From Multichannel to Omnichannel Supply Chain

On May 5, 2023, the World Health Organization officially declared an end to the COVID-19 pandemic as a public health emergency. The pandemic started on March 11, 2020, and within 1,150 days, organizations underwent significant changes, buyer behaviors shifted, commerce was transformed, and supply chains were tested. Commercial channels opened and closed while technology was selected and implemented with the best intentions and expected outcomes. Now, a new cycle is in place, and buyers expect availability, convenience, price, experience, digital materialization (the ability to see it digitally and get it physically), sustainability, and trust. Despite a global economy currently facing high inflation, high-interest rates, global trade. invasion wars, and increasing debt, there is also plenty of opportunity to take advantage of these events

Over the past three years, there has been a significant increase in the use of eCommerce, digital channel enablement, improvements in supply chain infrastructure, and technology to serve better and fulfill customer needs. As a result, many companies have made strategic decisions to enhance their overall capabilities and take advantage of market opportunities meanwhile facing the challenges of survival. This period has tested the principles of business Darwinism, resulting in some surprising successes and failures.

Under the accelerated evolution or mutations to provide a multichannel or omnichannel experience, numerous businesses established dark stores, fulfillment centers, warehouses, and last-mile capabilities (some outsourced while others partnered with on-demand delivery), linehaul and replenishment capabilities, and in-store picking and fulfillment. They implemented new technology and processes with the available resources, and a "must-change management" approach to keep up with the pace and reap the rewards was readily established

In my observations, there are two primal lines of evolution in organizations:

Many companies are still committed to an omnichannel approach despite facing challenges. However, the changes made have led to the creation of siloed ecosystems within organizations. One team focuses on maintaining current channels, while another works on eCommerce and expanding into new channels. To support this expansion, a new supply chain organization has been established to fulfill orders linked to a separate commercial channel with a firefight team available to assist in sourcing products and managing the supply chain infrastructure. Unfortunately, there are no direct synergies between commercial channels, supply chain echelons, and the procurement strength and scale of the corporate office are the only means of interconnection.

Companies that were well-prepared for the omnichannel approach could efficiently connect their data, resulting in a seamless ecosystem that felt like a unified "omnichannel" even with wooden bridges due to the accelerated pace of implementation. These digitally-organized companies expanded their supply chain footprint by leveraging their infrastructure, Logistics Service Providers (LSP), suppliers, and established a digital "control tower" to boost their market share, profit, and dictate the customer experience. Their talent was prepared and digitally ready to cope with the environment and resilient to the uncertainty and fast pace of the market.

Nowadays, everything that happened is behind us and organizations understand that the measures they had put in place to make their supply chain more omnichannel and efficient-prone now need to be refined and made sustainable for the next 10-15 years. The goal is to meet customer expectations with a better cost-to-serve ratio, continue the expansion, improve the experience for both employees and customers omni-trends, and create the most value for the organization.

To successfully transform the multichannel supply chain into an omnichannel one, I believe the following enablers are crucial:

1. Have the right talent in place to lead and support the transformation, including a willing, ready, and well-trained team.
2. Keep the supply chain data up-to-date and accurate as the single source of truth.
3. Implement an omnichannel network with end-to-end mapping capabilities and a unified supply chain network.
4. Omni-operations, manage capacity for efficient, flexible, and robust operations that can deliver in peak season, respond to supply chain events achieve the best cost and time to serve.
5. Use a control tower for end-to-end orchestration and visibility to deliver on the customer promise dates, make informed decisions, and increase trust and profit.
6. Automate processes that can fulfill customer and shareholder expectations. This includes implementing RPA, mechanization, automation, robots, integration, communication, analytics, reporting, etc.
7. Get ready for AI/ML technology to crawl, walk, and run with data and imagination.

Let's get started!

1 Have the right talent.

People are still responsible for executing tasks in the physical world while AI and robotics provide support. Moreover, it is the talent that drives transformation and change. To succeed in the omnichannel supply chain, talent must possess many skills, including analytical capabilities, ego control management, and the ability to imagine and innovate.

The following teams are essential for success:

• Engineering: As we navigate the ever-evolving landscape of the omnichannel supply chain, it's crucial for us to remain adaptable. Despite making infrastructure decisions designed to last 15 years, we must make educated and agile adjustments to optimize performance, customer satisfaction, and, ultimately, company results.
• Managing data is also a critical component of our success. With new data being captured daily, it's essential to have a data-federated guideline that integrates all sources into one. By doing so, we can ensure that we have a single source of truth that enables us to leverage data analytics, AI/ML readiness, and ultimately, agile and smart decision-making in order to sustain new business opportunities.
• Talent Development: This is impossible without a team of talented individuals committed to innovation and constant transformation. Through knowledge sharing and ongoing development, our team is the foundation of a successful supply chain operation.

It is crucial for the head of the organization, along with the transformation and People officers, to have faith in the change and take charge of the transformation process. This involves wholeheartedly embracing the objective, implementing an agile methodology, managing the change effectively, and transforming the culture accordingly.

2 Supply Chain Data

Regarding supply chain data, it's still surprising to witness that some big retailers, manufacturers, and logistics operators still need to get all their data ready or digitalized throughout their organization. It's hard to believe this could happen, especially since their businesses need to run daily. However, the reality is that some data may only exist in the hippocampus (memory) or frontal lobe (thinking) of the supply chain workforce, which assigns routes, manages inventory, determines box sizes, selects carriers, schedules shifts, and handles transportation requirements. Nonetheless, some data can be found in spreadsheets but not in a formal database.

