Executive Briefings

Optimizing the Omnichannel Supply Chain

With so many channels to juggle, merchandisers today are finding it difficult to manage multiple pockets of inventory, and satisfy customers regardless of how they order product. Burton White, vice president of industry supply chains with Chainalytics, shares some tips on how this goal can be met.

Retailers and manufacturers alike are struggling with the challenge of supporting the omnichannel. Their initial focus might be on satisfying the customer, but companies also need to start paying attention to the cost-to-serve metric, says White. Many don't understand the true cost of supporting today’s omnichannel requirements.

Free shipping is the most obvious drag on costs, but it’s here to stay, White says. To make it feasible, retailers need to get their costs in line, taking into account such factors as “last-mile” transportation, inventory placement, efficient fulfillment techniques and shipment bundling.

Data can be used to hedge against uncertainty in increasingly volatile marketplaces, White says. Companies need to focus on the metrics that govern inventory placement – where product is, how it sits in various markets, and how it’s positioned in line with retail outlets and distribution centers. Retailers should be able to cross-sell within each channel, drawing inventory from multiple locations to meet immediate needs. Store managers need to be sharing the relevant information with distribution centers.

Many companies continue to struggle with “full-line visibility,” White says. They should be able to view inventory wherever it resides, whether in the D.C., the backroom of a store or on the retail shelf. At the same time, retailers need to ensure pricing consistency, so that online shoppers picking up orders at the store don’t discover that the item is cheaper for walk-in buyers.

Rising customer expectations demand that companies have a well-thought out plan and consistent strategy for serving all channels. That includes the need to handle reverse logistics in an efficient manner. “As the omnichannel grows,” White says, “that’s going to grow with it.”

To view the video in its entirety, click here

Retailers and manufacturers alike are struggling with the challenge of supporting the omnichannel. Their initial focus might be on satisfying the customer, but companies also need to start paying attention to the cost-to-serve metric, says White. Many don't understand the true cost of supporting today’s omnichannel requirements.

Free shipping is the most obvious drag on costs, but it’s here to stay, White says. To make it feasible, retailers need to get their costs in line, taking into account such factors as “last-mile” transportation, inventory placement, efficient fulfillment techniques and shipment bundling.

Data can be used to hedge against uncertainty in increasingly volatile marketplaces, White says. Companies need to focus on the metrics that govern inventory placement – where product is, how it sits in various markets, and how it’s positioned in line with retail outlets and distribution centers. Retailers should be able to cross-sell within each channel, drawing inventory from multiple locations to meet immediate needs. Store managers need to be sharing the relevant information with distribution centers.

Many companies continue to struggle with “full-line visibility,” White says. They should be able to view inventory wherever it resides, whether in the D.C., the backroom of a store or on the retail shelf. At the same time, retailers need to ensure pricing consistency, so that online shoppers picking up orders at the store don’t discover that the item is cheaper for walk-in buyers.

Rising customer expectations demand that companies have a well-thought out plan and consistent strategy for serving all channels. That includes the need to handle reverse logistics in an efficient manner. “As the omnichannel grows,” White says, “that’s going to grow with it.”

To view the video in its entirety, click here