Omnichannel strategy

Revision as of 00:37, 24 September 2017

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Abstract

Summarise

Introduction

Retailers have traditionally oriented their strategy to deliver the right product at the right location and time. With the rise of internet and smart devices, and the new capabilities of connection and tracking through multiple digital platforms, new challenges appear to last mile logistics, marketing and multi device purchasing. An opportunity arises for retailers to become truly customer-centered and personalize their shopping experiences. However, it adds new challenges and complexities to the supply chain management.

Specifically, omnichannel refers to the use of both physical and digital channels combined with the delivery of a seamless shopping experience. This strategy requires a complex robust system and management in which the supply chain must adapt quickly to demand, escalate as required and have a fast response in the last mile delivery. ^[1]

This revolution will mean a transformation in the way that retailers manage their supply chain.

Omnichannel strategy: How it will model the supply chain

A growing number of customers use multiple channels during their shopping journey. These kinds of shoppers are known as omnishoppers, and they expect a seamless experience across channels. Customers prefer retailers who could provide anything, anywhere, at any time and in any way according to customers’ preference ^[2] For example, an omnishopper might research the characteristics of a product using a mobile app, compare prices on several websites from their laptop, and, finally, buy the product at a physical store or have it delivered to an address. They could also return it in store or having it delivered. This consumer 3.0 uses recent technology to search for information, offer opinions, explain experiences, make purchases, and talk to the brand. In an omnichannel environment, channels are used seamlessly and interchangeably during the search and purchase process, and it is difficult if not virtually impossible for retailers to control this use (Neslin et al., 2014; Verhoef et al., 2015)^[3].

Regarding technology: In the transformation, the adoption of Integrated channels and big data are a prerequisite for competitiveness (D. Grewal et al, 2017) . Advanced analytics allow to track the stock levels and all the data generated in the supply chain, but are also an input for the pricing strategies across channels, and the comparison to competitors. In terms of supply chain, the main changes required include the need for real-time universal inventory, increase in the speed of the decisions and actions and integrated systems to get one view of orders across the supply chain, check the status of any item and be able to fully control the production process. Big retailers in the world now realise the need for it, and the benefits of the implementation. ^[4]

In terms of project management, it needs to be assured that the whole organization works with one single common set of shared information and objectives, that improve overall transparency of the supply chain. Departments within the organization should not be an impediment to omnichannel strategies: ecommerce and physical departments shouldn’t compete for customers. This implies that some channels might be rewarded for supporting a sale even if it is not through them where is it closed. (Kusum L.Ailawadi, Paul W.Farris, 2017) ^[5] .

The highly competitive market is changing the way companies interact. New forms of collaborations are taking place to compete and integrate the technologies in the main business. One example is the partnership of Walmart and Google presented by its CEO, Marc Lore in August 2017. ^[6]

Omnichannel distribution is in fact the frictionless combination of channels. Consequently, effective and good project management becomes crucial in the implementation of the new strategy, both for the internal to the external management.

APPPM Tools for retail

Unfortunately, successful project management is still an issue in the retail sector ^[7] . However the recent development and innovations set the pace to the enhancement of current methods.

The fast pace and complexity of Supply Chain method involved in Omnichannel strategy might be addressed with some of the following tools form Project Management as suggested by Lisa Anderson ^[8]

Use the Critical Path Method.

"This well known technique to show in a project schedule the sequence of activities to characterize the most time consuming ones and the relationships between the different tasks could be helpful in this complex and fast paced environment.

“Using project management tools to identify and manage the critical path is an effective way to do everything from reminding product groups of upcoming collaborative tasks, to making sure that teams and vendors are focusing on the right activity at the right time, or at least aware of delays that can affect other pressing deadlines.”

Communicate and Collaborate.

It’s no secret that communication is at the crux of success when managing complexity. For example, a SIOP (sales and inventory operation plan) or a sales and operations planning process can run across supply chain partners, which provide a vehicle to communicate and collaborate on demand-and-supply topics."

