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5 Ways to an Agile Supply Chain: Winning the Omni-Channel Race

 
April 7, 2016

Heading to a party in a few hours, and need a gift for the hostess? No problem at all. Need to send your out-of-town mother a birthday gift? All it takes is punching a few buttons on a device in front of you. With online retailers such as Amazon providing delivery within the hour, todays customer controls not just what to buy, but also the when, where, and how. Catering to customers in this scenario requires moving from the traditional retail format to omni-channel solutions and upgrading the supply chain. But this is not without its share of challenges.

Some of the key supply chain challenges are dynamic demand distribution across channels, high shipping costs, and costs associated with different fulfillment types. All these factors add to the complexity in the supply chain process, and also impact the lead time and the cost of serving the customer. To make omni-channel work, you need the support of demand shifting and shaping strategies, unified inventory and order views, and omni-channel network design. Technology can be an important enabler in implementing these strategies. Lets take a look at five best practices that can help you leverage technology to transform your supply chain processes, and improve costs and efficiencies.

    1. Leverage Big Data

Rapid changes in buying patterns and buyer behavior are creating challenges in managing inventory. Solutions that can sense demand changes and help you react quickly to address supply constraints, optimize inventory, and improve in-stock ratios are essential for success. Amazon, a pioneer in data analytics, uses Big Data to implement anticipatory shipping strategies adjusting inventory even before customer places an order – based on previous purchases. Big Data can also be used to streamline shipping and logistics services and improve operational efficiencies by enabling dynamic routing. This helps determine the optimal route to deliver orders faster and at lower costs.

    2. Use master data platforms

Consumer engagement has expanded beyond physical stores to online platforms and kiosks. This is impacting customer dynamics on factors such as loyalty, footfall, online traffic, and order size. A consolidated platform that enables global master data management and delivers predictive analytics solutions can help you understand your customers better and gain insights into their mindset. Such a global master data platform can gauge the customer pulse much better and enable you to increase efficiencies and security by centralizing data.

    3. Conduct order fulfillment analysis

Logistics and warranty services use analytical tools in areas such as warehouse management to maintain target inventory levels. Analytical tools also allow you to optimize inventory at each stage of the supply chain and develop replenishment strategies. For example, Macys analyzed that about 15-20% of its inventory costs are associated with the last units of items in its store; these last units are not usually exposed for sales as they often cannot be tracked. The retailer now uses item level Radio Frequency Identification (RFID) technology to increase accuracy in tracking these last units and enhance order fulfillment even in situations where only one unit of the item is left. This approach has helped the company reduce $1 billion of inventory from its stores.

    4. Ensure effective management of drop-ship vendors

Integration of drop-ship vendors into your order management system enables better communication and effective tracking of orders. Clearing the backlog of Stock Keeping Units (SKUs) and updating your order management systems promotes greater transparency. Kroger collaborates with its vendors using a supply chain platform, sharing Point of Sale (POS) and inventory data with them. This has enabled all parties to work together as one team with a common view into inventory and customer activities.

    5. Develop an omni-channel POS system

To combat increasing security risks and compliance penalties, rising usage of mobile devices, and increasing number of payment methods, consider introducing superior POS platforms. For instance, omni-channel POS provides users a uniform experience across e-commerce and brick-and-mortar stores. It simplifies transactions like Buy Online Pickup in Store (BOPIS) and Buy Online Return in Store (BORIS). Such a system effectively integrates transactions such as purchases, order reservations, in-store pickup, and online shipping.

    6. Create a Responsive Omni-channel Supply Chain for Higher Business Value

From the top players such as Amazon, Target and Macys to the local grocery stores, everyone recognizes the need to revamp their supply chain to be a successful omni-channel player. In a recent Forrester survey on retailers in North America, around 21% responded that omni-channel efforts were one of their leading priorities for 2016. Todays digitally savvy millennials want the best quality, costs, fulfilment time, as well as overall experience. This is only possible with an agile and responsive supply chain that supports an omni-channel environment. Leveraging automation and predictive analytics intelligently to streamline supply chain will not only leave you with happy customers, but also a stronger bottom line.

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Swecha Rikhy is a part of the Retail domain supporting Pre sales and solutions within the TCS Business Process Services unit . Her areas of expertise include Branding and significant project management to drive sales across all the Retail engagements. Swecha holds an MBA from ICFAI Hyderabad in Marketing and Project management.