Lecture 11 - Fulfilling Omni-Channel Demand1 (NO Video)

FULFILLING OMNI-CHANNEL
DEMANDS
BM4322 OMNI-CHANNEL MANAGEMENT 11
BUILDING BLOCKS OF
OMNI-CHANNEL RETAILING Learning
• Omni-channel Retail Facilities Objectives
11A
• Inventory Consistency
• Supply Chain Integration
• Personalized Retailing
• Seamless Commerce
• Omni-channel Brick & Mortar Store
• Brick & Mortar Store: Personal Shopping Hub
• Brick & Mortar Store: Fulfilment Hub
SUPPLY CHAIN IMPLICATIONS

• Omni-channel Supply Chain
• Supply Chain Performance Issues
• Logistics Partnerships
OMNI-CHANNEL RETAIL FACILITIES
Online Stores
Mobile Features
Offline Facilities
• Brick & Mortar Stores
• Pick up Hub
• Showroom
• Pop-up Stores
INVENTORY CONSISTENCY
Although retailers did implement

multichannel sales points (offline stores,
online stores, mobile apps) most of these
channels work in separate silos
• Separate teams,
• Separate sales policies &
• Separate inventories (most crucial)
Cross-channel walls started to emerge

• Competing teams: Offline store, online store, mobile
commerce, social media, etc
• They were all trying to get customers to buy from
their channel
As a result, customers get frustrated!

Forecasting Demands
• If retailer has independent brick and mortar and online channels, they
would have to forecast demand for each of the brick and mortar stores
and for the online channel, so that they can decide the amount of
inventory they should hold at the stores and at the distribution centre.
• For that purpose, they could use past sales data from each of their brick
and mortar stores and from their online channel.
• If the retailer integrates the brick and mortar and online channels by
offering omnichannel capabilities such as “buy online, pick up in store”,
things become even more complex. It is not enough to know how many
orders will be placed online. Some of those orders will actually be
fulfilled using inventory from the stores.
• Estimates need to be done for the fraction of online orders that will
choose to pick up the product at each store, so that the retailer can
decide on the amount of inventory to hold.
Forecasting Demands
• Channels interact in a subtle way, so small changes can have a
substantial impact on the breakdown between the inventory
needed at the distribution center and at the stores.
• For example, some customers may shift from placing orders
online to visiting the stores when they are provided information
about store product availability.
• If we do not consider the impact of omnichannel initiatives in
our demand forecasting process, we are going to make poor
decisions that will cost us money.
• Fortunately, with an omnichannel approach we also get more
data that we can use to improve our forecasting capabilities
Forecasting Demands
• The difficulty in forecasting demand in an omnichannel
context translates into challenges when managing inventories.
• Inventory replenishment models will also need to be adjusted.
• An omnichannel approach can present opportunities that can
increase the inventory efficiency.
Inventory Consistency across channels is a must as customers

may shop but buy using a different format!
BUILDING BLOCKS OF
OMNI-CHANNEL RETAILING
• Omni-channel Retail Facilities
INVENTORY CONSISTENCY 11A
DONE •
•
Inventory Consistency
Supply Chain Integration
Inventory Availability • Seamless Commerce
• Inventory (information) must be fully accessible to the • Omni-channel Brick & Mortar Store
consumer through whichever formats consumers go to. • Brick & Mortar Store: Personal
Shopping Hub
• Customers and company representatives should have • Brick & Mortar Store: Fulfilment Hub
access to consistent, cross-channel inventory data.
• Omni-channel retail is a customer centric approach so • Omni-channel Supply Chain
the inventory needs to be fully accessible to the • Supply Chain Performance Issues
consumer. Whether the customer visits an offline store • Logistics Partnerships
or the online store, the mobile app or talks to a phone
sales assistant, the inventory needs to be fully
addressable. The customer should be able to access
information regarding product availability within the
company.
BUILDING BLOCKS OF
SUPPLY CHAIN INTEGRATION •
•
11B
Customers’ Expectations • Brick & Mortar Store: Personal
Shopping Hub
• Retail supply chain should run seamlessly • Brick & Mortar Store: Fulfilment Hub
• Retailer and its supplier has to integrate their system SUPPLY CHAIN IMPLICATIONS
to improve stocks mobility and increase customer • Omni-channel Supply Chain
satisfaction. • Supply Chain Performance Issues
• Leading online retailers have made possible “infinite
shelf ” with no real-life shelf space and virtually no
costs associated with products displayed.
SUPPLY CHAIN INTEGRATION
With seamless supplier-retailer integration,

