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Omni-Channel Fulfillment Drives SCM

OmniChannel Fulfillment

This past holiday season, did you brave the crowds and wait in line for deals too good to be true? Or did you stay in, and enjoy the comforts of your home and use a computer or tablet to make purchases? A growing number of consumers chose the latter option or a blend of both, and retailers are responding with omni-channel business strategies. As the function that bears much of the heavy lifting in these strategies, supply chain management (SCM) must be a part of that response.

In a recent episode of Talking Logistics, two former supply chain executives at lead retailers share their views on the evolution of retailing, and underlined the key role that the profession has to play in this exciting episode of the retail story.

Eric Morley and Will O’Brien look at these changes as an opportunity for both traditional brick and mortar stores and online stores. Eric highlighted that brand loyalty is going away. Price and specs influence consumers’ buying decisions as never before. For example, in today’s environment, what consumer buys a larger purchase without doing research? Very few. The opinions of peer groups have become particularly important. A number of studies show that individuals are more likely to make a purchase if a friend recommends the product or service. According to a recent study by ODM Group, “74% of consumers rely on social networks to guide purchase decisions.”

The bottom line for retailers is clear: today’s consumers are extremely well informed and, by extension, very discerning.

According to Morley and O’Brien, the charge to develop omni-channel retailing models capable of meeting these demands is being led by sales and marketing. It is generally accepted that this function has the pulse of the market; sales and marketing teams must be intimately familiar with consumer preferences if they are to be effective.

But supply chain management is the critical link between market supply and demand, and as such, must have a seat at the omni-channel table too. Retailers that understand this, and include operations in the development of these strategies, can create a competitive advantage.

For example, one cannot talk about omni-channel fulfillment without looking at same-day delivery. There have been numerous blogs and stories recently written about same-day delivery and the impact that it can create in the supply chain.  If you look at the numbers, most people are selecting this as an option when given a choice. According to some new data, overall sales increased when the consumer was given same-day delivery as an option at the time of the checkout. Both Eric and Will made the point, “It’s not about how quick you have to have it, but when you want it.”

Leading companies are well aware of these preferences. Google is testing a same-day delivery service that brings it into competition with similar offerings at Amazon, for instance. And supply chain management is the function that makes these services possible.

Consumers want both online and bricks and mortar buying options, and retailers are redefining their business models in order to satisfy these needs.  These changes bring tremendous opportunities for retailers of all shades and providing supply chain management is an integral part of the new service equation.

The supply chain management community must play its part by questioning the way it supports retailer customers going forward. How has your strategy changed in light of these transformative changes?

For additional information on volatile demand, growing regulation, compressed order lead times, and other factors that are pressuring retailers, download Manufacturers and Retailers Focus on Logistics Excellence as Service Performance Grows in Importance in a Consumer-Centric Marketplace.