Assessing the True Cost of Omni-Channel

Published : January 28, 2015

business-papers-with-calculator-and-computerOmni-channel fulfillment is the Holy Grail of supply chain fulfillment services. Just think about it. Your full line of products available to every one of your customers, day and night, regardless of how they may reach out to you. Maybe they've found you and your products through an Internet search that took them to your website, while thumbing through images on their smart phone, or after scanning a QR code on a mailer. However they found you and the product they need, they can order it instantly and can expect it to arrive nearly as fast.

It's what modern shoppers have come to expect: all of your products, available to all of your customers, all of the time. What could be more perfect?

Omni-channel fulfillment is indeed beguiling, especially considering from where the impetus of the movement has sprung. The demand for omni-channel distribution is being driven by, as put in a recent Industrial Distribution article, "evolving consumer demands and expectations." When companies offer their products in many different ways— on websites, in brick-and-mortar stores, through catalogs— and consumers can search for those products with the tap of a keyboard, they start to assume those products will be available just as easily.

Take a Moment for a Reality Check

In the heady rush to meet the burgeoning expectations of your tech-savvy clientele, don't forget there are real-world considerations to be factored in. Have you taken a good, hard look at the real costs of developing omni-channel fulfillment services? Here are a few things you may not have considered.

  • Infrastructure
    Modern terms like "the cloud" give the business of ecommerce and delivery a very ethereal feel. It can seem, to the average consumer, that goods and services just fall out of the sky. But for those working in the fulfillment trenches, the reality is the very concrete world of packaging, trucking and warehouses. The seamless nature of omni-channel distribution will require you to add new distribution centers, warehouses and shipping options to your fulfillment process. While this can ultimately give your business the consumer-centered experience you're striving for, it can also be costly to implement.
  • Additional Staff
    Adding distribution hubs and shipping routes means adding staff. Existing hubs may have to ship smaller parcels more often, requiring additional staff I established locations as well. If brick-and-mortar stores are part of your inventory system, they will need a dedicated staff for their new shipping departments. Staff already helping customers or manning the cash register can't realistically be expected to stop what they're doing when an order comes in, locate the item and ship it.
  • Technology
    Unless you seriously upgraded your capabilities within the last few months, you probably won’t be able to perfect your omni-channel fulfillment plans without some serious tech investments. Omni-channel fulfillment lives or dies on the optimization of delivery and fulfillment options. Which warehouse is closest to the consumer? Which shipping option will get it there fastest? With hundreds— perhaps even thousands— of orders being handled daily, this can only be done with computer software that can track your inventory across your entire distribution network, including your local store fronts. Ideally you will need an order-management system that is connected to your entire network, allowing it to pick and choose the best combination of fulfillment and shipping solutions for each order, ensuring that every individual order is expedited.
  • Training
    New methods of delivery require changes in how your staff handles each and every order. Whether that means learning to direct packages from a wide range of warehouses to optimize their delivery time, or teaching staff at your retail outlets how to process and ship orders not being directly picked up by customers. Keep in mind that training takes time, effort and money.

Look Before You Leap

While omni-channel fulfillment services are certainly on the horizon, don't leap into this brave new world of order fill without carefully weighing all the costs and benefits.

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Topics: Supply Chain Logistics

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