How All Things Omnichannel Work
Everything you need to know about Omnichannel
What is the Omnichannel approach?
The omnichannel approach to supply chain management offers integrated order fulfilment and distribution channels that effectively services consumers in the digital age. Omnichannel is unique because it is dependent on the customers having the ability to switch between multiple sales and communications channels while remaining connected to the retailer. By providing consumers with various media channels with which they can interact, the customer and their experience is positioned in the forefront of commerce instead of a product, brand, or service.
New technologies have emerged. Innovations in e-commerce have altered business-to-business and business-to-consumer relationships. Within the customer journey, the user experience has become paramount, critical to sales and revenue. Consumers find the ability to shop via customizable means to be highly desirable.
The advent of e-commerce has prompted retailers to utilize a direct-to-consumer model that offers the omnichannel customer an integrated shopping experience. Think about it. Today consumers shop using cell phones, tablets, laptops, and desktop computers, find and buy from social media sites as well as company websites. Consumers also visit brick-and-mortar stores to view goods, may buy in store or online and use a variety of shipping and pick up methods. Brands have expanded their reach across many channels and need to have consumers readily identify their company, no matter the brand. It is truly a complicated retail world.
Retailers often utilize third party logistics providers as an extension of their companies, outsourcing order fulfillment and package shipments. 3PLs may provide value added services such as gift wrapping, gift cards, returns processing and much more and provide branded portals for consumers to use.
Omnichannel means “all channels.” The alternative approach that omnichannel commerce brings to supply chain management places consumers and the user experience at the center. Customer data plays an integral role because it is used to track customer engagement to build a personalized experience. The customer experience management integrates sales channels to effectively service consumers in the digital age.
The Building Blocks of Omnichannel Excellence
- Consumer-centric supply chain strategy
- Network and supply chain eco-system of the future
- End-to-end planning and information flow
- Omnichannel fulfillment: node operations
- Omnichannel fulfillment: transportation and logistics-service-providers management
- Operating model and change management
- Digitization and process automation
– data from McKinsey & Company
The Role of Omnichannel Warehousing
In today’s complex omnichannel world, consumer demands directly impact warehouse operations. 3PLs that operate as omnichannel warehouses are configured to take and fulfill orders placed through multiple channels. These orders may originate from retail locations, e-commerce, or other warehouses.
Omnichannel warehouses can operate as either 3PLs or shared warehouse space for multiple companies which manage their own warehouse operations. Advanced technology and warehouse optimization efforts are necessary to manage dedicated warehouse space for each company. Due to this, configuring omnichannel warehouses can be complicated. Unlike distribution centers, omnichannel warehouses need to be optimized to efficiently manage the flow of goods to:
- Physical locations such as other 3PL warehouses and fulfillment centers
- Retail locations
For 3PLs to be successful in the digital age, they must be able to effectively restock large volume planned orders and spur-of-the-moment online purchases. Technology that integrates omnichannel warehousing gives 3PLs the necessary capability to handle these duties. They are then able to satisfy both business and consumer needs. The way that a warehouse is configured plays a critical role in those operations
Consumers have become accustomed to omnichannel retailing. When dealing with omnichannel ordering, consumers expect accurate inventory visibility and shipment tracking. The order fulfillment and delivery process is the single most important factor in determining future brand loyalty and a positive customer experience. To facilitate streamlined, accurate order fulfillment, many omnichannel warehouses are leveraging leading edge technologies. By fast-tracking order fulfillment using automation and leading edge best-of-breed warehouse management software, omnichannel warehouses can help ensure customer satisfaction, positive brand experience and customer journey.
- Number of stock-keeping units (SKUS)
- Order fulfilment times
- Total number of orders
- Goods size
– data from McKinsey & Company
Omnichannel Order Fulfillment
Omnichannel fulfillment is a method that 3PLs can use to manage inventory, picking, packing, and shipping across all sales channels. It is the entire process, from when a customer places an order to when that order is delivered. With omnichannel fulfillment, products are pulled from consistent inventory supply and distributed among 3PL fulfilment centers. There they are picked, packed, and prepared for shipping to the desired destination. Regardless of the sales channel the consumer uses, the omnichannel order fulfillment process ensures that the 3PL properly handles each order accurately and seamlessly.
Types of Sales Channels
Social media Mobile devices
Company website Customer Service
– data from McKinsey & Company
Omnichannel commerce is defined by its ability to fulfill orders in online and offline sales channels. Online shoppers prioritize short wait times over cost, however operating costs are a critical issue to stores and distribution centers. Operating costs get passed on to consumers and warehouse customers and can limit a 3PL’s ability to compete. Due to this, order fulfillment, sometimes referred to as supply chain fulfillment should be designed to account for shifting physical and digital channels.
Omnichannel commerce has also helped to elevate customer brand awareness. In addition, omnichannel commerce enhances the customer experience by optimizing operations and adapting to brand trends. An elevated omnichannel customer experience translates to an increase in sales and revenue for 3PLs and retailers.
- Research products
- Evaluate prices
- Purchase goods
- Receive goods via multiple channels
- Move between sales channels
What is omnichannel distribution?
This is a strategy which merges wholesale, retail, and e-commerce channels so that retailers can provide a seamless customer experience across multiple channels. This involves providing an integration between online and offline retail stores so that consumers have more options to receive their orders. This includes options such as buy online, pick up in store (BOPIS), curbside pick-up and much more.
Collaborating with 3PLs creates opportunities for companies to invest time in other business functions that augment their omnichannel distribution operations. It is important for businesses to adjust their omnichannel distribution strategies to fit their business goals. 3PLs can help them do so by simplifying processes.
