What are omnichannel logistics? What are some top omnichannel logistics challenges?

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By FarEye | October 13, 2022

What is omnichannel logistics?

Omnichannel logistics is a multi-channel approach to delivering products purchased across multiple sales channels to consumers.

Consumers are shopping online more than ever before and demanding deliveries in increasingly shorter timeframes. In order to satisfy rising consumer demand, omnichannel logistics and distribution must work to give consumers quick access while delivering to the consumer’s choice of locations including: in-store pickup, parcel lockers, workplace delivery and at-home delivery. Brick and mortar stores remain a strong channel for shoppers, though in-store consumers can opt to have the goods shipped directly to their homes from the store, rather than leaving with them.

Achieving seamless omnichannel logistics demands that retailers, distributors, manufacturers and wholesalers work together to achieve the goal of making a sale and delivering it while also providing a superior customer experience.

Why is omnichannel logistics important for retailers?

Retailers can drive sales and traffic across multiple digital touchpoints and provide consumers with a more cohesive shopping experience at any time of day or night. Retailers need to have both the available inventory and the logistics operations to deliver them, whether through their own logistics operations or through 3PL providers to provide timely, branded superior customer experiences.

Omnichannel Logistics Challenges

With so many options for companies to deliver to consumers, they must learn how to optimize end-to-end omnichannel fulfillment with precision while minimizing last-mile cost. Retailers and logistics companies must mitigate supply chain disruptions including weather, transportation delays and driver shortages. They must also continually adjust and adapt to increased consumer expectations.

Executing seamless omnichannel logistics has its share of challenges. Below is a list of challenges for retailers and logistics providers to overcome to satisfy today’s consumers.

Siloed Supply Chain Processes

Global markets bring many challenges to supply chain processes. Supply chains have been used to working in silos, which are inefficient with today’s omnichannel distribution options. There may be little to no interoperability between a warehouse management system (WMS) in Malaysia and a delivery tracking platform that sits with a retailer in the United States. Such disjointed operations make building a robust delivery logistics ecosystem difficult.

Lack of Inventory and In-transit Visibility

Modern consumers demand fast deliveries but dated logistics operations cannot keep up with demand. Many companies still use manual inventory management which means they cannot provide real-time in-transit updates. With fast and same-day deliveries, it’s critical to automate core aspects of inventory management and provide visibility to shipments in transit.

Delivery Visibility

Delivery visibility leads to a better last-mile delivery experience for consumers. Dispatch managers get real-time information on the loading and unloading of packages, the assigned delivery agents, and how near or far these agents are from the package drop location - all this information is communicated to the consumers. Visibility helps in communicating accurate ETAs to consumers, enhancing brand experience.

Last-mile delivery visibility facilitates route efficiency which has a direct impact on delivery timelines. New-age technologies are harnessing the powers of machine learning algorithms to provide predictive visibility empowering businesses to accurately forecast on-time or delayed deliveries and maximize consumer experience.

Traditional Order Fulfillment Processes

Since same-day and next-day deliveries can be brand differentiating factors, more retailers are committed to providing them. However, many may not be able to execute these timeframes without having advanced delivery tracking capabilities, real-time route and driver optimization and automated delivery task allocation.

Many companies still leverage traditional delivery fulfillment methods that are prone to delays including manual route planning, which increases overhead costs and shows limitations when trying to build omnichannel logistics operations and delivering on evolving customer demands.

Poor Reverse Logistics Operations

Reverse logistics or returns are extremely important with omnichannel logistics as they directly impacts customer loyalty. A bad returns experience does not bode well for a brand. A McKinsey report says that 33% of repeat consumers would choose to abandon a retailer if they had a “difficult” returns experience. Deploying digital tools that simplify and optimize reverse logistics processes becomes key in an omnichannel logistics framework.

Inefficient Selection of 3PLs

To ensure timely delivery of orders, it’s important to select and assign the right parcels, based on dimension, destination and capacity, to the right partner. It's crucial to leverage a 3PLs capability with regards to executing fulfillment jobs. Such capabilities include understanding the KPIs that ensure faster fulfillment, routing knowledge about a specific locale or geography, compliance awareness, adherence to SLAs and more. Often businesses only focus on rates and shy away from exploring new 3PL providers and this might not be the most efficient way to drive omnichannel logistics operations.

A Personalized Delivery Experience

One of the greatest benefits of online shopping is personalization. The consumers choose when and where they want their purchased items. Different consumers may prefer different times and places for deliveries. Some may want last-minute changes to their order. Customizable deliveries are the backbone of seamless last-mile delivery experiences.

Personalized last-mile delivery experiences are critical for creating a great consumer experience. In the post-pandemic world, consumers are either working remotely or in hybrid mode, and they want to choose where and where they receive and return their packages. When it comes to building brand loyalty and long-term consumer relationships, retailers must focus on delivering a flexible and easy returns experience.

Frictionless Order Tracking

From the retail warehouse to the consumer’s doorstep - providing real-time updates on orders enables businesses to enhance the post-purchase experience and increase brand credibility. Last-mile order tracking solutions keep consumers informed about their packages through text alerts.

These alerts usually contain the order number, delivery vehicle, and delivery agent’s phone details. It also provides customers with information on the specific time slot they can expect the delivery agent to bring their order. The greater the communication with consumers in the last mile, the more likely they are to stick to the brand and recommend it to their family and friends.

Enhance Speed, Flexibility and Personalization in the Last Mile

Consumers today expect to make purchases and receive deliveries anytime and anywhere. Orchestrating fulfillment options across channels requires great flexibility in supply chain networks. Leading retailers are now using converged inventories to optimize enterprise-wide stock levels while maximizing availability across channels. Retailers must be able to dynamically allocate and fulfill the deliveries.

With the advent of new-age technologies, companies can deliver seamless experiences at an optimum cost. Brands can ensure customer loyalty by empowering them with real-time visibility. Building a flexible and adaptive omnichannel logistics plan is key for all supply chain stakeholders in order to provide a superior customer experience.

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