• Actual product inventory is kept to a minimal level
• Best sellers will hold more quantity and take larger warehouse
space
• Less popular (long tail) items are displayed but not stocked
• Orders in online store trigger retailers to automatically place an
order with supplier, & receive digital information on delivery from
the suppliers
• Data would be based on previous purchases and possible shipping
combinations that keeps costs to a minimum
PERSONALIZED RETAILING
Omni-channel
engagement, together
with emerging tech
trends (e.g., NFC,
Beacons or omni-
channel payments,
social media activity),
would allow improved
profiling of the
customer and
creation of
personalized retailing
programs.
Through data analytics, Retailers can create a contextual and

personalized buying experience by offering customers tailored
and automated experiences such as:
• Loyalty programs
• Personalized pricing
• Gifts and perks
• Targeted communication
• Loyalty programs • Customers should be able to get

• Personalized pricing the same treatment across all
channels.
• Gifts and perks
• Loyalty points and benefits should
• Targeted communication be available in the store, online,
in the mobile app or while talking
to call centre operator
• Based on context retailers should

• Loyalty programs employ software capable of offering on
• Personalized pricing the fly offers, dynamic promotions and
prices based on customer loyalty and
• Gifts and perks
previous purchases; access to special
• Targeted communication products and events - the personal
touch can be applied to product
availability just as well as pricing.
• Loyal customers could be notified of
limited stock special offers and could get
access to them when logged in
• Special sales offline events would be
available to the these loyal customers
also
• Loyalty programs • Estimate the right perks for each

• Personalized pricing customer group, small gifts,
service or waived charges
• Gifts and perks
• Targeted communication
• Loyalty programs • Information is a special kind of

• Personalized pricing incentive when it comes
personalized - based on previous
• Gifts and perks activity and other customers’
• Targeted communication purchase history.
• Location based technologies can
help to do this seamlessly
BUILDING BLOCKS OF
SEAMLESS COMMERCE 11B
•
•
DONE • Personalized Retailing
• Create a simple and fun buying • Omni-channel Brick & Mortar Store
experience • Brick & Mortar Store: Personal
Shopping Hub
• Enjoyable customers experience • Brick & Mortar Store: Fulfilment Hub
through cross channel activities
(customers could purchase SUPPLY CHAIN IMPLICATIONS
online and pick up in store or • Omni-channel Supply Chain
they could order in the brick and • Supply Chain Performance Issues
mortar store and receive items • Logistics Partnerships
ordered at home)
• From getting information on
product availability over the
phone, experiencing the product
in the B&M store and later on
purchase online.
BUILDING BLOCKS OF
SEAMLESS COMMERCE •
•
11C • Personalized Retailing
• Brick & Mortar Store: Personal
Shopping Hub
SEAMLESS COMMERCE
*Study suggested - retailers find the following

omnichannel programs most important
1. Buy online, pick up in store
2. Buy instore, ship to customer
3. Real-time inventory info available online and instore
4. Allow customers to buy online, ship from store (store
as fulfilment hub)
* Source: Customer Desires Vs. Retailer Capabilities: Minding The Omni-Channel Commerce Gap
SEAMLESS COMMERCE
Retailers do not want to hold high level of stocks

• Stores with real-time stock info – more likely preferred by customers
• When inventory is marked as low-availability, customers intention to
visit the store will fall
• Retailers need to juggle between showing in-store availability in real-
time and figuring what is the lowest inventory level where customers
are willing to visit stores
• Retailers need balance stock availability in real-time and maintain
lowest inventory level at the store.
SEAMLESS COMMERCE
Customers need to feel they are in control. While

enjoying a seamless buying experience customers
list following most important:
1. Picking alerts
2. Pay in store, at pickup
3. A guaranteed product availability
4. Alternative fulfilment options
5. Omni-channel informed sales associates
SEAMLESS COMMERCE
1. Picking alerts • Informed on the status of

