Supply Chain Logistics & Distribution as the backbone of every Omnichannel strategy 2

Backbone - Omnichannel

Efficiency and Effectiveness are the pillars for a successful Omnichannel strategy.

Logistic operations are the key enablers to consistently and cost-effectively deliver Omnichannel, in terms of personalized service and flexible fulfilment.

Robust Logistic operations enable the retailers to achieve cross-channel inventory visibility and optimization (crucial to the success of Omnichannel implementation) and meet customer expectations, generating higher satisfaction and loyalty.

The change to Omnichannel is justified by the benefits resulting from an increase in customer base and loyalty.

Cross-channel fulfillment strategies help to move store inventory faster and save the sale that may have been lost (in the traditional multichannel approach this meant that a product was unavailable).

Through Omnichannel it is possible to improve margins as ship from stores. I is also possible to liquidate products or markdowns at a much higher gross margin rate. Avoiding markdowns is well worth the cost of shipping products from store to home.

Cross-channel inventory visibility also reduces costs through inventory optimization.

Omnichannel requires seamless personalized customer experience anytime, anywhere and on any device. This is impacting logistics as the variety of Ws (refer to ‘the Logistics Rule’) becomes exponential.

An approach to Distribution based on Omnichannel can also leverage mobile phones to drive traffic to the physical store network.

For example, if you are at a Starbucks in the neighborhood, a nearby retailer realizes you are close by based on your GPS location and sends you special offers to entice you to drop in to the store and purchase something.

To maximize effectiveness, the personalized promotional offers sent by the retailer are based on your profile and purchase history gathered from a combination of sources.

This is what is referred to as « on-the-go » promotions. The customer insights database triggers targeted offers when the customer enters specific geo-fencing codes (predefined locations), that increases the chance of getting the customer to visit the store.

Omnichannel customer engagement continues beyond the store via online channels. You need to design these processes to build relationships with customers and influence their opinions and purchase decisions. In particular for those customers who prefer to do their shopping outside bricks-and-mortar stores.

Omnichannel companies use social media to monitor customer sentiment and, where possible, take corrective actions to recover any negative customer experience.

The key objectives are to deliver great customer service, drive action through customer insight, build customer advocacy and build a contemporary image for the brand.

All the above is referring to the front-end, that cannot work if back-end processes are not streamlined and duly monitored.

In the successive sessions we will analyse how to deploy back-end processes for supporting a successful Omnichannel strategy.

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2 thoughts on “Supply Chain Logistics & Distribution as the backbone of every Omnichannel strategy

  • gilberto vendramin

    Very interesting and well done.
    We always hear talk about omnichannel but no one has ever expressed so clearly where we start.

  • Paul

    So true!
    Today’s customers demand higher speed, convenience and personalization.
    Supply chains need definitely to be redesigned to offer greater flexibility and agility. Distribution centers need to be more and more integrated to handle on line and store orders.