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

OMNICOMMERCE, SUPPLY CHAIN DIVERSION AND THE NEW SUPPLY CHAIN PARADIGM

Omnichannel, driven by e-commerce, is the dynamic way to do business. It is a way firms market and sell across channels for B2C and B2B. E-commerce and omnichannel--omnicommerce--has become a new business model that extends markets and industries. Even more, the new model has created the new supply chain paradigm, global in scope and impact.

DISRUPTER. This new way of doing business is both a strategic, competitive force and a disrupter to traditional business. Bricks and mortar firms have to deal with it to compete for local, national, and global business. Omnicommerce has redefined and expanded markets, customers, and opportunities. Its role and value applies not only to retailers; manufacturers and middlemen must also adopt and adapt to it. Part of the issue is change related and moving beyond the corporate comfort zone with the new business model.

DIVERGENCE. For years, there has been a standard view of supply chain management (SCM). Despite many discussions and terminology, SCM has been static. Now there is the reality of supply chain divergence and segmentation. Many traditional supply chains -

Omnicommerce has created a hidden divergence from the standard supply chain approach. It necessitates distinct ways to service each channel's customers. Supply chains often have a single focus and are an amalgamation of discrete actions by internal and external parties; and this adds to time. Time is critical for service, performance, inventory levels, and customer satisfaction.

Supply chains, for best costs, are not designed to effectively handle multiple, distinct channel needs, especially those that are speed sensitive. Supply chain management, as presently practiced, is becoming out-dated by omnicommerce customer service demands.

The e-commerce component has immediacy to its service; and that service demand grows with performance expectations. Even supply chains that originated with e-commerce firms are falling behind in performance. They were designed along customary lines with focus on pulling orders and shipping, and mask service issues and shortcomings, with website design and shopping cart technology.

NEW PARADIGM. There are new supply chain dynamics to meet the innovation in business. Omnicommerce and its e-commerce have become competitive forces for supply chain management. This new way of doing business forces changes to inside and outside inhibitors. Accelerated velocity is a key element with the contemporary supply chain paradigm.

New supply chains -

Time compression is important for the needed service velocity. This must be done across the entire supply chain, both inside and outside the company. Inventory positioning; network, both technology and logistics, redesign; complete supply chain visibility; reduced redundancy and conflicting risks; coordination, both internal and external, of inter-related activities around the world; inventory velocity; and a fresh breed of logistics players are vital, both as benefits and needed, to the compression. As a result, products flow more and more quickly through supply chains.

WHAT MUST BE DONE. Those who implement omnicommerce with traditional supply chains will struggle to achieve maximum benefit. Using old supply chain ideas with a new business model is shortsighted. Companies using the new supply chain paradigm will dominate omnicommerce.

Underlying this supply chain is how it is designed. Many supply chains are built from the company out to customers and are based on pushing orders out. That is an attempt to meld costs and service. That approach will no longer work. Supply chains must be designed from customers back to what is required to meet their demands.

The change for supply chain management has begun. There is a new way. The power of the better supply chain will not be limited to omnicommerce. It will flow back and transform supply chains for many channels, industries and markets who will want the same service.

Supply chains must be built on a structure of process and technology. The total supply chain, and its underlying organization which negatively affects time, must be streamlined to facilitate the paradigm. Outsourcing and supply chain logistics providers - be they 3PLs, transport firms, warehouses, forwarders, and others - must be used based on the ability to drive the needed performance.

Changes to doing business and to supply chain management bring risks. Risk mitigation and aversion are important topic. These create hesitancy to do what must be done, to start fresh to service markets, to stop what no longer works. But, there is also the risk of standing still or moving too slowly and dealing with the impact of that choice.