Typical challenges in omnichannel logistics
By FarEye | October 13, 2022
Thanks to the increasing popularity of online purchasing, there is no one way a modern customer shops. They are constantly looking for products both in online channels and in-store. They are buying apparels, furniture, grocery, medicines and more just by a few clicks and swipes. They are impatient and are driven by the need to be instantly gratified. Hence, retailers and e-commerce businesses need to deliver customer orders to their doorstep the very next day. But what do all these mean to a business? It means that they need to be present and available to customers every time they feel like buying. Hence, an always available inventory and more importantly always on logistics operations are keys to satisfying modern customers. In other words, businesses need robust omnichannel logistics.
What is omnichannel logistics?
Omnichannel logistics can be defined as a phenomenon that ties together inventory, distribution and logistics across sales engagement channels, including in-store, social media, e-commerce portals among others. Achieving seamless omnichannel logistics demands all supply chain stakeholders, retailers, distributors, manufacturers and wholesalers, working in tandem to achieve a single goal-making a sale by providing a delightful customer experience.
An article in bigcommerce.com nicely pens down the significance of omnichannel logistics.
“Meeting people on the channels where they are shopping and buying, whether it’s in a physical store or an online store or on social media, and connecting the dots between those channels. The purpose is to keep customers moving around within the brand ecosystem, with each channel working in harmony to nurture more sales and engagement.”
Having said this, just like any other emerging logistics phenomenon, executing omnichannel logistics has its share of challenges. Siloed supply chain processes, lack of inventory and in-transit visibility, traditional order fulfillment processes, poor return logistics operations and inefficient selection of 3PLs are five of the major roadblocks when it comes to seamless execution of omnichannel logistics.
Siloed Supply Chain Processes
Markets are going global. What your customers order online in California needs to be shipped from a manufacturer in Asia or it’s the other way round. Hence, supply chains are crossing boundaries. But the problem is such supply chains have been working in silos triggering a series of latencies in shipping. There’s no interoperability between say a warehouse management system in Malaysia and a delivery tracking platform that sits in California. Such disjointed operations make building a robust omnichannel logistics ecosystem difficult if not impossible.
Lack of Inventory and In-transit Visibility
The need to have omnichannel logistics operations is driven by a modern customer’s need for instant gratification. Many enterprises still bank on manual ways of managing inventory. Result? Errors, lack of real-time status updates, inaccurate information about available inventory and order processing delays. These problems defeat the purpose of instantly gratifying customers and create major hurdles with regards to fast or same-day deliveries. Hence, it’s critical to automate core aspects of inventory management.
Traditional Omnichannel Fulfillment Processes
Since same-day and 24 hours delivery are becoming brand differentiating factors, more and more retailers and e-commerce companies are promising customers the same. But little do they realize that to deliver on these promises means having advanced delivery tracking capabilities, generating routes that are being constantly optimized in real-time, optimizing driver productivity, automating delivery task allocation and much more. But many businesses are still complacent, leveraging traditional delivery fulfillment methods that are prone to delays, increasing overhead costs, manual route planning and growing overhead costs. Hence, such practices become a problem when building omnichannel logistics operations and delivering on evolving customer demands.
Poor Reverse Logistics Operations
Reverse logistics, an aspect of logistics that’s seldom spoken about. But it’s extremely important with regards to omnichannel logistics as it directly impacts customer loyalty. A major reason why a customer returns a product is she is unhappy with it in the first place. A bad return experience will only make things worse. Customers are known to leave brands if they cannot return an order properly and without extra charges. Hence, deploying digital tools that simplify and optimize reverse logistics processes becomes a 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 key 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.