In recent years, the concept of Omni-Channel Management has emerged and gained strength in retail, which in the definition of Verhoef et al. (2015) it is “the synergistic management of the various available sales channels and customer touchpoints, so that customers' experience across channels and their overall performance are optimized”.
In other words, Omni-channel can be understood as the convergence of platforms and sales channels, whose strategies can no longer be conceived separately, as the consumer, informed and equipped, is able to move freely between the physical world and the virtual world throughout the shopping process, as illustrated in Figure 1.
Figure 1 – Omni-channel
Source: ILOS (adapted from http://www.i95dev.com/drive-holiday-sales-with-omni-channel-retailing/)
Research carried out last year in the United Kingdom and Germany by Deloitte (2014), ordered by eBay, confirms the use by consumers of multiple channels and platforms to complete the purchase, as shown in Figure 2.
Figure 2 – Increased share of Omni-channel sales
Source: Deloitte (2014)
In addition to the obvious impacts on channel and brand management, Omni-channel also brings profound changes to supply chain management, as the traditional functions performed by stores, distribution centers and factories are mixed, requiring new technologies. and customer service capabilities.
Examples of these transformations can be identified, on a reduced scale, from the last two decades, with the growth of electronic commerce, which forced retailers to adapt the operation of their distribution centers to enable them to carry out the separation of orders more and more fractionated.
With the customer's expectation of being able to travel freely through the purchase channels, the types of delivery and service channels become more complex, as shown in Figure 3. For example, many retailers allow the customer to buy over the internet and pick up the product in the store, which obliges the distribution center to pick orders with products in batches to replenish the store's display grids and, at the same time, obliges them to separate and send fractionated products to fulfill online orders, often different from the store's traditional assortment.
Figure 3 - Increased complexity in delivery types and service channels
Source: Deloitte (2014)
Stores need, within this new perspective, to be able to carry out activities traditionally carried out in distribution centers, such as order picking, packaging for transport and dispatch, in order to be able to send the product directly to the end customer or to other stores.
Factories, in addition to being able to make consolidated shipments to distribution centers, will increasingly be required to process fractional orders and make individual deliveries to increase service speed and reduce transport costs.
Along with the reduction in transaction costs, brilliantly illustrated by Philip Evans (2014) in Video 1, supply chains are undergoing profound transformations, with retailers such as giants AliExpress, Amazon and Walmart developing skills to bring together multiple small suppliers and distributed in a totally fragmented way.
Video 1 – How data will transform business
Source: TED Talk – Philip Evans
Amazon and Walmart have even shown interest in going beyond the role of sales portal, testing innovative distribution models with lockers and drones, shown in Figure 4, seeking to position themselves as major door-to-door operators. Tests with drones, for example, have raised discussions and have been gaining notoriety in the non-specialized press..
Figure 4 – Drone and Amazon Locker
Source: Adapted from Amazon.com
Imagine, in the not-too-distant future, walking into a traditional retail store and the salesperson electronically identifying you and addressing you by name. From your recent searches on the internet, on other sales sites or specialized in product reviews, the electronic LED shelves will display exactly the products you searched for recently and offer discounts specific to you. Once the purchase is made, although the store does not have stock, the product will be conveniently delivered to the place of your choice in a few hours, not days.
Imagine the changes in the Supply Chain to make this reality possible!
Based on this discussion, some questions arise for Supply Chain managers:
- Are companies prepared to manage two-way flows of information and goods?
- Will they be able to process a huge amount of data and extract relevant information in a timely manner for decision making?
- What, and in what ways, other innovations (Nanotechnology, big data analytics…) could impact supply chain management?
Wanting to contribute to the discussion on this topic, my email is leonardo.julianelli@ilos.com.br.
References
Verhoef, PA; Kannan, PK; Inman, JJ From Multi-Channel Retailing to Omni-Channel Retailing: Introduction to the Special Issue on Multi-Channel Retailing. Journal of Retailing, v.91, n.2, p. 174-181, 2015.
Accessed in:http://www.sciencedirect.com/science/article/pii/S0022435915000214>
<https://www.ted.com/talks/philip_evans_how_data_will_transform_business/transcript?language=pt-br>
<http://www.i95dev.com/drive-holiday-sales-with-omni-channel-retailing/>
Leonardo Julianelli
https://ilos.com.brExecutive Partner of ILOS. Graduated in Production Engineering from EE/UFRJ, Master in Business Administration from COPPEAD/UFRJ with extension at EM Lyon, France, and PhD in Production Engineering from COPPE/UFRJ. He has several articles published in periodicals and specialized magazines, being one of the authors of the book: “Sales Forecast: Organizational Processes & Qualitative and Quantitative Methods”. His research areas are: Demand Planning, Customer Service in the Logistics Process and Operations Planning. He worked for 8 years at CEL-COPPEAD / UFRJ, helping to organize the Logistics Teaching area. In consultancy, he carried out several projects in the logistics area, such as Diagnosis and Master Plan, Sales Forecast, Inventory Management, Demand Planning and Training Plan in companies such as Abbott, Braskem, Nitriflex, Petrobras, Promon IP, Vale, Natura, Jequití, among others. As a professor, he taught classes at companies such as Coca-Cola, Souza Cruz, ThyssenKrupp, Votorantim, Carrefour, Petrobras, Vale, Via Varejo, Furukawa, Monsanto, Natura, Ambev, BR Distribuidora, ABM, International Paper, Pepsico, Boehringer, Metrô Rio , Novelis, Sony, GVT, SBF, Silimed, Bettanin, Caramuru, CSN, Libra, Schlumberger, Schneider, FCA, Boticário, Usiminas, Bayer, ESG, Kimberly Clark and Transpetro, among others.
