omnichannel

Omnichannel

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A good omnichannel strategy can create the ideal customer experience. But, what is omnichannel exactly? And how is it related to the supply chain? In this article, Inchainge discusses everything you need to know about omnichannel.

What is omnichannel?

Omnichannel means using all of your channels, both physical and digital, to create a unified and seamless experience for your customers. Whether it involves shopping online, through digital devices, or visiting a brick-and-mortar store, customers expect their interaction across multiple touchpoints to be seamless.

What is the difference between omnichannel and multichannel?

Businesses using more than one type of distribution channel to reach customers are considered having a multichannel strategy. However, what really differentiates multi and omnichannel is the customer experience. Multichannel generally lacks integration. The different channels function as silos by working independently from each other. For example, a retailer’s online channel will have its own strategy, goals, and stock, whilst operating completely separate from its physical store.

On the contrary, the purpose of omnichannel is to enhance customer experience with a connected flow across multiple customer touch points. All the different channels are integrated properly to have visibility on stock. Hence, seamless integration in omnichannel is crucial to creating the ideal customer experience.

What is an omnichannel strategy?

An omnichannel strategy is often discussed as omnichannel marketing strategy or omnichannel retail strategy, depending on the nature of the business. It is basically an approach for fully integrated seamless value-added experience provided by operations, sales, and marketing. This gives users an opportunity to search and buy from a variety of platforms for a single product. It ranges from online browsing to in-store and anything in between.

Omnichannel supply chain

The role of supply chain in an omnichannel business model is to deliver consistently and seamless operations to meet the customer demand.

In order to achieve that, businesses should remove operating silos that exist between different sales and distribution channels. This means combining different sales and operation systems or merging warehouse or fulfilment operations so they can serve both online and in-store requirements collectively.

Challenges in omnichannel supply chain

To achieve an efficient supply chain and the seamless operations required for omnichannel is not as easy as it looks. Due to systems working in silos, it is a challenging task for supply chain managers to estimate how much, when, and where to hold stock in order to meet the demand for one channel.

Assigning a wrong stocking strategy or variability in demand at one channel may result in out of stock which results in customer dissatisfaction. Prioritizing the demand of one channel can also disrupt your supply chain.

Moreover, it is difficult to optimize omnichannel value to customers without clear visibility across the supply chain. Therefore, it is important for retailers to know which stock to hold, what quantity to hold, where to hold, which channel requires priority and when to replenish. Hence, the right approach requires technology to enable visibility across the supply chain in order to manage the flow of inventory among different channels.

Improving strategies for omnichannel supply chain

As discussed before, removing silos and enhancing visibility throughout the supply chain is important for its success. To build a successful omnichannel the supply chain requires an IT system integration to have information available in real time.

It is common today that a customer buys the product online but returns it in-store. Therefore, the flow of inventory with the help of inventory management software can help to optimize the return process.

Businesses need to adapt to the following in order to improve their omnichannel supply chain:

  • Well suited Enterprise Resource Planning (ERP) system, which tracks business resources (e.g. cash) and the status of business commitments (e.g. orders)
  • Combined warehouse or fulfilment centre for all channels
  • An integrated inventory optimization tool
  • An integrated warehouse management system (WMS)

Omnichannel experience

Experience the dynamics of an omnichannel approach yourself in our business simulation game The Fresh Connection. Together with a multi-disciplinary team you get to manage an omnichannel for a ‘fast moving consumer goods’ supply chain. To succeed you need to align and discuss the challenges of integrating the different flows.

Want to know more?

Now you know everything about omnichannel and how it relates to the supply chain. Do you want to know more about the supply? Have a look at our pages about supply chain management, supply chain risk management or supply chain finance. Do you want to experience and learn more about topics related to supply chain? Take a look at our business games page!