If you are a supply chain manager, you probably find yourself focusing on inventory optimization: getting the right product, at the right volumes, to the customer at the right time. Customers are increasingly expecting to buy online and pick up in-store the next day. Better yet, customers can buy online and get next-day delivery. These expectations are becoming more and more common and are difficult for retailers to achieve without a plan.
Many retailers, especially those who have been around for a long time, may have established a great brick-and-mortar business but are just branching out into online sales. The reverse is also true; Amazon, arguably the world’s most successful online retailer, recently opened its first brick-and-mortar location. These retailers are used to multi-channel sourcing, having different inventory models for each channel. But as customers look for more streamlined buying experiences, businesses need to rethink their strategies and get the right balance of inventory to meet the needs of both “store pick up” and “store ship from.”
What is Omnichannel
Omnichannel offers a seamless approach to consumers through all available shopping channels, from brick-and-mortar and computers to mobile devices and catalogues. Retailers can’t expect to continue business as usual if they want to have the right balance of inventory to meet both in-store needs and ship from store levels. As with any consumer delivery model, the right cost point versus the correct service level is critical, especially for consumers who use more than one channel (and can therefore compare store visits to buying online).
This is where the transportation team needs to develop a plan and stick to it. If you can get it right, the gross margins made from a good omnichannel strategy are much greater than the incremental transportation costs. An example of what I like to call What Good Looks Like (WGL2) in this situation is a company that uses a combination of static and dynamic transportation routes. Retailers should use LTL (less than truckload) and multi-drop trucks delivering weekly, as well as express parcel deliveries to ensure that fast-selling, high-margin products are always on the shelf and sales dollars are not lost.
These kinds of strategies strike the right balance for businesses, making sure both cost points and customer service levels are satisfactory.
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