It’s an Omni-Channel World and Amazon is Setting the Standard

By Jim Haller | Senior Manager, Parcel Spend Optimization | Chainalytics The change in consumer expectations has forced merchants, distributors and manufacturers to re-think how...

By Jim Haller | Senior Manager, Parcel Spend Optimization | Chainalytics

The change in consumer expectations has forced merchants, distributors and manufacturers to re-think how and where they fulfill an order and then expedite the delivery at the lowest cost. This shift is impacting the entire organization from Order Processing to Operations Planning to Carrier Mode Selection and energizing Supply Chain Design & Last-mile Delivery activities across the globe.

In the past few weeks, I have had various conversations with merchants, distributors and manufacturers alike around the current state of the omni-channel world. Everyone agrees that Amazon is setting customer expectations and impacting the ecommerce supply chain model of the future. They also mentioned struggling with the service vs cost structure to meet current expectations. The ultimate goal is to determine the highest level of service you can provide for the lowest possible cost for a given service.

The question is: How do you create a comprehensive supply chain strategy that delivers the agility, flexibility and speed required to serve your customers in the most cost-effective manner with improved levels of service?

Technology is a key driver to meet customer expectations.  

As you move forward, it is very important to sync up Sales, Operation Planning, Inventory Management, Supply Planning and Order Processing activities. They can no longer be siloed and must be fully integrated with ease of use and flexibility – millennials, the nation’s largest labor force and fastest growing consumer base, are demanding it. When focusing on Inventory Management, ensure the end results allow your team to manage order fulfillment between various inventory sources. And when evaluating how to fulfill the order, build in international shipping capabilities.

Supply Chains of the future must consider shorter lead-times to market and focus on a service-based network.  

Key areas to focus on and evaluate carefully include inbound and outbound transportation, warehousing fixed & variable components and inventory management. Understanding key constraints around current supply & demand, facility capacities & capabilities and lead times to customers is important when designing for the future. Analysis must be performed on the number of facilities needed to support the service-based network, where they should be located and how this will impact inventory sources, particularly if fulfilling from existing brick & mortar merchant locations.

Delivery mode options are expanding for the omni-channel marketplace.  

Technology and the entire Supply Chain must be able to handle multiple LTL, small parcel, postal service, courier service, white glove, and various Last-mile providers – for both Domestic and International shipments. When evaluating the mix of carriers, you need to build in the option to deliver outside of the normal Monday through Friday 8am to 5pm window and deliver on Saturday, Sunday and, in some instances, Holidays!  

Customer Service support and additional training will be pivotal in handling the constant evolution of “consumer expectations.”  

Evaluate your order processing to returns goods management and everything in between – order status, shipment notification, tracking and claims. Oh yeah, don’t forget to prepare for peak season demands and create performance metrics that should be monitored hourly, daily, weekly monthly, etc.

Put a plan in place and get moving!

Calculate an achievable ROI and be sure to measure the return on investment. Set up a review process and look for areas to implement continuous improvements. Measure everything that is important (customer service, technology, supply chain network and transportation) and helps you understand the service level improvements vs the cost-to-serve to achieve this new level of service and meet your customer expectations.

Chainalytics Senior Manager Jim Haller leads the firm’s Parcel Spend Optimization offering, which enables multi-level organizations to reduce costs, improve service levels, negotiate better pricing agreements and generate cost savings of 8-15 percent on their parcel spend.

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