The document discusses the transformation of supply chains driven by omni-channel retailing, necessitating a unified view of inventory across various channels. It highlights challenges in visibility, inventory management, and order fulfillment while emphasizing the need for technologies like RFID and cloud-based systems to address consumer expectations. Furthermore, it explores the evolving customer service landscape and the importance of maintaining a seamless experience across all touchpoints.

1. How Omni-Channel
Impacts Supply Chain
Wesley Amick, Travis Trainum, Steven Veal, Kevin Clark

2. Overview
• What is Supply Chain
• What is Omni-Channel
• Customer Expectations
• Challenges derived from Omni-Channel
• Future of Omni-channel
• Review

3. What is Supply Chain
• Supply chain is…
• A System of organizations, people, activities,
information, and resources involved in moving a
product or service from supplier to customer.
• Connected by transportation and storage
facilities.
• Idea of product/service -> End customer

4. Omni-Channel Overview
• Omni-channel provides the customer not only with
consistent experience over all channels, but also a
seamless experience as a whole12
• Different ways to shop
• Brick- and- mortar stores
• At home - Internet, tablet cellphone laptop or Catalogs
• Buy at home - Pick up in store
• Buy at home - delivered directly to you

5. Key Omni-Channel Drivers
• Driving change through E-Commerce
• E-commerce paved the way by allowing the buying and selling of goods or services over
an electronic network
• Most e-commerce sites account for 15% to 50% of a merchant’s total revenues.12
• Multi-Channel
• Marketing strategy that offers your customers a choice of multiple ways to buy
products.
• In multi-channel retailing, the multiple channels are separated into silos.

6. How Omni-Channel Came About

7. Current State of Omni-channel
• New requirement for retailers is single, clear view of all channels in supply
chain
• Customers have maximized options for quality products at the lowest price
• Increased outlets to shop from has created price competition between
retailers and e-tailers alike
• Customers now demand more options and are able to leverage retailers
against each other in order to receive the best value9

8. Customer Expectations
• -Timely Delivery-Speed, people are trying to compete with Amazon
• - Multiple Options for: Shopping - Price comparisons, showrooming, webrooming
• - Begin shopping in one channel and finish, fulfill or even return through another
• - Price (the cheaper the total price, the better)
• - Selection (the broader the selection the better)
• - Convenience (the quicker the delivery the better)
• - Experience (the less friction and more personalized, the better)9

9. Challenges
• Visibility within the supply chain
• Inventory management
• Order Fulfillment
• Pricing
• Customer Service

10. Visibility Within the Supply Chain
• Lack of inventory visibility across all channels is causing retailers to struggle
meeting today’s high consumer expectations.23
• Increases the need for safety stock
• Makes forecasting, planning, and purchasing difficult
• Inability to promise inventory availability
• Knowing the current status of inventory in transit, in Distribution Centers,
and in retail locations is essential.14

11. Visibility Within the Supply Chain
• Consumer expectations are increasing, and supply chains are growing increasingly
long
• Inventory levels across the supply chain are rapidly changing
• Timely and accurate information on inventory needs to be available to all parts of
the supply chain
• In the past a small glimpse into inventory levels was enough
• Real Time inventory levels allow companies to choose the least costly and most
efficient option14

12. Visibility Within the Supply Chain
• “Visibility is knowing where inventory is at any moment. But it is also
actionable information that can help support customers and be applied to
myriad touch points along the supply chain—from supplier to service
provider to end customer—to remove redundancies and improve
processes.”33

13. Creating Visibility
• In order to create visibility data needs to be collected and made available to
all in order to provide a singular view of inventory at all nodes of the supply
chain
•Implications: Increasing visibility of inventory at all retail channels is difficult to achieve
but allows a supply chain to become proactive instead of reactive, better meet
customer demand, and increase customer service

14. Creating Visibility
• Technologies such as Radio Frequency Identification Tags and Barcodes can
be used to track inventory in the warehouse, the store, or on the move
• All data collected needs to be available to all members of the supply chain
•This data is collected in different Information Systems, some companies
are moving to the cloud

