Are Traditional and Omni-Channel Distribution on a Collision Course?

Published : April 3, 2015

boxing-gloves-collidingFull steam ahead—on a track that's already occupied? Businesses that are tackling omni-channel distribution while balancing existing supply chain and distribution challenges are facing a big mess if the blending goes awry.

While there are obviously similar components to both approaches, they still carry more than enough fundamental differences to cause some major headaches. Is it possible to successfully transition to an omni-channel method without a radical upset? It can be, but not if you aren't properly prepared for the switch on multiple levels.

Keep an eye out for these two major obstacles to ensure that you aren't grasping for a track switch to avert disaster.

1. Getting Your Vendors Aligned?

We’ve spoken before about how complacent vendor management is a supply chain’s worst enemy—and this holds doubly true as you move toward omni-channel distribution.

With many supply chain managers identifying their approach to operations strategy as “tactical” and “cautious,” it’s not surprising that many supply chains have fallen into a rut. Each link mechanically fulfills its role in the chain with no real insight or connection to others further downstream: Suppliers ship a certain amount of raw material to manufacturers who, in turn, send a predetermined number of finished products to your warehouses which then ship orders to customers, clients, and retailers.

The system runs in one direction and it is easy to follow, track and troubleshoot due to that simplicity. Omni-channel turns that simple river into a far more complex series of lakes and streams, requiring a greater degree of transparency, flexibility and responsiveness from your suppliers.

In an omni-channel system, many small decisions, which nevertheless require a great deal of operational data, must be made every day.

If, for example, a customer who places an order is physically closer to one of your warehouses or distribution hubs, but another has a better chance of filling the entire order, how will these vendors know who should fill the order when data and intelligence doesn’t flow between the two?

Even though it poses the most immediate potential for transitional difficulty, getting your vendors on board with omni-channel should be #1 on your to-do list. In a February 2015 report on the importance of the supply chain in the emerging omni-channel trend, industry source EY went as far as calling the supply chain the "front lines" of support for the omni-channel movement.

2. Reimagining Technology Evolution

Maholic advises that in an omni-channel business landscape, tech is no longer strictly the domain of the IT department. Rather than being presented with technology like warehousing systems and computers and modifying approaches to best leverage it, ideas dictate the direction of tech evolution. In a data-rich business culture, outside factors ranging from social media on through to customer experience are beginning to shape the way dashboards, ordering, fulfillment and more are handled.

Holding on to the obsolete best practices will just leave your company stranded in the past—and your competitors are all too happy to skim that business away from you while you're assessing the damage. Stop them in their tracks by taking a good long look at your current tech, use it to help define your ideal future tech, and start plotting the efforts you'll need to move it from point A to point B.

Yes, the path toward omni-channel distribution can have dangerous intersections for even the steadiest of businesses, but if you start your turns gradually, you won't risk tipping over. Keep two important considerations—vendor management and tech—in mind at each business decision and you won't have to worry about a cascade of issues piling up when you aren't looking.

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Topics: Supply Chain Logistics

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