Upon hearing the phrase "omnichannel," most retailers probably envision reaching out to customers across front-end touchpoints, such as store, PC, mobile device and social media. But fulfilling customer needs across those touchpoints does not occur in a vacuum. Tamara J. Saucier, VP industry, retail solutions for cloud-based supply chain collaboration provider GT Nexus, recently took time to explain the impact of the omnichannel revolution on back-end retail operations, and how retailers can adjust their supply chains to maximize the effectiveness of their omnichannel strategies.
Everyone is talking about how an omnichannel approach is revolutionizing retail front-end operations. How is it affecting retail back-end operations?
There has been a lot of focus and investment on engaging consumers, which has changed consumer expectations for delivery and service. Now we are seeing a shift in focus to the back-end supply chain to enable and support those new expectations. The supply chain is at the very heart of profitability and service. The key to enabling omnichannel retail is a supply chain that provides complete visibility into all inventory and investments, including goods that are in holding across all channels, in transit or at consolidation points.
Retailers have to be agile enough to identify all goods throughout the entire supply chain that are available to expedite, reroute or allocate to consumers. And they need to understand the cost and value of these decisions. This is a different paradigm for retail. It is affecting processes, systems and even organizational structures.
How does omnichannel supply chain visibility help retailers meet the needs of the omnichannel consumer?
Knowing where all goods are across the production life cycle is essential to the omnichannel supply chain. Enabling visibility to the lowest level of granularity will allow retailers to be much more responsive to their market.
If a retailer has visibility into its factory floor and shipment pipeline, then they now know which goods are available to expedite, which can be air-shipped to replenish hot selling items, which can be re-routed to different locations, or which could be drop-shipped direct to consumer. Having these options positions retailers to meet fast-changing consumer demand in a way that provides the highest level of service, yet remains wholly transparent to the end customer.
How can omnichannel supply chain visibility help retailers realize the full potential of RFID?
More and more retailers are deploying RFID, but often their vision is set primarily on in-store benefits. There's room to capture significant ROI by tagging earlier in the supply chain, at source, to improve compliance, visibility and transparency.
Using RFID at the point of manufacture can improve packing accuracy, reduce concealed shortages and eliminate the need for higher volumes of buffer stock. Improved shipment accuracy supports item-level proof of delivery that can translate into new capabilities in available-to-promise commitments.
It also provides a certified chain of custody, which can support authentication for transparency relating to regulatory compliance, CSR and/or counterfeiting.
How can retailers enable their supply chains to be more omnichannel visibility-ready?
Doing more at the source is key. This is where the cost of change is less and the impact to agility is highest. Customization of goods, generation of store-ready merchandise, providing flexible pack strategies, preparing shipments for direct ship or cross dock can all be done at the factory level to not only reduce costs and time, but to make the supply chain more agile and transparent.
Given the diverse sourcing strategies across branded and private label goods, retailers must have a framework or platform to capture a single view of the supply chain. This is a major challenge when there are multiple parties involved in the supply network, each having their own processes, tools and logistics models. Visibility across all sources is critical. It is imperative that the visibility supports execution capabilities. Finding ways to do more at the source and securing actionable inventory intelligence is a major priority for injecting responsiveness into the omnichannel retail supply chain.