15. Radio Frequency Identification Tags
• RFID tags consist of a microchip attached to a radio antenna, some consider it and the
Electronic Product Code the next generation barcode.19
• Implications: RFID tags can provide real-time data on inventory without manually scanning and
counting inventory. RFID is more expensive than barcoding and some companies cant justify the money
required to implement it at all levels of the supply chain.
• RFID tags communicate with a reader or interrogator that is connected to a computer
where the data is stored. They can be passive, activated by the reader, or active, self
contained battery that allows it to broadcast a signal. They can be programmed with a EPC
or programmed to do much more such as provide time, location, and temperature24
• Implications: RFID tag price, size, and ability determines what role it will be used for. Simple EPC only
tags can be used to replace barcodes and remove the need for manual scanning .

16. RFID pictures

17. Radio Frequency Identification Tags
• Tags can be used to track inventory in backrooms and on the shelf of stores24
• Implications: Knowing exactly what inventory you have and where can help prevent a loss sale, items can be
shipped from a nearby store. Also can be used to identify demand trends in order to divert slow selling inventory
to prevent markdowns.
• Tags can be used to track inventory in a warehouse or DC
• Implications: Having accurate and timely inventory information at the warehouse and distribution centers can
prevent lost sales and help get items to the customer faster
• Tags can be used to track inventory on the move
• Implications: Customers can see where their shipment is or what store has the items they want, increasing
customer service and preventing a lost sale
• Tags can be used to track trucks and equipment19
• Implications: Valuable equipment and trucks can be used to prevent equipment loss, a stolen item or truck can be
tracked down

18. Barcoding
• As shipments enter the warehouse they are checked in via a barcode
scanner that then transfers the information to the IS System. Barcoding is a
well established system that some still consider superior to RFID37
• Implications: Barcodes provide accurate information about inventory, but Barcoding
requires the actual barcode to be handled and scanned. This requires more labor than
RFID and leaves room for human error that can have an adverse effect on inventory
accuracy and condition. Even with its shortcomings barcoding is a known technology
that is cheaper than other newer technologies like RFID

19. Internet of Things
• These same technologies can be used to gather information on more than just
inventory, the IOT is leveraging information from all accessible devices to provide a
more clear view of the environment in which the supply chain operates
• The internet of things is a term first introduced by Kevin Ashton who was an early
advocate of RFID and its uses in the supply chain18
• RFID in street lights can provide information on traffic and weather conditions24
• Implications: Having accessible knowledge of things in a supply chains environment can help
them plan using real time data on the environment, not past data or second hand data

20. Information Systems and the Cloud
• All this information has to go somewhere
• In the past each channel had their own systems, even then most channels did not
have integrated systems20
• To provide a singular view of inventory across all nodes and channels supply chains
need integrated systems that share valuable information and can be accessed
anywhere at any time38
• Walmarts expansion to the cloud10, 31

21. Information Systems and the Cloud
• When using a cloud-based network, companies can provide customers and themselves a
view into all inventory, regardless of channel
• Supply chains are looking to the cloud to answer the challenge of visibility20
• All systems and all data can be stored in one place that can be accessed anywhere that
Wi-Fi or cell service is available23
• Having all this valuable information in a non physical location that cannot be safeguarded
means that it has an increased risk of tampering from outside the supply chain38

22. Inventory Management
• If a customer makes a purchase online, should the shipment come from the
Distribution Center or the nearest store?
• Potential Implication: Store inventory will be reduced and store turnover will go up if the item
is shipped from store, despite the fact that the sale originated online.
• If a customer chooses to pick a product up from a local store, who gets credit for
the sale?
• Potential Implication: If considered an e-commerce sale, store inventory will be reduced with
no corresponding sale for that channel, unless the inventory becomes reclassified
retroactively.
-Ecommercetimes

23. Inventory Management
• Should the stores replenish inventory sold via other channels or leave as is?
• Potential Implication: Even if the sale originated form an e-commerce customer, the
store may need to replenish the picked up item to remain stocked.
• What is the process and policy if there is a return?
• Potential Implication: If an item is purchased online but returned at the store,
inventory ownership can become confusing since the returned item is planned for
resale.
-Ecommercetimes

