Executive Briefings

How to Implement an Omni-channel Strategy

Kelly Thomas, group vice president of global accounts with JDA Software, offers a definition of "omni-channel," and discusses how the concept is transforming retail supply chains.

The term "omni-channel" is distinct from "multichannel" in that the former describes a "seamless path" by which retailers deliver their goods to the consumer, whether through the internet or brick-and-mortar stores. It entails both the transfer of both physical goods and information, says Thomas.

In pursuing an omni-channel strategy, companies need to keep several things in mind. One is the "push" component - the setting up of resources for order fulfillment. The second is the "pull" aspect - how the merchandiser actually carries out orders in the most efficient way possible. Third is how those tasks are achieved profitably, as companies seek to align sales channels with their business models.

Thomas recommends that manufacturers and retailers view the omni-channel as an "end-to-end" strategy - "optimizing push and pull components, and bringing them together in a profit framework." Too often companies find themselves setting up an entirely new supply chain to fulfill the new channel requirements, he says.

Businesses need to imbue their supply chains with flexibility. They must understand the "many-to-many" relationships inherent in the delivery of goods in an omni-channel environment. In addition, JDA suggests that companies implement a platform integrating their merchandising and supply-chain capabilities. Such a tool would combine inventory optimization, demand management, fulfillment and allocation in the creation of a localized assortment strategy. Finally, on the pull side, they need a common platform "that allows for a seamless experience across these information channels."

As to whether companies should create separate or combined areas of physical inventory for internet and store sales, Thomas says a workable strategy can embrace both practices. "You can allocate by channel," he says, "then set up rules as you see demand come in."

To view the video in its entirety, click here


Keywords: supply chain, supply chain management, retail supply chain, inventory management, inventory control, order fulfillment, supply management, supply chain planning, supply chain systems

The term "omni-channel" is distinct from "multichannel" in that the former describes a "seamless path" by which retailers deliver their goods to the consumer, whether through the internet or brick-and-mortar stores. It entails both the transfer of both physical goods and information, says Thomas.

In pursuing an omni-channel strategy, companies need to keep several things in mind. One is the "push" component - the setting up of resources for order fulfillment. The second is the "pull" aspect - how the merchandiser actually carries out orders in the most efficient way possible. Third is how those tasks are achieved profitably, as companies seek to align sales channels with their business models.

Thomas recommends that manufacturers and retailers view the omni-channel as an "end-to-end" strategy - "optimizing push and pull components, and bringing them together in a profit framework." Too often companies find themselves setting up an entirely new supply chain to fulfill the new channel requirements, he says.

Businesses need to imbue their supply chains with flexibility. They must understand the "many-to-many" relationships inherent in the delivery of goods in an omni-channel environment. In addition, JDA suggests that companies implement a platform integrating their merchandising and supply-chain capabilities. Such a tool would combine inventory optimization, demand management, fulfillment and allocation in the creation of a localized assortment strategy. Finally, on the pull side, they need a common platform "that allows for a seamless experience across these information channels."

As to whether companies should create separate or combined areas of physical inventory for internet and store sales, Thomas says a workable strategy can embrace both practices. "You can allocate by channel," he says, "then set up rules as you see demand come in."

To view the video in its entirety, click here


Keywords: supply chain, supply chain management, retail supply chain, inventory management, inventory control, order fulfillment, supply management, supply chain planning, supply chain systems