How to Avoid Hidden Costs in your Omni Channel Supply Chain

Retailers in the past few years have been starting to realize they need to start changing the way their supply chain fulfills orders. These same retailers are worried they can’t continue to make top margins if they make the change to Omni Channel fulfillment, but if they don’t, they will not be able to compete within the market. If you are in the position where you need to completely change your business model you may have a few concerns:

• Can Omni Channel be profitable in the near future?
• Will my brick and mortar locations become obsolete?
• What are the barriers to success?
• Which consumers and what products should we focus on?

So what do you do?

Focus on what the hidden costs will be and what you can do to avoid them.

We currently know that a consumer will buy from a retailer that has a readily available product and with the best price. This is the new norm, so we must focus our efforts on improving the efficiency of the Omni Channel supply chain. Today we will discuss three areas to help avoid hidden costs before you start improving your Omni Channel operations.

Here are some additional tips on how to grow your supply chain.

Data sharing with your suppliers

There is a huge lack of information sharing between retailers and suppliers when converting to Omni Channel fulfillment.
We understand this is because:

• lack of trust with confidential information
• multiple suppliers per retailer
• tracking complete different data point.

If retailers were to bring their key suppliers in and share the data they have collected the Omni Channel could prepare for predicted inventory needs and notice trends of how individuals purchase. This will in turn help to schedule and in increase lead time on the top products that a retailer may sell.

Free Guide: Top Order Fulfillment KPI Indicators

Most retailers may have a number of different suppliers, creating the barrier between data sharing even more difficult. To create an even larger barrier between retailers and their suppliers is that they are not using the same data capturing systems. Data can not be easily passed along without having to restructure the format in which it is received. But many who have found that data sharing works, have increased profitability and have learned to streamline across their Omni Channel operations.

The continued use of manual systems/processes

Many supply chains are still using manual processes to complete orders and sometimes even track orders. This creates a great deal of inefficiency, which will eventually trickle down to the consumer level. When supply chain shortcomings get to the consumer level in your omni channel operations, you must now be cautious of losing customers. Remember the consumer wants to buy/return products at any location within the supply chain, any sort of hiccup in that processes will cost your customers.

It is imperative that some processes, such as product order management became automated in the supply chain. This will allow you to know where products are, in real time, and will help to complete the Omni Channel supply chain. Improving upon these process may cause a decrease in margins, but I do not foresee buyers going back to the way they used to purchase, so embracing the change and making necessary changes is important.

Lack of coordination between retailers’ order and suppliers’ production

It is important to evaluate your suppliers’ performance. Use these Key Performance Indicators (KPIs) to calculate any downfalls that you may be seeing within your supply chain.

• Fill rate
• Orders satisfied to total demand
• Order processing
• On-time delivery
• Supplier creativity

Creating a consistent strategy between retailers and suppliers will help to avoid extra costs down the road. Knowing what new trends suppliers are going to produce, and how they will go to market with them, will better prepare the retailers to accomplish a sale on the consumer end. Molding the strategy will create a seamless customer experience.

Find out what metrics you should be measuring.

Why take these steps to avoid extra costs?

Creating the best customer experience, and providing the best price is the only way to retain customers. Slip up once, and they will move onto the next store that will offer them with what they need. That is why it is important to focus on:

1. Data sharing is key to predicting the ebbs and flows of your omni channel operation. Why haven’t you started sharing your data yet?
2. Automating the processes that are currently manual. Should you start with the heart of your omni channel operations, order fulfillment?
3. Combining efforts and strategies to retain clients. Can you close the gap between you and your vendor?

Converting to Omni Channel Fulfillment is not an easy task, but working with your suppliers will help you to avoid any extra costs that you may accrue along the way and help to avoid any hidden costs.