"Another way to bridge any communication gaps is to use collaborative project management software. It provides a single source of truth for project and team activity and schedule updates, especially when connection points include global teams working in different time zones."

“Here’s another simple way to approach communication to streamline supply chain complexities: Pick up the phone. If the operations plan or project management platform reveals incoming issues, talk to those task owners who are dependent on you, as well as the people you’re dependent upon.”

Use Agile Processes Agile PM ImperativesAgile PM Wikipedia.

Agile, a set of fast and flexible processes that accounts for change, helps teams adapt to marketplace opportunities, and improves business performance, lets you to break down complexity into reasonable chunks. Once you try a simple set of circumstances, you add layers of complexity and test again. Thus, it becomes easier to identify issues and manage complexity because you understand what each layer of complexity affects.

"If you lead a team or a project, the more you learn how to successfully manage complexity, the more you’ll thrive. And simplifying complexity is a starting point that will pay big dividends. Also, in today’s Internet-purchasing world, speed is cornerstone. Since managing complexity improves speed and effectiveness, companies that can manage complexity often leapfrog their competition."

Once reviewed the importance of project management in the industry, the new aspects of it will now have to set the focus on:

 - Owning one source of information, accessible to the whole organization. Information and objectives need to be shared and aligned. 
   A suggested approach for this is the Enterprise Project Management Office (EPMO). While the traditional PMOs focus on doing the things right, include the right way of doing this. The strategic goals are achieved when the teams are supported by this shared business function. 
 - Accelerate communication with project members and stakeholders. Since decisions must be made faster, the interaction with stakeholders is ought to be continuous.

 - Visibilityto have a quick real-time status overview of all retail projects in one place – anywhere at any time.

It becomes more important than ever using a good software that integrates the store data with the online channel, the demand and trends that feeds the marketing decisions, and optimises the operations with the cost and time dimensions.

The improvement of the processes in the new circumstances will often result in partnerships with suppliers and other stakeholders. This another dimension of complication that needs to be considered in the new supply chain management.

Additional reflection

As research has explored, project management in retail has an extra dimension: the customer. Project management has traditionally focused on conventional planning tasks although human behavior is particularly important in the retail setting, where projects are generally focused on testing new concepts, increasing collaboration, and implementing new technologies. ^[9]

“Customers prefer retailers who could provide anything, anywhere, at any time and in any way according to customers’ preference.” This is the ultimate goal of Omnichannel retailing, but behind the scene there are multiple complexities added to the Supply Chain in several stages as Jahan Minur suggests: • Inventory Level management across various fulfillment centers • Sourcing and distribution strategy from single/ Multiple DCs • Reverse logistics across different channels • Data management complexities including security and volume. • Increased Customer Expectation The Omni-channel retailing could help in reducing the stock outs and revenue loss. For the Omni-channel to function successfully the Order Management System (OMS) in the back end must be implemented in the right way. The shift to Cross-channel retailing requires the customer transaction and the master data, to be available across all the channels. The OMS should provide all information from the order creation to delivery and also the reverse logistics information consistently between different channels. The data obtained from the customer is very valuable. It helps determine the customer trend and also in the demand planning. But adding data analytics to the database linked to the OMS increases the burden on the DB. Hence, the data needs to be archived separately for further analysis. This could be done using the ETL to migrate the data to the archival database. If the retailer deals with multiple vendors, it is important to consider moving to an enterprise level solution, so as to have a good supply chain visibility and also for the reduction in operation cost. The OMS has to be well integrated with other systems such as fulfillment centers, inventory management, warehouse management and the logistics systems. For example consider an e-commerce order which has five items of multiple quantities (Pen, book, clock, keyboard, and tablet). If all the items are not available in any nearest single DC, the order management system should know the inventory levels of various fulfillment centers and should be able to break the order into multiple purchase orders (PO) and send it across several fulfillment centers. For that to happen the OMS has to be well integrated with the sourcing engine, so as to determine the cost-effective way to ship the product with customer satisfaction in terms of the order arrival time. Also, the order tracking information must be made available to the customer. With the arrival of peak seasons, the volume of sales is usually thrice than that of standard sales. This requires the functionality of the system to be increased to at least four folds, to have a buffer. Rather than to invest permanently on the IT infrastructure, the retailers could consider moving to the OMS cloud hybrid model. Where the usual sales are managed by the in-house IT infrastructure and the excess peak load could be carried out the cloud infrastructure, resulting in cost saving together with a decrease in loss of sales due to IT infrastructure problems. For a seamless transition in Omni-channel retailing, in addition to the frontend, the backend OMS must be able to effectively support the cross-channel functionality. The OMS must support the following functionality: • Cross-channel order capture • Cross-channel order fulfillment and reverse logistics • Consistent data availability across channels • Customizable • Scalable according to the demand changes • Customer Data capturing across all channels for analytics • Ablility to integrate with other supply chain systems (e.g. Inventory management) and vendors

