Omni-Channel Distribution as a Cross-Functional Symbiosis

Inspired-Search | 7 September 2017

Written by: Annemieke Gelder

With the amount of innovation and digitalisation around us, these are probably the most exciting times for Supply Chain professionals. In the next series we will discuss a couple of key Supply Chain trends and considerations for your strategic and organisational needs and to shape your next generation supply chain.

 

When I graduated from business school, the terminology of multi-channel marketing was the trend, now onward almost 2 decades later it’s all about omni-channels.

So what is the difference, and what does this mean for leaders in the operations and distribution arena on how they can continue to support the most optimal route to market?

 

Omni-channel explained

A quick Google search on “omni-channel” (omnichannel.me) tells us that multi channel means multiple, many or even cross channel; and omni-channel would be “cross channel being done well”. It perceives all things and experiences beyond the traditional channels or point of sales for a single brand; any platform which can give consumers more ‘data’ or information to inform it’s buying decision and perform it’s final purchase, and where the consumer can interact.

Traditionally, sales and marketing were focusing on the top line and supply chain focusing on the bottom line and efficiencies. The supply and sales options were limited or more discrete: offline vs. online, direct or via distributors and typically in a specific geography and more important the functions could still interact in their own relative ‘silos’ to meet their own objectives.

Today we not only observe companies having multifaceted ambitions of both traditional players and (new start-up) disruptors. We also observe how the whole market place, including its players and the roles they play, is becoming more dynamic and interactive. Let’s just take the most well-known example: Amazon started out as a true e-tailer selling books online wiping out the traditional ‘brick & mortar’ bookstores, disrupted the relationships with the big publishing houses, went on to expand it’s range of products and went on to become a designer and manufacturer of it’s Kindle, a distributor of e-books – taking out the need for physical distribution all together – and expanded it’s activities into web services provider and a distribution partner competing with the regular third party logistics service providers.

 

Business Intelligence shapes the omni-channel market place

These changing roles and interactions are how omni-channel market place is shaping through the use of technology and data. Market makers such as distributors and retailers are becoming potentially less relevant. Through the use of Business Intelligence (BI), manufacturers, service providers or brand owners can build up deep and broad market knowledge, and fulfillment through ‘middlemen’ becomes a choice.

A deep understanding of the specific market space is required extending into relationships of the multiple tiers on the supply (upstream) and the sales & distribution (downstream) side.

Being competitive requires a successful application of an omni-channel approach and requires the availability of data across the supply chain and the right aggregation, to build up useful market knowledge or BI. Data is becoming available in data lakes, but require definition to be relevant to support the business objectives.

Omni-channels are beyond the role of supply chain, or sales & marketing individually and require an integral view across all business functions to support the data aggregation definition and requirements. More specifically: a business wide strategic approach to the companies’ channels, addressing the related data and technology requirements is envisioned. IT and BI become pivotal to drive the omni-channel approach and all functions are to work in a symbiotic way to constantly adapt to this dynamic market place. Where the consumer expects and seeks out more interaction, companies internally are to do the same.

 

Model 1: Omni-channel and a symbiotic cross-functional operating model

 

Omni-channels as a cross-functional operating model

Organise the key business functions – including BI – across different levels from operations to executive into (virtual) forums. Joint decision-making and agile supply along the parameters that are jointly set and choose the appropriate supply model: shortest fulfillment lead-time, efficient supply, most optimal sales or even maximised sales. Supply chain and BI functions can now directly impact the top line should this be required.  As the end to end value chain becomes more complex and dynamic, the (sequential) value stream model as it was defined by Michael Porter could therefore see a more symbiotic version centered around the key business objectives and BI (model 1).

Omni-channel is therefore not exclusively a domain of marketing or distribution, but a cross functional operating model heavily dependent and enabled by technology and BI. Omni-channel is a holistic business approach where all functions are represented and BI and technology play a prominent role to deliver the business objectives.

 

A full article about this topic was published in APAC CIO Outlook April 2017 (https://www.apacciooutlook.com/magazines/April2017/Logistics/#page=32)

 

About:

Annemieke Gelder has over 16 years experience in end-to-end supply chains across different industries. She is a certified Procurement Professional (MCIPS), Project Manager (PMP) and holds a MSc Business Administration in Supply Chain of the Rotterdam School of Management. She recently set up www.supplydirection.com to channel her learnings and views on supply chain trends, as well help businesses shaping and improving their supply chains operations.

 

Reading more blogs of Annemieke?

Consider reading her blog: Supply Chain Flexibility, its Drivers and Sources