LTD Management
Logistics & Supply Chain Management Consulting Global Solutions That Work

OMNICHANNEL SUPPLY CHAIN ESSENTIALS —For Manufacturers and Retailers—

Many retailers and manufacturers struggle with how to service e-commerce customers. This is a significant change from shipping to stores and to retailers—both are types of intermediaries. They must now deliver to end-use customers.

There are assumptions that must be established—

The assumptions are important to the what you want and how to do it issues. They help to define the structure for the operations and are meant to meet customer expectations. These also provide needs and requirements with any possible logistics outsourcing providers.

Shown below is the supply chain structure—which are interrelated and linked to each other—that are important for start and ongoing. They are the essentials. An important point is that the design is not what others do, but rather what the firm needs to compete and succeed.

  1. Process. Everything starts with the process, which is viewed as the what is done.

    • Defined/Scope. The supply chain process starts with and runs from the end customer back through the factory. Recognizing the total scope/process is needed to reduce operating issues, now or down the road.

    • Pull. The placement and movement of products in the supply chain is based on customers ordering. Those orders trigger the pull replenishment inventories through the supply chain—which extends to the factories. This is different from standard ways of responding to orders from retailers. Now, the manufacturer has responsibility for the total supply chain.

  2. Technology.

    • Visibility. You need visibility across the supply chain—to know where all inventory is, both at various nodes and in-transit. Add to it the movement of orders and other needs. What do you have now? What do you need? This is important for replenishing fulfillment centers.

    • Integration. Bring the different areas and technologies together at factories, suppliers, warehouses, and logistics providers—warehouse and transportation. It is important to identify and correct gaps.

  3. Velocity.

    • Inventory. It must move quickly to keep up with customer expectations but not drown the company in excess inventory. Forecasting is even more challenging with e-commerce. Inventory velocity can counter this. The design must recognize this need. E-commerce is more demanding that the usual make and ship to retailer distribution centers and to stores. Underlying this is process integration among the various nodes in the supply chain—suppliers, manufacturing, and storage.

    • Customer expectations. This is delivering orders timely.

  4. Network.

    • Fulfillment centers—many and where. To meet the two-day delivery expectation, how many fulfillment centers are needed? And where should they be approximately located for startup? This also presents the manufacturer or retailer with an understanding of whether one outsource provider can meet all location needs or if multiple providers are needed.

    • Metrics. Performance metrics are needed to measure and monitor how well the program is working. The need is for a few, critical measures. The use of metrics means that corrective actions, if needed, can be made sooner.

Completed actions for these points may not be implemented for launch. For example, total supply chain visibility may not be operational, but working to advance it is the key. Others may involve making changes to improve inventory velocity or adding more fulfillment centers as the program grows.