2. Pay in store, at pickup their orders
3. A guaranteed product • Automated alert system
availability
• Time factor: very important
4. Alternative fulfilment options
as customers expect orders
5. Omni-channel informed sales to be available for pick up in
associates less than 2 hours (click & pick
situation)
SEAMLESS COMMERCE
1. Picking alerts • Online customers feel safer when

2. Pay in store, at pickup allowed to pay in store as
customers fear ordered
3. A guaranteed product merchandise is not actually
availability available. In-store inventory is not
4. Alternative fulfilment options yet 100% accurate for all retailers
5. Omni-channel informed sales • This may be a risk to retailers
associates because customers could
potentially order merchandise,
thus reserving inventory, and not
show up for pickup.
SEAMLESS
COMMERCE
1. Picking alerts • Customers list on top of their

2. Pay in store, at pickup concerns the fact that
3. A guaranteed product products, although ordered
availability and displayed as available,
4. Alternative fulfilment may sometimes be out of
options stock.
5. Omni-channel informed • Retailers report between 2%
sales associates and 10% of all orders cannot
be fulfilled due to failures in
inventory reporting
SEAMLESS COMMERCE
1. Picking alerts • Customers should be given a

2. Pay in store, at pickup choice of fulfilment options
3. A guaranteed product such as alternative pickup
availability locations, slot-based home
4. Alternative fulfilment options delivery or pickup in specially
designated facilities such as
5. Omni-channel informed sales
associates
postal offices
SEAMLESS COMMERCE
• Customers expect sales associates

1. Picking alerts to have a good understanding of
2. Pay in store, at pickup products sold both in-store and
3. A guaranteed product
online
availability • Offer information on inventory
4. Alternative fulfilment options across multiple locations and be
5. Omni-channel informed sales
ready to offer to ship products
associates home, for free, if the product is not
available in the store inventory
• Customers still prefer interacting
with sales consultants face to face
instead of an app
BUILDING BLOCKS OF
SEAMLESS COMMERCE •
•
11C • Personalized Retailing
DONE • Seamless Commerce
1. Picking alerts • Brick & Mortar Store: Personal
• However, the sales associate’s Shopping Hub
2. Pay in store, at pickup role shifted from a responsive • Brick & Mortar Store: Fulfilment Hub
to an engaging position, and
3. A guaranteed product SUPPLY CHAIN IMPLICATIONS
availability customers are now expecting • Omni-channel Supply Chain
the person in front of them to • Supply Chain Performance Issues
4. Alternative fulfilment be a brand ambassador,
options • Logistics Partnerships
connected and informed, ready
5. Omni-channel informed to tackle the company’s IT
sales associates structure to improve the buying
experience.
BUILDING BLOCKS OF
OMNI-CHANNEL •
•
Omni-channel Retail Facilities
BRICK & MORTAR STORE 11D

•
•
Personalized Retailing
• Proximity is still key Shopping Hub
• Still prefer selecting
in B&M even if
purchase is not done
there • Supply Chain Performance Issues
• Even millennials
prefer B&M stores
over online stores
OMNI-CHANNEL
BRICK & MORTAR STORE
Omni-channel Brick & Mortar store will feature

• Information – product, inventory
• Simplicity – seamless
• Convenience – like online store, with fulfilment
options
• Well informed sales associates playing the brand
ambassadors role
BRICK & MORTAR STORE:
PERSONAL SHOPPING HUB
Brick & Mortar store as personal shopping hub:

• Allow functions that online stores do best stay online
• Store to do what it does best, personal interactions that
customers still prefer (showcasing the large products online,
while make appointments to try/ test products in offline
store)
https://instapage.com/blog/personalization-in-retail
PERSONAL SHOPPING HUB
Concepts that transform
customers shopping experience:
• Push notification using location
based technology (Identify
customers to push
contextualised /personalised
info or deals to customers)
• Fewer products in store but
show interactive information in
store about manufacturer's
products and endorsements 5 PUSH NOTIFICATION CAMPAIGNS EVERY
APP NEEDS!
http://blog.apps-builder.com/5-push-notificatio
n-campaigns-start-right-away/
FULFILMENT HUB
1. Pick up and delivery
Customers can pick up ordered products from the closest store and
store employees can deliver goods in a timely manner, without
increased costs from shipping partners.
2. Return operations
Product returns are a burden for both the customer and the retailer.
Free returns, as nice as they might sound carry associated costs.
Use nearby shops providing return options, customers can feel safe
to purchase.
3. Inventory distribution according to local demands
With stores spread across the most important areas, retailers can
stock merchandise according to specific local demand. With cross
channel shipping costs can be decreased.
FULFILMENT HUB
Benefits of using B&M as fulfilment hubs
• Retailer can deliver faster and at lower cost

