A recent study revealed 20 percent of retailers don’t think they have the right technology to execute their omnichannel strategy. MHD reports how the current pandemic is encouraging retailers to rethink omnichannel technology.
Last year, many retailers were thinking about putting plans in place to invest in technology to support their omnichannel strategies. Due to the current pandemic that is sending shockwaves through global supply chains, these retailers are now needing to not only think about investing in technology, but to quickly start putting plans in place for their omnichannel strategies.
Omnichannel strategies are still a work in progress according to recent research on omnichannel fulfilment. Forrester conducts the annual “The State of Retailing Online” study by the National Retail Federation (NRF). The 2019 research summarised attitudes and investments that retailers and digital business professionals are making for both their store and their online businesses. Findings in the research suggest that retailers were starting to make investments in order management systems to shore up inventory accuracy and order routing last year. However, when the sudden and unexpected challenges that came with COVID-19 hit retailers, many of them would have found that their plans for investing in technology to support their omnichannel strategies hadn’t progressed very far.
COVID-19 highlights the importance of having a risk-aware supply chain with visibility, resiliency, flexibility and collaboration. As the pandemic continues, supply chain leaders are assessing their supply chains and seeking out risk-aware solutions. Having technology in place that helps to effectively execute their omnichannel strategy, while also meeting an individual business’ return on investment (ROI) goals, will be at the forefront of retailers’ investment plans. However, nearly a quarter of survey respondents said finding the right ROI metrics for a fulfilment program was very challenging. Raghav Sibal, Manhattan Associates’ Australia and New Zealand managing director says investment in technology allows a flexible and multichannel supply chain, which is focused on efficient order fulfilment and a unified customer experience across all channels.
The year of unprecedented demand
Raghav says in today’s fast-paced, digital economy, new trends in retailing such as the rise of e-commerce and new and evolving consumer technology, such as smartphones, AI, geotargeting and more, have heightened customer expectations of service, which is why an omnichannel strategy is vital for a supply chain to remain competitive in this new landscape.
He says the COVID-19 pandemic has caused supply chain networks to become stressed due to unprecedented demand. Empty grocery shelves, both physical and digital, have become a symbol of how COVID-19 has had far-reaching impacts on communities and supply chains around the globe.
Unfortunately, due to self-isolation measures and the resulting reduction in customer foot traffic across Australia, many retailers have closed their physical store doors, but online shopping is allowing them to continue to trade and fulfil the needs of their customers. Raghav says those retailers that are able to continue to meet customer expectations well during this difficult time, when a number of retailers are having to constrain their operations, will have an advantage. “Planning for increased demand and implementing new measures and technology immediately has been successful for some retailers,” he says.
Australia’s leading retailers’ omnichannel secrets
Major retailers Chemist Warehouse Group, who is part of Manhattan Associates’ customer base, as well as other pharmacy businesses and the major supermarkets in Australia are facing unprecedented challenges during COVID-19. “They’re really on the front line, delivering essential goods to Australian consumers at this current time of panic buying,” Raghav says. He says Coles’ and Chemist Warehouse Group’s supply chain networks are paying extra attention to managing inventory levels, which is what every operation should be focusing on too.
In March this year, during the consumer peak of panic buying, Coles opened three new pop-up distribution centres in New South Wales, Queensland and Victoria to meet demand. Whilst this may be a luxury short-term measure to cope with unprecedented demand compared to the average retailer, Raghav says for many retailers it is a chance to look at their supply chain restraints and how they can make their omnichannel strategy more flexible into the future. “We’ve seen some creative temporary measures, but we also have to think about the long term too,” he says.
“Due to the increased pressure for eCommerce delivery, Coles has introduced more points to distribute its products from and changed the way in which supermarkets typically fulfil eCommerce orders,” Raghav says. In the past, most supermarkets were picking eCommerce orders directly from their stores overnight, however due to the current situation where many shelves are quickly being emptied of stock, eCommerce is having to be serviced in an alternate manner.
DHL assists Woolworths with its ‘Woolworths Basics Box’. The boxes contain essential food and household products for customers unable to leave their home. DHL are responsible for the packing and they work with Australia Post, who distribute. “DHL’s systems have allowed this operation to have the agility that is needed for such a large project to be rolled out at short notice. If you look at the value it brings to the community, it has been quite amazing,” Raghav says.
Chemist Warehouse has seen demand for some of its products skyrocket too. “Chemist Warehouse uses demand forecasting and inventory optimisation solutions, which has been continuing to be a valuable asset every day,” Raghav says. He adds that following the challenges of COVID-19 many Australian retailers will be reflecting and looking to and learning from these kinds of companies that were able to successfully adapt, be flexible and react to meet customer’s needs through this period.
“A sophisticated inventory solution would know that spikes in demand, like those currently being experienced, are not permanent demand. When we look at forecasts, you want to smooth it out and not continue to buy certain products at this current level on an ongoing basis. It’s important companies leverage the benefit of omnichannel flexibility,” Raghav says.
Managing inventory level
The most important investment for any omnichannel strategy is to ensure that shoppers, store associates, and suppliers all know which products are where – whether they’re in store, in the warehouse, in transit or out for delivery. According to the findings in the 2019 NRF survey, 56 per cent of respondents said that inventory accuracy was a problem for their omnichannel efforts. Furthermore, 65 per cent said that another challenge was having inventory planning systems that forecast cross-channel demand.
Raghav says increasing flexibility to fulfil orders from different inventory location points is key to the success of retailers’ multi-channel operations. “In this current environment, a lot of distribution centres have gone down to skeleton staff, so it’s even more important now to have visibility of where all products are in the network, so order fulfilment can be processed from a range of locations, including both the warehouse and stores,” Raghav says.
Before the pandemic unfolded, supply chain networks were focused on just in time operations and efficiency. Raghav says having a sophisticated omnichannel strategy in place is the best way retailers can effectively position themselves to manage inventory levels during COVID-19, as well as for future operations.
“Retailers don’t want to hold a large amount of safety stock. It’s a balancing act – obviously chief financial officers want to see the overall inventory level on the balance sheet to go down.” Raghav says. If there is safety stock in stores and distribution centres, then it becomes multiple points of buffering which affects the overall cost of inventory management. “Managing this in an efficient manner is only possible if businesses look at network inventory across all points – like in transit inventory, stores and distribution centres – as points of fulfilment and efficiently forecast demand at each level and across all channels,” Raghav says.
“Inventory visibility is very important. Fulfilling orders from the most efficient point is able to be leveraged when accuracy is high. Omnichannel related tools will enable that desired level of network inventory visibility and accuracy,” Raghav says.
He adds that the current COVID-19 pandemic is an opportunity for retailers to uncover challenges in their operations and supply chains, so they can strengthen their omnichannel strategies. “Even in this difficult period, technology is proving to help many of our customers. Investment in a digital omnichannel strategy is the best way forward for all retailers, as the heightened capabilities are ready to help meet the demands of sudden changes and challenges within their businesses at any time,” Raghav says.