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Supply Chain’s New BFF–The Omni-Channel Experience

With the growing significance of digital advertising and the advent of viewer customization and data mining, marketing to the same person in multiple touch points is a must for businesses today. While almost all of the tech-savvy retailers have decided to embrace multi-channel marketing, few take full advantage of the specific characteristics of each channel and the interaction between them. In our world of supply-chain asset protection (SCAP), the tentacles continue to extend outwardly.

What we call “omni-channel” marketing is known for creating a consistent, interdependent customer experience across several channels. It is what every company aiming to succeed in an omni-channel world should strive to achieve. Each channel must be able to meet the customer demand and be cost-effective, and so should the SCAP program. Nevertheless, one can venture into some particular channels so that overall customer/consumer experience can improve. Increased pressure from the pure online retailers have made traditional brick-and-mortar businesses fashion strategies to retain market share without minding the cost implications and how it will affect their day-to-day activities.

Priority of the Omni-channel Strategy

Regardless of the reasons, customer satisfaction and increased sales remain key priorities. It can only be achieved through a properly designed supply chain that mitigates disruption risks and allows the sufficient flow of supply to meet demand. As a result, leading companies are developing business models that focus on maximizing customer satisfaction by achieving an optimal balance between performance (accurate fulfillment), cost (minimizing transportation expense), and risk (providing safe, uninterrupted transport and brand-positive products). Companies may source from new suppliers as a stop-gap measure when facing supply shortages and may inadvertently expedite products of inferior quality, thereby increasing the risk of product returns even though cost and service objectives may have been met.

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Brand reputation risks, recall costs, and any additional regulatory scrutiny would likely outweigh any benefits derived from the product sales. Assuring the supply of goods entails far more than providing the correct products at the right time via the requested channel at the desired margins. Identifying, assessing, and managing strategic risks that can disrupt your supply chain and erode consumer (not just customer) trust in your brand are critical components of an omni-channel strategy. Developing a supply-chain risk-management program that incorporates the use of supply-chain network optimization and risk-quantification techniques will assist in designing an optimal omni-channel supply chain that balances cost, performance, and risk.

Supply-Chain Risk-Management Program

A supply-chain asset protection and risk-management program should include mitigation plans that help decrease the severity of supply disruptions throughout the value chain and provide the analytical insights required to develop a flexible supply chain to support each 24/7 channel. A supply-chain network design that doesn’t take into consideration assurance of supply strategic risks will be considered sub-optimal and can result in:

  • Excessive safety stock resulting in potential obsolescence, additional carrying costs, and sub-optimal use of working capital.
  • Over-reliance on costly airfreight logistics due to lack of flexible demand fulfillment.
  • Inefficient use of resources or capital applied toward one channel over another.
  • Supply disruptions of longer duration or severity.
  • Loss of sales (order cancellations) or increased cost of sales (expediting orders).
  • Damage to brand reputation resulting from unsatisfied customers.
  • Excessive spend of human capital and variable expense resources.
  • The ability to manage performance, cost, and risk becoming ever more complex as omni-channel businesses strive to meet the expectations of the modern consumer.

The evolution of omni-channel shopping is having a significant impact on how supply chains are designed, driving a greater need to understand cost-to-serve and to protect margin erosion as channels and SKU assortments increase. Demand fluctuations during seasonal peak or promotional periods are particularly challenging and taxing on supply chains, requiring networks to be designed with greater flexibility and control.

- Digital Partner -

It is my humble opinion that consumer businesses should place an increased focus on transforming supply-chain networks to align with their omni-channel strategies. The harsh reality is that omni-channel is rapidly moving away from something to be considered to being a must-have for surviving and thriving businesses. The recommended approach is to embrace the new reality of omni-channel while also investing in more in-depth analysis on consumer demand and aligning supply-chain asset protection objectives with corporate strategy to create a competitive advantage.

