor relevant data for accurate predictions. All of these things are difficult to manage using spreadsheets. In the modern retail world, retailers increasingly work their supply chains on digital platforms, such as cloud-based software.

If the company’s business rules and criteria are met, you will manage the omnichannel operations effectively. Multichannel planning software can process all of the required data utilizing advanced analytics and machine learning techniques. You will use the data to perform predictive analytics to forecast demand and return rates. After that, prescriptive analytics will optimise inventory levels in fulfilment and sales locations.

Perfectly designed omnichannel planning processes will delight families and ensure they get everything they need from online retailers!

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