Designing An Omnichannel Fulfillment Network: A Blueprint by Izba
What is an Omnichannel Network?
Ever since the boom in omnichannel eCommerce during COVID, contemporary markets make it difficult to define what an omnichannel supply chain network can be. Supposedly, an omnichannel fulfillment network should allow retailers to integrate their physical stores, online platforms, and other sales channels to provide customers with a consistent and convenient shopping experience.
But when it comes to practical implementation, adding platforms and channels to market, sell and deliver your product is a continuous challenge. Given your audience, you could be looking at several networks and supply chain operations in addition to retail to achieve peak omnichannel fulfillment, such as:
Online Marketplaces (Amazon, eBay, etc.)
Emails, Calls, and Chats
Recent approaches to revolutionizing customer experience have provided a renewed landscape with new challenges and opportunities that are well worth the effort. Studies show that companies with omnichannel customer engagement strategies retain 89% of their customers on average.
How to Design an Omnichannel Fulfillment Network?
Designing an effective omnichannel fulfillment network requires careful planning and consideration of various factors. Here are the key processes involved in omnichannel expansion:
1. Store Setup and Management
Expanding the fulfillment network often involves setting up new physical stores or optimizing existing stores to act as fulfillment centers. Efficient management of these stores ensures smooth operations and effective order fulfillment across multiple channels.
2. ERP Selection and Project Management
An ERP system helps manage inventory, orders, and other critical business processes. Proper selection and project management of an ERP system facilitates seamless integration and coordination among different fulfillment channels, enabling efficient order processing and inventory management.
3. Routing Guide Consolidation for Fulfillment
Routing guide consolidation involves streamlining the process of selecting the most appropriate transportation routes and carriers for fulfilling customer orders. In omnichannel fulfillment network expansion, consolidating routing guides ensures consistent and optimized order fulfillment across multiple channels, reducing costs and enhancing customer satisfaction.
4. International Business Organizational Design
International business organizational design refers to structuring the organization in a way that supports global operations, considering factors such as distribution, logistics, and regulatory compliance. It ensures that the expanded fulfillment network can effectively cater to international customers and navigate the complexities of cross-border operations.
5. MAP Pricing Policy Review
Minimum Advertised Price (MAP) policies regulate the minimum price at which a retailer can advertise a product. Reviewing MAP pricing policies is relevant to omnichannel fulfillment network expansion as it helps maintain consistent pricing across different sales channels. This consistency ensures fair competition, protects brand value, and promotes a unified customer experience.
6. Order-to-Cash (O2C) Process
The order-to-cash cycle is an essential process in retail that encompasses all the steps from receiving a customer order to collecting payment for the goods or services provided. It includes activities such as order management, inventory allocation, fulfillment, shipping, and invoicing.
The order-to-cash cycle is directly related to omnichannel retail as it is critical in ensuring a seamless and efficient customer experience across all sales channels.
Key Considerations for an Omnichannel Fulfillment Network Design
1. Understand Customer Expectations:
Gain a deep understanding of your customer's preferences and behaviors across different channels. Analyze data to identify popular buying patterns, preferred fulfillment options, and any pain points they might experience during purchasing. This knowledge will inform the design of your fulfillment network to meet customer expectations effectively.
2. Centralize Inventory Management:
Implement a centralized inventory management system that provides real-time visibility across all sales channels. This enables accurate stock levels, prevents overselling, and allows for efficient order routing based on proximity to inventory. Centralizing inventory also enables better demand forecasting and inventory optimization.
3. Integrate Technology Systems:
Invest in an integrated technology infrastructure that enables smooth data flow and coordination between various systems, such as point-of-sale (POS), e-commerce platforms, order management systems (OMS), and inventory management systems (IMS). This integration ensures accurate and up-to-date information across channels, minimizing errors and delays in order processing and fulfillment.
4. Optimize Order Routing:
Develop a robust order routing strategy to optimize fulfillment efficiency. Consider factors such as inventory availability, customer proximity, and operational capabilities of different fulfillment locations (warehouses, stores, or third-party logistics providers). Intelligent order routing algorithms can help determine the most cost-effective and timely fulfillment options for each order.
5. Enable BOPIS and Ship-from-Store Capabilities:
Implement buy-online, pick-up in-store (BOPIS), and ship-from-store capabilities. Utilize your physical stores as fulfillment centers to offer customers the option to order online and pick up their purchases in-store, or ship products directly from the nearest store to reduce transit times and shipping costs.
6. Streamline Last-Mile Delivery:
The last mile of delivery is often the most critical and expensive part of the fulfillment process. Leverage technology solutions, such as route optimization software, to streamline delivery routes, improve efficiency, and reduce costs. Explore partnerships with local courier services or third-party delivery providers to expand your delivery network and offer flexible delivery options like same-day or next-day delivery.
7. Simplify Returns and Reverse Logistics:
Establish a streamlined returns process for customers by allowing in-store returns for online purchases and providing prepaid return labels. Implement efficient reverse logistics processes to minimize return processing time and optimize inventory management. This includes refurbishing, restocking, or redistributing returned items to the appropriate channels.
8. Continuously Monitor and Adapt:
Regularly monitor the performance of your omnichannel fulfillment network and gather customer feedback to identify areas for improvement. Leverage analytics and reporting tools to track key metrics such as order fulfillment time, inventory accuracy, delivery performance, and customer satisfaction. Use the insights gained to make data-driven decisions and adapt your fulfillment network as needed to meet evolving customer needs and market dynamics.
Get in Touch for Help!
Ready to take your business to the next level with an expanded omnichannel fulfillment network? Seamlessly integrate your sales channels, optimize inventory management, and provide a superior customer experience.
Enhance convenience with options like buy online, pick up in-store (BOPIS) and efficient ship-from-store capabilities. Streamline last-mile delivery and simplify returns for increased customer satisfaction.
With the right technology, strategic planning, and data-driven decision-making, you can unlock the potential of an omnichannel retail strategy, and as a team of supply chain consultants, Izba is prepared to offer everything above and more!
Don't miss out on the opportunity to stay ahead of the competition and exceed customer expectations. Start your omnichannel fulfillment network expansion today and revolutionize your retail business!
Written by Aaron Alpeter
About Aaron Alpeter
Aaron Alpeter is the founder of two supply chain startups, Izba and Capabl. His Fortune 500-level expertise has a track record for accelerating growth at companies like Unilever.Read More
Izba is a supply chain consulting firm that specializes in helping businesses optimize their supply chain operations. They offer services related to logistics, fulfillment, and inventory management, with a focus on enhancing efficiency, reducing costs, and improving customer satisfaction.View Izba's Website