Omni channel Supply Chain – A door to new Opportunities or Challenges
In the world of connectivity, distances are shortened with the help of technology. As wonderful as this is, it can pose some unique challenges and occasionally make things even more complicated. Such is the case with the Logistics and Supply Chain management (LSCM) in the context of Omni channel.
What is Omni Channel Logistics?
Emergence of information technology has dramatically changed the way businesses are conducted and has radically evolved LSCM operations from ‘Single channel’ to ‘Multi-channel’, and now ‘Omni channel’.
The Omni channel system takes a holistic approach and presents the opportunity to utilise all channels available to the consumer and supply chain members. In such a system, the customer gains the power/privilege to buy what, where, when, and how they want. So it would be correct to say that neither customer nor retailer can really distinguish between channels anymore and can easily switch between different channels to choose, buy, and collect/deliver the product.
Example of Omni Channel:
A customer looks at a poster and goes online to get more information with the prospect of buying it, but then decides to visit the store to physically examine the product, deciding to purchase in-store with home delivery option. They also have the choice of buying online with store-pickup option to the nearest outlet. There can also be many other variations in switching/channel choosing.
Why is it important?
The customer’s expectations/ demands are changing continuously and any missed target can lead to the loss of business. Availability of the product, its information, and ease of getting it ordered and delivered as per the customer’s desire, are some of the crucial elements a business needs to thrive in todays’ market.
Does it open the door for new opportunities or challenges?Does it open the door for new opportunities or challenges?As much as these developments provide ease to the customer and seller, it poses challenges for LSCM organisations to cope with variability, uncertainty, time constraints, inventory management, etc.
Below is a brief classification of two of the many challenges:
- Customer driven delivery and return strategies:
- Shop in-store or online and get products delivered to home
- Click and collect – in-store pickup of goods delivered from warehouse inventory
- Click and reserve – online orders are allocated from store inventory
- And likewise similar return options
- Inventory to be managed across all channels, centrally or decentralised.
Whilst the technology is being rapidly developed to manage Omni channel operations, there yet remains a bigger hurdle of the installation/ operating requirements in terms of capital, human resource, infrastructure, skills, and associated management. This hurdle might be manageable for larger businesses, but small and medium size enterprises (SMEs) can be gravely affected as they may not be able to effectively resource the necessary elements required to have such a system functional.What are the possible solutions? The author points to the following as one way to cope and create win-win business for both customers and businesses:
- Competing in collaboration
- Web based, low cost ERP system
- 3rd parties to provide cost effective yet efficient LSCM operations management services, for companies that do not yet have the capacity or prefer not to embark on a new system at this stage.
You can find out more about innovations within the Logistics and Supply Chain sector at Logistics and Supply Chain Week 2018.
Simon Peter Nadeem – PhD Candidate, University of Derby
Simon is an ambitious, emerging researcher in the era of Circular Economy, Logistics and Supply Chain Management, and Business.