Omnichannel order fulfilment requires inventory as fully available to all channels including e-commerce, own stores replenishment and wholesale retailers. Firstly, a pull system where each channel dictates not only the order size but also delivery requirements, packaging, shipment method and rules for handling. Moreover, it is required an intense E2E cross functional collaboration through a RACI approach and upon accountability since there is no central authority within complex matrix organizations. What is more, a clear omnichannel customer centric strategy by defining the channels as well as the services provided online, within own bricks and mortar stores, to wholesalers and retailers to target specific B2C and B2B customer segments. Furthermore, customer insights about key drivers to buy will allow not only increase new business sales but also cross and upselling as well as the critical factors to will enable to develop loyalty and build long term relationships. However, to create fulfilment flexibility to manage complexity while keeping process simple to ensure processing speed through an effective and efficient omnichannel Supply Chain will require the following key features:
Custom-designed omnichannel Supply Chain network design
Companies can’t use to design omnichannel networks, the same thinking used to design traditional ones because poorly defined Supply Chains will struggle between one extreme with high inventory levels and operation costs and the other with stock outs and dissatisfied customers. The first step is to segment the Supply Chain into omnichannel flow paths starting from orders online to deliver to customer, pick up at store, deliver or return to store as well as directly select and pick up at store. The second step is to identify flows and nodes, working intensively in Leadtime reductions by eliminating waste to increase flows. On the other hands, focusing on nodes is key to make closer inventories to the customers as well as increase vertical and horizontal collaboration with business partners and customers to boost inventories visibility and availability. Third, the custom-design may result from a combination between centralized and decentralized Distribution Centres (DCs) according to what is best for each omnichannel flow path, considering its flows and nodes as well as the collaboration level achieved. Finally, the design will be enhanced by including within the infrastructure IoTs, Robotics, Big Data and Machine Learning among other disruptive technologies and applications available for omnichannel Supply Chains.
Developing essential capabilities by transforming processes
Capabilities are more than systems, software and even disruptive technologies, and to develop the ones which are required within an omnichannel Supply Chain the companies need to transform their processes with an agile perspective to achieve the right balance between flexibility and stability. Firstly, analyse customers behaviours and product flows requires not only technology but also to understand through processes involved, cost-to-serve and benefits within each omnichannel flow path, to identify opportunities to improve and develop countermeasures for example with demand shaping by dynamic pricing. Moreover, real-time inventory visibility throughout the omnichannel Supply Chain network will empower not only decision making to select the best sourcing node by consider how fast the product can get to the customer, cost-to-serve and benefits, but also regarding to inventory to have it in the right place, quantity and time. Furthermore, to have efficient as well as rapid node and store operations; simple, streamline and stable processes are needed. In addition, transport optimization could lead to define OLAs with business partners or run daily auctions to find the cheapest supplier for delivering services. Therefore, the operating model (TOM) should not only contain the omnichannel design but also performance management, incentives, responsibilities and decision making across the Supply Chain.
Enabling people through continuous learning and improvement
Since omnichannel Supply Chains are within fast changing environments, they need to be quick and flexible during the implementation of a new segment or flow path. Thus, an iterative approach with frequent and rapid changes as well as adjustments must be adopted throught an agile project and change management. Moreover, the deployment should be performed through smaller pieces including testing until the solution or new flow path is considered stable. What is more, through the integration of infrastructure with processes, people are enabled to operate efficiently in the omnichannel world, but this new approach required continues learning and improvement. Therefore, a change in organization and people’s mindset is needed where fulfilment flexibility will depend to a certain extent on people’s flexibility as well as the processing speed will heavily rely on simple, streamline and stable processes. Finally, the efficiency and effectiveness of the omnichannel Supply Chain will depend on the organization’s agile transformation journey and its short and long-term outcomes. To conclude, I would like to bring a very interesting reflexion from Taiichi Ono “Toyota style is not to create results by working hard. It is a System that says there is no limit to people’s creativity. People don’t go to “work” to Toyota they go there to “think”.” This is the right mindset to drive the omnichannel Supply Chain agile transformation through continuous learning and improvement.
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