Executive Briefings

Building an Omnichannel Fulfillment Road Map

Analyst Insight: Omnichannel commerce is the new "normal" for retail. And it's a tall order for most companies to achieve. You'll need an omnichannel road map that incorporates where you've come from and where you need to be based on your customers' expectations and your business strategy. – Joe Dunlap, Senior Director, Supply Chain Strategy, Fortna Inc.

Building an Omnichannel Fulfillment Road Map

Online sales growth and increasing customer expectations for a seamless experience across channels has given rise to omnichannel as the new normal for retail. This disruptive change requires alignment of stakeholders at unprecedented levels; multi-year capital investments in systems, store operations and material handling equipment; and the need for flexibility to adjust to an uncertain future. That’s a tall order for most companies. But how do you decide what to invest in and in what order to tackle each initiative? The path you take depends largely on where you've come from and where you need to be based on your customers’ expectations and your business strategy.

You need an omnichannel fulfillment road map that identifies and prioritizes the steps to achieve your goals. Consideration must be given to dependencies, linkages and stakeholder involvement to ensure the proper support and resources are in place from start to finish.You must begin with the customer experience and re-design your fulfillment operations so that the seams are invisible. This could mean shared inventories, shared operations, complete inventory visibility, complex and dynamic rules for delivering at the highest profitability and fastest speed, and common KPIs across the organization. That kind of alignment can be challenging and costly.

To develop an omnichannel fulfillment road map, retailers should focus on six key omnichannel capabilities – identifying meaningful and actionable gaps in Inventory, Order Management, Delivery and Returns, Customer Information, Operational Effectiveness, and the Distribution Network. Fortna developed an Omnichannel Fulfillment Model focused on these six capabilities. Under each capability there are individual elements for which good, better and best are defined. The model provides a way for companies to evaluate where they are against where they need to be, where best-in-class might be:

• Inventory is visible to the consumer across channels, well-deployed to meet demand at least cost, and shared (available to customers in different channels).

• Orders sourced from the closest node while minimizing split shipments, cross shipments and transfers.

• Delivery and Returns provide greater efficiency, flexibility, visibility and options.

• Customer Information and preference data is used to provide improved customer experience.

• Operational Effectiveness strikes balance between flexibility and costs.

• Distribution Network enables efficient flow of orders across different paths, balancing service and costs.

The evolution to omnichannel is not the same for every company. Ask yourself: “what omnichannel capabilities do we need to tackle and to what level of performance?” Then begin to develop a road map by thoroughly assessing your omnichannel fulfillment capabilities to determine where you are and where you need to be.  Next, identify the gaps and determine the initiatives to fill those gaps.  Finally, group those initiatives and develop a sequence of steps to achieve your omnichannel goals.

The Outlook

No two companies follow the exact same path for omnichannel transformation. You’ll need a thoughtfully developed road map to determine your unique path and prioritize initiatives to get you to your goal. There are six key fulfillment capabilities to consider when developing a road map. Depending on where you are and where you want to be, you may need to make investments in some or all of these capabilities.

Online sales growth and increasing customer expectations for a seamless experience across channels has given rise to omnichannel as the new normal for retail. This disruptive change requires alignment of stakeholders at unprecedented levels; multi-year capital investments in systems, store operations and material handling equipment; and the need for flexibility to adjust to an uncertain future. That’s a tall order for most companies. But how do you decide what to invest in and in what order to tackle each initiative? The path you take depends largely on where you've come from and where you need to be based on your customers’ expectations and your business strategy.

You need an omnichannel fulfillment road map that identifies and prioritizes the steps to achieve your goals. Consideration must be given to dependencies, linkages and stakeholder involvement to ensure the proper support and resources are in place from start to finish.You must begin with the customer experience and re-design your fulfillment operations so that the seams are invisible. This could mean shared inventories, shared operations, complete inventory visibility, complex and dynamic rules for delivering at the highest profitability and fastest speed, and common KPIs across the organization. That kind of alignment can be challenging and costly.

To develop an omnichannel fulfillment road map, retailers should focus on six key omnichannel capabilities – identifying meaningful and actionable gaps in Inventory, Order Management, Delivery and Returns, Customer Information, Operational Effectiveness, and the Distribution Network. Fortna developed an Omnichannel Fulfillment Model focused on these six capabilities. Under each capability there are individual elements for which good, better and best are defined. The model provides a way for companies to evaluate where they are against where they need to be, where best-in-class might be:

• Inventory is visible to the consumer across channels, well-deployed to meet demand at least cost, and shared (available to customers in different channels).

• Orders sourced from the closest node while minimizing split shipments, cross shipments and transfers.

• Delivery and Returns provide greater efficiency, flexibility, visibility and options.

• Customer Information and preference data is used to provide improved customer experience.

• Operational Effectiveness strikes balance between flexibility and costs.

• Distribution Network enables efficient flow of orders across different paths, balancing service and costs.

The evolution to omnichannel is not the same for every company. Ask yourself: “what omnichannel capabilities do we need to tackle and to what level of performance?” Then begin to develop a road map by thoroughly assessing your omnichannel fulfillment capabilities to determine where you are and where you need to be.  Next, identify the gaps and determine the initiatives to fill those gaps.  Finally, group those initiatives and develop a sequence of steps to achieve your omnichannel goals.

The Outlook

No two companies follow the exact same path for omnichannel transformation. You’ll need a thoughtfully developed road map to determine your unique path and prioritize initiatives to get you to your goal. There are six key fulfillment capabilities to consider when developing a road map. Depending on where you are and where you want to be, you may need to make investments in some or all of these capabilities.

Building an Omnichannel Fulfillment Road Map