With stores close to the customers retailers may deliver
products faster than by using a third party logistics
option or shipping from the central warehouse
• Retailer can reconnect with its customers

Customers can get reconnected to their proximity store
and in the future increase propensity to buy
Fast-fashion newcomer Pomelo picks up
speed in Southeast Asia
Online retailer builds real-world
presence to become the 'next Zara'
• BANGKOK/SINGAPORE -- When Bangkok resident

Maneerat Tepravipard felt like updating her wardrobe
recently, she went online and picked out a few items
at Thai women's fast-fashion retailer Pomelo.
• But instead of waiting at home for a package to arrive
-- and facing the bother of returning unwanted
clothes -- Maneerat arranged a fitting at Printa, a
stylish cafe that doubles as a Pomelo pickup point.
The upstart retailer has established about 40 such
partnerships with yoga studios, boutiques and other
cafes across the city.
https://asia.nikkei.com/Spotlight/Startups-in-Asia/Fast-fashion-n
ewcomer-Pomelo-picks-up-speed-in-Southeast-Asia
David Jou, co-founder and
CEO of Pomelo Fashion
BUILDING BLOCKS OF
BRICK & MORTAR STORE: •
•
Omni-channel Retail Facilities
FULFILMENT HUB • Supply Chain Integration
11D • Personalized Retailing
DONE • Seamless Commerce
Benefits of using B&M as fulfilment hubs • Brick & Mortar Store: Personal
• Possible improvement in stocks rotation/stock turn rate Shopping Hub
As stores in different areas have different stocks turning
speeds customers can be pointed to the closest store having SUPPLY CHAIN IMPLICATIONS
problems in selling the product ordered. Minor inconveniences • Omni-channel Supply Chain
in proximity for the customer could mean increased sales and • Supply Chain Performance Issues
higher profits for the retailer • Logistics Partnerships
• Retailers can keep obsolete stocks to a minimal

Retailers can also keep obsolete stocks to a minimum and
lower overall inventory levels, both important in improving
customer satisfaction and profitability
BUILDING BLOCKS OF
BUILDING BLOCKS OF OMNI-CHANNEL • Inventory Consistency
RETAILING • Supply Chain Integration
• Omni-channel Retail Facilities • Personalized Retailing
• Inventory Consistency • Seamless Commerce
• Supply Chain Integration • Omni-channel Brick & Mortar Store
• • Brick & Mortar Store: Personal
Personalized Retailing
Shopping Hub
• Seamless Commerce • Brick & Mortar Store: Fulfilment Hub
• Omni-channel Brick & Mortar Store SUPPLY CHAIN IMPLICATIONS
• Beyond Legacy POS •
11E Omni-channel Supply Chain
• Brick & Mortar Store: Personal Shopping Hub • Supply Chain Performance Issues
• Brick & Mortar Store: Fulfilment Hub • Logistics Partnerships

• Omni-channel Supply Chain Learning
Objectives
OMNI-CHANNEL SUPPLY CHAIN
Classic Retail Supply Chain

• With classic retail the supply chain was somewhat linear,
starting with the Manufacturer who would sell
merchandise to the Wholesaler and products would then
arrive to the Retailer.
• The retailer would then stock inventory or place it on the
shelf in its stores, additionally creating silo structures for
separate digital commerce inventory.
How Omni-channel Supply Chain is Different

• Omni-channel changed this, as customers expect retailers to provide
the market with responsive supply chains working both downstream as
well as upstream and sideways.
• All key sections of the supply chain should now ideally be
interconnected and communication / operations should work
seamlessly.
• In addition to a responsive supply chain, medium and larger retailers
should strive to improve their mass customization and on demand
retail facilities.
How Omni-channel Supply Chain

is Different
• Such mass customization and
on demand facilities could mean
keeping more work-in-progress
production to allow
customization, 3D printing
factories or on-demand book
printing systems.
THE LINEAR SUPLLY