From another perspective, Kristen Melenden reflects on some of the cons of Omni-Channel retail Logistics: [Omni-Channel] requires that a large number of people in a lot of different places all be on the same page. A few of these things are necessary for omni-channel distribution to be efficient, and while they may seem like drawbacks, they’ll help to create the best experience for customers. • A dedicated fulfillment employee. If a retailer is fulfilling orders from a store, drawing the sales team away from customers who are in the store shopping doesn’t help for a great experience. Each store should have one employee (or rotating) whose sole job is to fulfill online orders. • Special in-store items. E-commerce fulfillment works on every level, but there’s still something to be said for shoppers who make snap decisions on items when they’re in the store. If they can buy something that isn’t available online, they may buy other items along with it. • Software. There’s no more efficient way to communicate e-commerce sales across a network of stores than good software. Phones and fax machines just aren’t efficient. The right technology allows retailers to fulfill orders very efficiently.

References

1. ↑ [ http://web.efzg.hr/dok/TRG/ddunkovic/VERHOEF%201.pdf] From Multi-Channel Retailing to Omni-Channel Retailing
2. ↑ [ https://www.linkedin.com/pulse/complexities-omni-channel-retailing-importance-oms-jaganmohan] Complexities in omnichannel
3. ↑ [https://www.ncbi.nlm.nih.gov/pmc/articles/PMC4963459/] Omnichannel Customer Behavior: Key Drivers of Technology Acceptance and Use and Their Effects on Purchase Intention (2016)
4. ↑ [https://risnews.com/ekn-research-el-corte-ingles-case-study-led-approach-supply-chain-success] Case Study: El Corte Inglés Success - “ECI needed to create a single system able to support the functionality desired to provide home delivery for all customer orders, enable new types of cross- channel services and returns, and extend its network of suppliers, ultimately enabling a superior customer experience”)
5. ↑ [https://search.proquest.com/openview/030bac7bf5d09ab943aaf1d5bb59abac/1.pdf?pq-origsite=gscholar&cbl=41988 ] Managing Multi- and Omni-Channel Distribution: Metrics and Research Directions (2017)
6. ↑ [http://blog.walmart.com/innovation/20170823/walmart-google-partner-to-make-shopping-even-easier-heres-how ] “Today, we’re announcing an exciting partnership with Google to do just that. Starting in late September, we’ll be working with Google to offer hundreds of thousands of items for voice shopping via Google Assistant – the largest number of items currently offered by a retailer through the platform.”
7. ↑ [http://www.tandfonline.com/doi/abs/10.1080/09593960802113950?src=recsys&journalCode=rirr20] Project management in retailing: integrating the behavioral dimension (2017)
8. ↑ [https://www.liquidplanner.com/blog/manage-supply-chain-complexity-using-project-management/] Lisa Anderson , August 25 2016, How Project Management Tackles Supply Chain Complexity
9. ↑ [http://www.tandfonline.com/doi/abs/10.1080/09593960802113950?src=recsys&journalCode=rirr20] Project management in retailing: integrating the behavioral dimension (2017)

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