We have previously discussed how to design an Omnichannel Supply Chain Logistics & Distribution Setup, but the natural question now is: What is the Key Success Factor that contributes to make an Omnichannel transformation project successful?
In this article I have identified four factors that should be considered really key.
Individual Consumer Centrality
It is key to realise that what works for one customer in one segment or geography may not work for another.
There can be tremendous variation in customer preference for buying, receiving, and returning merchandise, and for required levels of customer service and human interaction.
It’s therefore essential to localize Omnichannel Supply Chain Logistics & Distribution solutions, and give special consideration to local regulations when defining the Omnichannel strategy.
A strong key success factor is to create a seamless consumer experience, the organization may have to change, aligning itself with the Omnichannel shopper.
Companies cannot retain separate online and offline organizations for Marketing, Merchandising, and Supply Chain Logistics & Distribution.
Instead, they should define one common strategy and vision for an Omnichannel customer experience.
The tricky point is to create one common strategy for each individual customer.
Incentives and metrics must be aligned to this common strategy to ensure successful implementation.
The supporting organization needs to be consistent with the objective to provide to the customer one common vision.
The wrong way to approach this transformation is to set up separate units that work in isolation. The correct way is to weave thinking and actions into the structure and processes of the whole Company.
The key success factor is to support transformation by shifting the organization’s mindset from knowing to learning, for example by combining a to-down design approach with a customer-centric test-and-learn delivery model; by aligning staff incentives with online purchase; or by ensuring the right mix of creative top-down decision making and customer focused execution.
These capabilities represent the “how” part of the equation: building the skills base, knowledge, and business processes so that it become part of “the way we do things”.
Optimize the Omnichannel Supply Chain Logistics & Distribution Infrastructure
It is mandatory to integrate inventory across channels and in transit. Probably this is the most relevant key success factor. It requires significant technology investment and may require a review of existing inventory allocation and ownership model.
Todays’ requirement is to design a flexible and dynamic distribution infrastructure. It must be accurately evaluated if the existing storage and processing capacity can be translated into a virtual network.
Introduce an on-demand reallocation system is fundamental to optimise operations and working capital in stock.
Suppliers and logistics providers need to be appropriately aligned with flexible, dynamic contract terms
Expand the utilization of physical assets in support of the Omnichannel strategy
Evaluate if stores, warehouses and distribution centers can progressively play a greater role in direct-to-consumer fulfilment.
Contemporary it should be possible to segment and deploy fulfillment options based on product characteristics such as value, volume, seasonality, service requirements, and margin.
Consider innovative last-mile delivery options consistent with Omnichannel customer expectations, modeling the preferred delivery options for cost impact to select the right impact (in-house out-sourcing).
IT is not enough
For all the above steps, technology is the key enabler.
Said that, it is important to always consider that a successful Omnichannel transformation project cannot be IT-driven, keeping always those key factors as the elements to be successful in this evolution.
For sure Information Technology is a key success factor, but it cannot be the driver of the overall transformation.
The right combination of new IT solutions, clear business requirements, consistent processes design, healthy supporting organisation and strong ROI projections will help to drive Omnichannel strategy at every level of the business.