Differences between Multi-channel and Omni-channel Marketing

The differences between multi-channel and omni-channel marketing are subtle, and the two strategies often overlap. But understanding their benefits is crucial for businesses looking to stand out in an economy in which customers are constantly bombarded with ads.

Here are a few of the most important purposes and tactics of multi-channel and omni-channel marketing, as well as examples of companies successfully reaching customers through a variety of media.

- Digital Partner -

Goals and Purposes. In simple terms, the purpose of multi-channel marketing is to reach customers through a variety of means, both digital and physical, including in-store advertisements, websites, fliers, email newsletters, mobile apps, and more. Most customers require multiple touch points with a brand before they’ll consider making a purchase. And the more avenues you use to reach them, the better.

Done properly, multi-channel marketing also leverages the unique attributes of each type of communication—a particularly important step for the digital channels today. For instance, websites accessed via laptops, tablets, and other large-screen formats might be more content-rich and allow for more exploration of a brand’s content and offerings, while simpler, uncluttered mobile sites may allow for swiping, pinch-zooming, and other touchscreen-enabled features.

Even when leveraging all of these unique features, retailers often fail to create a consistent experience throughout multiple channels. This is where omni-channel marketing comes into play. Instead of displaying different ads in their newsletters, on their websites, and in their stores, for instance, retailers with effective omni-channel strategies will send identical or complementary messages across each channel. This approach allows for more consistent branding and personalized communication with each customer.

Strategy and Tactics. The overarching goal of both multi-channel and omni-channel marketing is to create a better customer experience that leads to greater brand loyalty and a higher likelihood of purchases. A solid multi-channel strategy can go a long way in accomplishing this goal. An omni-channel approach will build upon that strategy to create a more cohesive, continuous experience for the average customer, which is someone who frequently uses and views multiple forms of media digitally and in person.

Solid, foundational multi-channel tactics include:

  • Using the media channels most appropriate to the target demographic.
  • Leveraging the unique attributes of different digital and print advertisements.
  • Tracking sales and leads through surveys and visitor statistics.
  • Placing both informative content and persuasive advertisements strategically.
  • Understanding the purpose and utility of each channel—some may lead directly to purchases, while others will persuade customers to visit other channels before they buy.

Retailers can build upon these tactics with the following omni-channel strategies to better leverage the channels they have created and provide a more consistent customer experience:

  • Create continuity between standard and mobile websites. For example, use a login system that saves viewers’ carts and recently viewed items, so they can view those same items on their phones when they visit your stores in person.
  • Consistently advertise the same sales and specials at the same time in newsletters, on websites, and in stores. Customers may be more likely to make a purchase if they’ve seen one ad several times, rather than several different ads for different products or services. Use consistent phrasing or even identical copy when communicating the attributes of your brand.
  • Allow for online ordering and in-store pickup via multiple digital channels, and use similar interfaces for each one. You will eliminate a great deal of learning and decision-making challenge from the purchasing process, making it more likely for your existing customers to keep buying.

Generally, the primary purpose of employing omni-channel tactics is to make it seem as if one person or brand is working as an individual with each customer. Comparing it to an uncoordinated multi-channel and disparate approach, this is a strategy that will surely give the present and prospective customers a connection that is highly interactive with your company or brand.

Clearly the moving parts and pieces are almost one to the supply-chain asset protection professional. It is in our best interest to align with the merchant group and most importantly tie in the marketing data scientists who have access to the data that allows our area to thrive and catapult past the horizon of the shoplifter or dishonest employee. We need to see what they see and plan by channel a strategic, layered program that feels “marketing-esque” but is SCAP through-and-through.

A Renaissance for LP Professionals

The renaissance continues for the supply-chain asset protection professional. As I see it, years ago, I would not have seen or understood the layers of multi-channel outlined, let alone the phrase “omni-channel retailing.”

Today, there is a great deal of zeal when approached by non-operators asking the supply-chain asset protection professional to contribute to the risk mitigation plans for the next phase of the consumer omni experience. It sure feels as though the best is yet to come.

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