The primary objective of omnichannel distribution is to lower costs and improve the shipping process to benefit consumers. Because of its ability to streamline operations, the benefits of perfect omnichannel distribution outweigh the challenges. It can improve transportation efficacy and precision. It can also collect data such as customer feedback that can be used to improve the omnichannel customer experience.
Consumers want choices. They want to shop at online stores, pick up items at brick-and-mortar shops, or place orders at physical stores for shipment elsewhere. They want to elect to have push notifications sent to their mobile devices to track when products are in stock or where they are in transit. Consumers also want data. They want to know when, where, and how their order is being processed, and when and why any issues occurred. As a transportation strategy, omnichannel distribution helps to give consumers the things that they want. This enhances the omnichannel customer experience and accumulates loyal customers for continued business growth.
Types of Sales Channels
- Highlighting necessary geographical zones
- Improving outbound and return tracking
- Fulfilling orders from the best locations
Forward distribution is the system that moves goods from sellers to consumers. Consumers rarely approve of elevated costs or postponed delivery. Forward distribution eliminates the distance between products and customers to speed the delivery process. 3PLs are integral parts of forward distribution because they unify the customer journey and the product journey.
Forward distribution is broken down into four types: same day, two-day, and standard are shipping choices that can be utilized for this type. On-demand delivery for scheduled dates is part of this system as well. All points that move goods to the consumer are included in the distribution types
- Buy from an online store and pick-up goods at a brick-and-mortar store
- Buy from an online store and have goods delivered to a location
- Buy goods at a brick-and-mortar store and have goods delivered to a location
- Drop-ship item from a warehouse to a location
Buy from an online store and return goods online
Supply Chain Visibility
Transparency of information across the supply chain is useful and often critical. The means of following a product or a shipment of products from various points to an end destination is supply chain visibility.
The issue of visibility has become more important as supply chains globalize and companies increase outsourcing. 3PLs can succeed by having developed infrastructure that provides seamless omnichannel customer experiences. This has become a hallmark of omnichannel commerce.
- Know what customers are going to order
- When customers are going to order
- When customers are expecting to receive their order
- How they will help shippers to execute shipping
Inventory visibility shows clients and workers what inventory is in stock and where inventory is. 3PLs that utilize technology that provides high visibility often have greater insights into their inventory. Greater insights help 3PLs better manage inventory for companies across distribution networks. This reduces costs while simultaneously saving time.
In a customer-centric market, omnichannel commerce is designed to enhance the experience for customers. Choice is part of this enhanced experience. Customers can see what is in stock at brick-and-mortar locations or warehouses and make their own purchase and shipping choices.
- Maintained inventory
- Improved efficiency
- Better product demand forecasting
- Enhanced customer experience
3PL magazine reported that by 2023, over 50% of world businesses will use a transportation visibility solution. In the past, shipment tracking was mainly comprised of location and cargo status. Today however, customers and consumers demand more shipping details such as:
- In-transit starts and stops
- Arrival times
- Temperature and humidity
To increase revenue when operating with omnichannel distribution functions, 3PLs must provide advanced visibility across physical and digital channels. Using resources that collect and communicate data across each step of the supply chain increases visibility. This can help to predict delays, send push notifications to inform consumers, and drive customer engagement and satisfaction.
Online shopping has affected the logistics industry by placing more focus on customer satisfaction and engagement rather than cost-reduction. By utilizing omnichannel supply chain solutions, 3PLs and shippers can meet consumer demands for integrated solutions and save money. COVID-19 continues to affect omnichannel strategies that 3PLs can apply. Having the technological means to assess cost and revenue in multiple ways will only assist 3PLs in proactively improving operations for the perfect omnichannel experience.
As we have learned, a standard omnichannel consumer experience is made up of different and integrated points of sale. The customer experience of today revolves around a smooth and unified shopping experience across all sales channels. Redesigned 3PL processes and structures around omnichannel commerce will improve 3PL capabilities and performance on the omnichannel journey.
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Industry Specific WMS
5 Ways 3PLs Improve Shippers’ Supply Chain Visibility | ODW Logistics
What Is Supply Chain Visibility & The Effect It Has On 3PL Clients (3plworldwide.com)
Freight management: How 3PLs are leveraging visibility for customers – Shipwell
Omni-Channel Distribution And Inventory Visibility Strategy (legacyscs.com)
Tips for Optimized Omnichannel Fulfillment | DCL Logistics (dclcorp.com)
The Omnichannel Ecosystem: Where 3PL Fits In | Retail News | RIS News: Business/Technology Insights for Retail, Supermarket Executives
Using a 3PL to Mitigate Shipping Disruptions – Multichannel Merchant
Inventory Visibility: 8 Benefits to Your Supply Chain (shipbob.com)
Inventory Visibility – Why You Need It? | Tecsys
Transportation Visibility: The Types, What It Is & How It Works – 3PL Perspectives (tianet.org)
Omnichannel fulfillment — the key of growth | Magestore POS
Omnichannel vs Multichannel: Are they so different? (multichannelmerchant.com)
A Study of 46,000 Shoppers Shows That Omnichannel Retailing Works (hbr.org)
Omnichannel Statistics for Marketing and Customer Experience 2022 (revechat.com)
The omnichannel warehouse success – Mecalux.com
International Journal of Physical Distribution & Logistics Management | Emerald Insight
Optimizing warehouse automation for retailers | McKinsey
The Importance of Shipping in Your Omnichannel Strategy – EasyPost
Overview of areas in omni-channel forward and backward distribution… | Download Scientific Diagram (researchgate.net)
What is Omnichannel Distribution? – Omni channel Supply Chain (magestore.com)
Omnichannel Distribution: The Ultimate Guide – Conger Industries Inc.
Omnichannel shopping and retail | McKinsey
Why Supply Chain Visibility is Essential to Calculating True Cost to Serve (mytotalretail.com)