How to Achieve Multichannel Supply Chain Excellence

Contributor: Elizabeth Dunlea

Retailers are constantly facing a balancing act within their supply chain. The days of the store-only channel are gone, so retailers need a clear vision throughout their supply chain to cope with the multiple methods and combinations of ways consumers shop – all while building customer loyalty. Tom Enright, research director at Gartner, outlines what supply chain excellence looks like through six key components.

Fulfillment

Despite being the most commonly available online shopping service, buy online and pickup in-store is only being offered in full by 34% of North American and European retailers.

Not only do consumers shop and buy products in multiple ways (desktop, phone, in-store), but variables like shipping cost, in-store pickup or delivery time impact the process. The challenge for retailers is to anticipate consumer demand for various shopping services and create the capability to meet it.

Step toward excellence: Evolve the supply chain to reduce shipping time and offer free delivery.

Not all retailers, depending on industry, list their widest product assortments online.

Returns

Data shows that less than one in five consumers would buy a product online if they were prevented from returning it to a store and had to pay for return delivery. On the other hand, over 80% of consumers would be converted to buy if the policy allowed for both in-store returns and free shipment back to the retailer. Consumers do not accept the channel silos and barriers that many retailers still have in place.

Retailers without a robust reverse supply chain are vulnerable to higher costs and, of course, being overrun with returns. By applying the cost of the return back to the buying or merchandising teams, it creates more robust performance targets for internal teams and an incentive to address the problem to reduce returns.

Step toward excellence: Support the “buy anywhere, return anywhere” mantra.

Inventory

Only 81% of retailers have a supply chain model that allows for inventory visibility across all channels, and only 16 percent of those have optimized transfer capabilities for fulfillment.

Fulfillment strategies cannot be optimized with a siloed approach to inventory. This restricts retailers in understanding the true demand for products or fulfilling orders from any channel. As retailers launch new ways for consumers to purchase, fulfillment tasks become more complex.

Step toward excellence: Gain visibility and transfer capability to ensure that all unsold inventory can be used to fulfill demand from any channel.

Support the ‘buy anywhere, return anywhere’ mantra.

Organization

Companies with a legacy siloed structure also find constraints on stock management, struggle to meet customer needs and can face a skills gap between online and in-store teams with regards to determining sales potential.

Step toward excellence: Align merchandising, allocation and demand planning teams on an enterprise, channel-agnostic scale.

Financial

Another challenge to a channel structure is credit allocation for online sales. Since so many consumers combine in store and online in their buying process, a channel-agnostic approach is crucial to avoiding inventory inconsistencies.

Step toward excellence: Use a financial sales accreditation method across channels to remove any cultural barriers to delivering multichannel consumer service.

Assortment

Even though the majority of consumers conduct research online first – 68% in Asia, 79% in Europe and 82% in the U.S. – not all retailers, depending on industry, list their widest product assortments online. Despite the balance, retailers need to understand how their customers search and anticipate what they need versus respond to what they buy.

Step toward excellence: Position your assortment offering across channels to reflect how consumers search and purchase.

Your approach to these six components of the supply chain can set you on the right path to multichannel supply chain excellence, but it doesn’t stop there. Gartner clients can read more in the report This Is What Retail Multichannel Supply Chain Excellence Looks Like, including more survey data on these components. Mr. Enright also offers advice on how to focus your team’s mindset on performance targets vs channel-specific goals.