Omnichannel Operations After the Pandemic

Stephen DeAngelis

July 14, 2020

You don’t have to be a faithful follower of the retail sector to know it’s in trouble. The media was focusing on the so-called Retail Apocalypse long before the novel coronavirus pandemic burst on the scene. The Retail Apocalypse resulted from the rise of e-commerce; retailers overbuilding; and, retailers taking on too much debt. The pandemic only made things worse. Consumer behavior, even before the pandemic, was moving steadily towards the digital path to purchase. The pandemic forced many consumers to make purchases online that they normally would have completed in stores. Brick-and-mortar retailers fear the move towards e-commerce will persist following the pandemic and doom their physical retailing activities. Aaron Orendorff (@AaronOrendorff), Vice President of Marketing at Common Thread Collective, observes, “If you’d have claimed ten years ago that retail shopping would be conducted on phones, social platforms, tablets, interactive kiosks, and more you would have been laughed at. Today, that’s exactly what’s happening. Retail is anything but dead. And, yes, people still buy in-store. But people don’t just shop in-store … even when they’re inside a store. Instead, shoppers check prices, compare products, research reviews, and consult social media before buying. If you’re not available everywhere, your limited presence will derail both the user experience and your bottom line.”[1]

The changing retail landscape

The staff at Consumer Goods Technology (CGT) writes, “Just five short months ago, the consumer goods industry was focused on building a supply chain to support the omnichannel era, focusing on four key areas: demand planning, fulfillment, manufacturing, and last-mile delivery. However, since then, the industry has been flipped on its head. … As it became necessary to social distance, consumers realized that in order to slow the spread effectively, buckling down and staying indoors was required. Stay-at-home orders necessitated a certain number of supplies, and as the shelves began to empty, the spotlight began to shine on the importance of the supply chain — not to mention its strengths and weaknesses.”[2] Even before the pandemic, Arnaud Morvan, senior director of customer engagement with Aera Technology, called omnichannel operations “a beast.”[3] The pandemic made such operations even more beastly. Morvan notes, “Retail supply-chain executives are under intense pressure to support the seamless omnichannel experiences that consumers are demanding in the digital age. Consumers want more product variety, faster delivery, affordability, and pickup and return over any channel. Meeting those expectations depends on retailers running a cost-efficient supply chain that can react quickly and accurately. When it comes to delivering a superior customer experience, that’s every bit as important as personalized front-end marketing.”

Alex Haines, a National Accounts Manager at Bastian Solutions Systems, writes, “As you well know from both a personal and business standpoint, COVID-19 is wreaking havoc on both global and regional supply chains. … The key supply chain question to ask during this unprecedented period of national shutdown is: Is this a supply chain anomaly or will it permanently change customer expectations? I believe as the national shutdown persists, customers who are already accustomed to purchasing online will increase their online spending even further and customers who have traditionally spent little to nothing online will be forced to increase or start.”[4] The staff at PYMNTS.COM agrees with Haines; which is why they insist, “Omnichannel [is] no longer optional for retail.”[5] There is a twist, however. They note members of Generation Z (so-called “digital natives”) “show a much greater affection for the physical store than their boomer parents and Gen X older siblings do.” That doesn’t mean they aren’t using the digital path to purchase — because they are. The staff explains, since Gen Xers have grown up in the experience economy, they want the “hands-on experience they’ve come to enjoy and appreciate as an extension of their digital commerce journeys.”

Omnichannel operations require great analytics

“In the omnichannel world,” writes Jason Rosing (@JasonRosing), a Managing Partner at Veridian, “supply chain leaders need to understand every process and activity.”[6] He adds, “Unfortunately, omnichannel also means more data in every aspect of your operation. Omnichannel supply chain analytics provide the level of insight needed to succeed in the omnichannel-driven world.” Understanding often requires taking a leap into the unknown using scenario planning. Rosing notes, “Supply chain leaders can implement the best systems on the planet, but if every possible scenario is not considered, the system lacks value.” Frankly, considering “every possible scenario” is impossible; however, the more scenarios you can consider the better prepared you will be for whatever the future brings. Analysts from Veridian note, “Knowing what will happen in the future of omnichannel supply chain management would be fantastic, and it would eliminate all concerns over inventory location and customer shopping habits. Clairvoyance is not possible, but the next best thing, predictive analytics with omnichannel supply chain management, is.”[7]

Rosing notes, “Omnichannel supply chain analytics have the potential to give supply chain leaders insight across their entire enterprise.” An increasing number of companies are turning to cognitive computing platforms, like the Enterra Cognitive Core™, a system that can Sense, Think, Act, and Learn®, to perform their analytics. Such systems can be used to run different scenarios in record time. They can also do a lot more. Rosing notes, “Applied analytics in supply chain management can lower overhead expenses, offer real-time visibility in product location, and empower leaders with better collaboration, boosting labor management along the way.” Veridian analysts conclude, “Predictive analytics with omnichannel supply chain management make up one of the most in-demand topics in modern supply chain management. However, predictive analytics only function when a thorough, integrated process for data collection, identification, and analysis exists.”

Concluding thoughts

Rosing concludes, “Omnichannel supply chain analytics are about understanding your customers, their habits, the actions of your supply chain partners, your transportation network, your raw material suppliers, warranty service managers, and everything in between.” Eventually, understanding needs to be put into action. Haines asks, “What does this mean for your business in the long-term after the pandemic subsides?” His answer: Your business will need to: Continue fulfilling normal store replenishment for in-store purchases and BOPIS with the expectation that BOPIS orders will increase; support a significant increase in ecommerce orders as buying behavior further adapts; and allow customers free and easy return options. … To execute this strategy, you will need to consider automation. It will be very difficult to manage your omnichannel demand with increased ecommerce orders and labor shortages without some type of automation. Automation will allow retailers to more efficiently deal with supply chain disruptions, bull-whip effects and permanent changes to higher volumes of each pick orders.” In the post-pandemic world, omnichannel operations will continue to be a beast — but a beast that must be tamed.

Footnotes
[1] Aaron Orendorff, “Omni-Channel Retail Strategy: The What, Why, and How of ‘In-Store’ Shopping,” Shopify, 9 January 2018.
[2] Staff, “Supply Chain Report 2020: A Wake-Up Call for the Future of Consumer Goods,” Consumer Goods Technology, 29 May 2020.
[3] Arnaud Morvan, “Taming the Beast of Retail Supply-Chain Operations,” SupplyChainBrain, 26 December 2019.
[4] Alex Haines, “How COVID-19 Will Permanently Change your Omni-Channel Supply Chain,” Bastian Solutions Systems, 19 March 2020.
[5] Staff, “Omnichannel No Longer Optional For Retail,” PYMNTS.COM, 20 March 2020.
[6] Jason Rosing, “What Omnichannel Supply Chain Analytics Should I Know?” Cerasis Blog, 29 may 2020.
[7] Veridian, “Predictive Analytics & Omnichannel Supply Chain Management,” Supply Chain 24/7, 23 September 2018.