CHAIN
SUPPLY CHAIN PERFORMANCE
ISSUES
1. Inability to determine optimal cost product location

There is opportunity in using multiple shipping points, including
warehouses, stores or even suppliers.
By using real time inventory, software and algorithms designed to
estimate best case scenario for shipping purposes, retailers can find the
best locations to ship orders.
Companies can also determine whether shipping can be replaced by
customer picking and advise customers to do that.
ISSUES
2. Shipping is not fast enough
Shipping is one of the most important issues retailers face. This inhibitor
is caused by inventory and product location inconsistencies. Some
companies provide a full assortment of these types of operations.
Sometimes, retailers have large enough logistics operations to allow
other companies to use it.
Fulfilment by Amazon
Fulfilment by Amazon (FBA) is a service available to sellers when they
sell on Amazon. With FBA, products are stored in Amazon’s fulfilment
centres, and FBA is responsible for picking, packing, shipping, and
providing returns/customer service for them.
ISSUES
3. Poor visibility and control over supply chain related IT

systems
The supply chain, as mentioned above spreads outside the
company’s walls. IT systems should be integrated with suppliers
(wholesalers/manufacturers), as well as service providers (3PL
partners) and in the future on-demand manufacturers (3D
printing and customization factories, on-demand printers and
others).
LOGISTICS
PARTNERSHIPS
3PL (Third Party Logistics)
Third-party logistics in logistics and supply chain
management is an organization's use of third-party
businesses to outsource elements of its
distribution, warehousing, and fulfilment services.
Strong partnerships and logistics outsourcing and
in-sourcing are essential to improving delivery
time and costs.
While retailers may use stores as fulfilment hubs, it
may not make sense to keep all fulfilment
operations in-house, depending on the volume.
As e-Fulfilment becomes more popular, more and
more smaller retailers shift the function to third
party logistics companies.
BUILDING BLOCKS OF
LOGISTICS PARTNERSHIPS •
•
3PL (Third Party Logistics) Services
1. Order Management Shopping Hub
Managing orders, finding the best solution in fulfilment and
11E
preparing the order for picking. DONE
2. Pick & Pack
After orders are placed, operators in the warehouse should • Logistics Partnerships
find the most efficient way to track products, pick them
from the shelf and then prepare the package for shipping.
3. Shipping, Tracking, Returns
Logistics companies are increasingly efficient in shipping
orders so it makes sense to outsource shipping operations
to those with the know how, IT and transport infrastructure.
https://www.youtube.com/watch?v=VdFx2R6diMk

Lecture 11 - Fulfilling Omni-Channel Demand1 (NO Video)

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Lecture 11 - Fulfilling Omni-Channel Demand1 (NO Video)

Uploaded by

Copyright:

Available Formats

FULFILLING OMNI-CHANNEL

SUPPLY CHAIN IMPLICATIONS

Although retailers did implement

Cross-channel walls started to emerge

As a result, customers get frustrated!

Inventory Consistency across channels is a must as customers

With seamless supplier-retailer integration,

Through data analytics, Retailers can create a contextual and

• Loyalty programs • Customers should be able to get

• Based on context retailers should

• Loyalty programs • Estimate the right perks for each

• Loyalty programs • Information is a special kind of

*Study suggested - retailers find the following

Retailers do not want to hold high level of stocks

Customers need to feel they are in control. While

1. Picking alerts • Informed on the status of

1. Picking alerts • Online customers feel safer when

1. Picking alerts • Customers list on top of their

1. Picking alerts • Customers should be given a

• Customers expect sales associates

BRICK & MORTAR STORE 11D

Omni-channel Brick & Mortar store will feature

Brick & Mortar store as personal shopping hub:

• Retailer can deliver faster and at lower cost

• Retailer can reconnect with its customers

• BANGKOK/SINGAPORE -- When Bangkok resident

• Retailers can keep obsolete stocks to a minimal

SUPPLY CHAIN IMPLICATIONS

Classic Retail Supply Chain

How Omni-channel Supply Chain is Different

How Omni-channel Supply Chain

THE LINEAR SUPLLY

1. Inability to determine optimal cost product location

3. Poor visibility and control over supply chain related IT

You might also like