The same item can have additional data added to it depending on its location, channel, process, and life cycle. For instance, a distribution center may not require information on the weight and size of a lipstick, but a fulfillment center or store would need it to select the appropriate packaging and shipping method. Similarly, a physical or dark stores would need information on the product and their environment to create the best planogram or slotting for increased sales and optimized total cost. The data on a product is constantly changing due to the actions of the producer, buyer, channel, or end user. Concordantly, it is crucial to manage and audit the data to ensure that it is relevant, useful, effective, and can be combined with other data to create valuable business insights.

It's essential to have relevant data for every aspect of the supply chain, not just for a product. This means you should have data and capabilities for all the components in your network, including item master, consignees, end customers, users, and the capabilities and productivities of every hub, DC, or LSP, transportation modes, and service levels, among others. If you don't have the data for a transformation process, it can lead to delays, additional costs, poor adoption, and frustration. The quality of your data directly affects the quality of your decisions, which in turn affects the results of your supply chain for your business.

3 Omni-Network: Many organizations are shifting their paradigm by considering infrastructure as part of the product or service to be delivered. This has led to a paradigm change in the sharing of infrastructure capabilities at the end-points. For instance, a warehouse contains several facilities such as MDC, RDC, Fulfillment Center, returns and repair, as well as value-added services. Similarly, a store may have a fulfillment area, curbside delivery, in-store delivery, reserve inventory, display inventory, and fulfillment activities, among others, integrating more activities in each node of the network to leverage the infrastructure and capabilities.

In both cases, the location can receive inbound or replenishment vehicles, last-mile vehicles, inbound parcels, and outbound vehicles. Essentially, there is only one supply chain that serves all customers and feeds all products, with priorities adjusted to meet each customer's needs or service level. It is that unique supply chain that must be synchronized to provide, control, and manage the new necessities of an overarching and ever-growing network of sales channels

4 Omni Operations & LSP: I have noticed that two consignees with the same origin-destination, service level, commodity to transport, route, and carrier have different transportation rates. Can you explain why? Please select one of the following options:

a)??????Consignee A pays more than Consignee B, so we may need to pay more to the carrier for shipments to A

b)?????There are multiple points of contact for procuring transportation with the same carrier.

c)??????The system has multiple rates, and the operator chooses a different rate for each shift.}

d)?????All of the above could be contributing factors.

Tactical operations are a complex system that requires information, timely decisions, constant communication, processes to deliver consistently, and coordination of several assets and resources. In order to achieve great results with strategic advantages, you need to focus on several key elements, including planning, optimization, operational excellence, and innovation.

• Planning involves forecasting both short-term and long-term needs to ensure a consistent supply and timely transform the footprint of the supply chain as necessities vary through time.
• Optimization requires making the best decisions at the right time.
• Operational excellence involves achieving the best possible outcome with the available resources, maturity of the processes, and infrastructure while keeping an eye on key performance indicators and costs.
• Innovation is essential to transform and automate processes and resources.

By considering all of your resources - including warehouses, fleet, third-party transportation, LSP, parcel, LTL, etc. - as part of a single system, you can execute and drive your strategic advantage every day. Furthermore, this approach will ultimately lead to the best cost and service for your customers.

In my experience, "Control Tower" is a complex term in the supply chain world. After operating one myself, it is an operation that offers complete visibility into all layers of the supply chain, including planning, production, execution, return, and store operations. The Control Tower also analyzes past operational data and correlates it with external factors such as weather and vendor information to improve performance, predict and resolve disruptions, and create collaborative solutions involving all members of the supply chain.

In both the physical and virtual worlds, automation is necessary for optimizing, accelerating, strengthening, and building capacity with consistent outcomes. It is no longer a luxury for large operations or costly workforce environments but rather a competitive advantage required to support business purposes and provide a differentiated customer experience. To achieve this advantage, a combination of digital and physical automation tools such as RPA, chatbots, robots, sorters, mechanical bands, and auto-driving are needed. By focusing on these value generators and experience generators, we can make our businesses unique and the best it can be.

Today, the integration of AI/ML into our operations has begun, and many organizations are questioning how to integrate Chat GPT, Tesla's self-driving technology, Siri, Alexa, Google Assistant, and the ever-ballooning AI platforms and solutions. Nevertheless, we understand that these advancements require good data, processing capability, teaching, supervision, and a thorough understanding of the endpoint. As I encounter various AI/ML quests, I ask myself the following questions:

• What specific outcome do I hope to achieve through AI interaction?
• Do I have the necessary data for successful implementation?
• Can I provide the AI with proper training, teaching, and supervision?
• Will my organization be able to comprehend the outcome?
• Am I prepared to act upon the AI's outcome?
• Have I weighed all the moral and environmental consequences of the AI-spawn decisions?

To sum it up, embarking on a transformational journey is no easy feat and requires the full support of the organization's leader and the team. If you would like to hear more of my thoughts, I am more than happy to share them with you. I wish you all the best on your exciting adventure.

#supplychaintransformation #omnichannel #multichannel #digitaltransformation #supplychaintalent #ai #dataanalytics