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What Is an Omnichannel Supply Chain and How Does It Work?

Customers today are demanding. They want a seamless experience across every touchpoint whenever and however they shop. Whether they are buying in-store, through your website, or any number of online stores, they expect a consistent, high-quality experience. They want real-time information about stock, pricing, and shipping.

For retailers, this means diversifying supply chain management and deploying technology capable of handling omnichannel logistics. Modern supply chain management requires an omnichannel supply chain to meet these consumer expectations. Only by bringing together a comprehensive, end-to-end solution for omnichannel operations can you create customer satisfaction.

Omnichannel Supply Chain 101

An omnichannel approach requires a customer-centric model of supply chain management. This model provides consistent customer service across channels, tightly integrating inventory, order management, fulfillment, and data. An omni-supply chain spans every aspect of warehouse management at fulfillment centers and distribution centers, providing this consistency.

By creating a unified back-end operation, you have complete transparency at each stage of your supply chain to manage both online and in-store inventory and fulfillment. This is crucial in omnichannel operations, where it’s easy for inventory to be out of sync, creating frustration for shoppers and degrading the experience. When a consumer completes an online purchase and pays for a product, for example, they expect to get what they ordered at the delivery speed they chose. If your inventory is out of sync, it can lead to stockouts and backorders, disrupting the flow of products.

The Difference Between Omni and Multichannel Supply Chains

A multichannel approach manages inventory and operations separately for each sales channel. This can lead to disjointed systems, fragmented data, and challenges in efficient order fulfillment. Omnichannel supply chain management integrates and centralizes all channels in a single system.

An omnichannel warehouse strategy can ship orders in the most efficient and cost-effective way regardless of where purchases are made or where inventory resides. An omnichannel distribution strategy has become even more important with the emergence of Reserve Online, Pickup In-Store (ROPIS), Buy Online, Pickup In-Store (BOPIS), and Buy Online, Return In-Store (BORIS), and digital strategies like endless aisles.

How the Omnichannel Distribution Process Works

An omnichannel distribution process encompasses the entire supply chain strategy, including:

  • Unified commerce platform. A centralized system brings together point of sale (POS), inventory, order management, fulfillment, customer data, and other capabilities across all channels and touchpoints. 
  • Centralized inventory visibility. Inventory is synchronized in a single database rather than separate stock pools for each channel — providing enterprise-wide visibility into product availability and location.
  • Advanced distribution centers. Smart warehouses and distribution centers (DCs) are designed for high-speed multichannel fulfillment using automation. RFID inventory systems and IoT devices enhance warehouse efficiency.
  • Flexible fulfillment options. Orders can be fulfilled from any node in the network, including stores, DCs, or warehouses. Fulfillment is optimized based on inventory availability, cost, and delivery speed.
  • Connected delivery network. Final-mile delivery is integrated with fulfillment to optimize speed and cost. Options may include ship-from-store, curbside pickup, free shipping, expedited delivery, and more.
  • Returns management. Consumers can initiate returns from any channel, and then return products to any location. Returns are quickly routed back to appropriate locations for faster processing.
  • Omnichannel customer service. Customer service agents have visibility into all channels to address inquiries, manage orders, and resolve issues.

These elements create customer-centric, end-to-end supply chain management from manufacturer to front door that is consistent across channels. Omnichannel supply chain solutions also create a data-driven model using the supply chain operations reference (SCOR) model to standardize operations and enable continuous improvement.

Benefits of an Omnichannel Approach to Supply Chain

Omnichannel operations provide significant benefits including:

  • Providing broader product selection and fulfillment options
  • Offering more flexibility in terms of order fulfillment and delivery
  • Improving inventory accuracy and visibility
  • Enabling more efficient order fulfillment
  • Delivering a consistent brand interaction across all touchpoints

Fulfill Customer Expectations

Achieving customer experience goals requires an omnichannel supply chain system with centralized management to connect physical stores, vendors, distribution centers, fulfillment centers, and digital channels. Only with a robust omnichannel supply chain solution can you deliver a superior customer experience. 

Consistent product, pricing, promotions, and brand messaging are crucial in an environment where shoppers may use five or more channels on their way to a purchase.

Track Inventory Across Channels

Since inventory is shared across channels and locations, there must be enterprise-wide visibility and coordination to avoid stockouts, overstocks, or dead stock. Synchronizing inventory provides accurate inventory counts, reorder points, safety stock requirements, and availability.

This comprehensive visibility also improves the accuracy of demand forecasts.

Achieve Fast and Efficient Fulfillment

More than half of consumers say the speed of delivery influences their purchase decisions.

Omnichannel supply chains enable orders to be fulfilled from the most optimal node, whether it’s a warehouse, distribution center, fulfillment center, or store. Using order orchestration, algorithms can evaluate multiple scenarios to determine the fastest and most cost-efficient way to fulfill orders.

Many retailers have shifted to regional distribution centers and leveraging ship-from-store strategies that are close to customers to accelerate deliveries and compete with online retailers offering same-day and next-day delivery. An omnichannel approach drives faster and more efficient fulfillment.

Keep Track of and Improve Delivery Times

Visibility extends to tracking deliveries as well. By monitoring the entire supply chain, you can set more accurate delivery expectations and keep customers informed of progress automatically. Machine learning in omnichannel supply chain management can optimize sourcing, shipping, and last-mile delivery to fine-tune fulfillment.

Grow Average Order Value

Omnichannel supply chain management can also grow revenue. According to the CX Trends 2023 report, 70% of consumers spend more with companies that offer seamless and personalized customer experiences. 

Join the Future of Supply Chain Management With the Right Solution

The supply chain of the future will leverage data for greater visibility and optimization. Transforming your supply chain management with an omnichannel solution is essential to serve customers and optimize operations.

Surgere can help. As a leader in omnichannel supply chain solutions, Surgere creates a single source of truth to improve inventory planning, production control, and logistics. A fully auditable supply chain and real-time insights help you not only manage your operations more efficiently but continuously optimize for improvements.

Contact Surgere today for a demo or to discuss your omnichannel supply chain needs.

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