24. Inventory Management
• Inventory Optimization
• Balance between carrying a certain level of inventory that will reduce out-of-stock
possibility without harming the bottom line
• Inventory must remain agile in order to meet demand presented across
multiple channels
• Products must be priced profitably across multiple channels
• Overall brand management must be considered14

25. Inventory Management
• Balance between supply and demand
• Optimizing inventory can address several difficulties
• High Storage costs
• Inability to fill orders promptly
• Margin loss on markdowns
• inefficient fulfillment process
• Must be able to identify where inventory is at any given moment14
• Store inventory, distribution inventory and in-transit inventory

26. Network design
• Network must be designed appropriately to properly withstand rapid delivery, free
shipping and free returns
• Expedited freight is viable, long-term solution
• Must determine the optimal method for inventory placement
• National
• Regional
• Local
• Segmented
• Creates the need for both Distribution Centers (DC) and Fulfillment Centers (FC)26

27. Segmenting Supply Chain
• Retailers offer thousands of Stock Keeping Units (SKUs) to customers
• Buying patterns vary greatly
• Product size/color
• Geographic region
• Price
• Season
• Availability
• Retailers mistakenly ignore buying patterns and will operate with single product flow or a
single, fixed network structure1

28. Segmenting Supply Chain
• Segment supply chain by grouping products with shared stocking, delivery
and fulfillment needs
• Each segment may require different supply chain strategies
• creating unique service and inventory targets in addition to unique delivery methods
• Segments should be created in order to achieve optimal stocking and
delivery performance while maintaining low operation cost1

29. Integration of DC and FC
• Omni-channel retailing presents the need to combine Distribution Centers and Fulfillment
Centers
• Doing so can provide many advantages
• Inventory optimization
• Less challenging for particular channel fulfillment
• Increased adaptability to channel evolution
• When different channels peak at different times, impact of overall peak volumes can be reduced
• DC/FC must be segregated into different echelons26

30. Distribution and Fulfillment Centers
• National Center
• Inventory is stored and distributed to local stores, fulfillment centers, regional and local DCs
• Regional Center
• Some percentage of inventory stored here
• Distributed to local stores and DCs
• Local Center
• Smaller percentage of inventory is stored here
• Inventory distributed to local stores

31. Order Fulfillment
• Expansion of brick-and-mortar and virtual retail channels creates a wide
range of customer touch points
• Stores, outlet locations, e-commerce sites, social media commerce, catalogs, and
possibly seasonal locations
• No matter where a customer makes their purchase, they expect fast, hassle-
free, flawless fulfillment.
• Increased focus on fulfillment means the supply chain plays a role that’s just
as important as the sales associates, merchandising managers, ect.17

32. Order Fulfillment
• Shifts in Order Fulfillment Options
• In-store pickup of goods ordered on mobile devices is expected to double17

33. In-Store Pickup
• The ability for customers to order an item on a computer or mobile device and then pick it
up while they are already out and about
• 86% of consumers want more retailers to add “buy online, pickup in-store” to their
arsenal of shipping methods – WD Partners report
• Retailers are using this method as a way to compliment “webrooming.”
• Webrooming is the process of researching products online before entering the store
• “88% of consumers are actively webrooming.” – Gary Edwards, Chief Customer Officer at Empathic
• Gives retailers the ability to re-engage customers and drive further sales once they enter
the store7

34. Role of Digital Channels

35. Ship-from-Store
• Many retailers are turning to “Ship-from-Store” strategies as a means to
extend the omni-channel delivery experience beyond the warehouse.
• This allows retailers to turn brick-and-mortar stores into fulfillment centers
so customers can receive orders from the closest location possible.
• Benefits of this method include:
• Faster delivery times
• Access to larger assortment of products
• No changes need to be made to store layout, purchasing process, or e-Commerce site.7

36. Ship-from-Store
• This requires a single view of inventory across all channel, stores, distribution centers, and
inventory in transit22
• Distributed Order Management system (DOM) software can determine the optimal location from
which to ship an item
• Store employees must pick and pack the order7
• Requires having the labor in place to do this efficiently and effectively
• Results?
• Macy’s over 400 store locations are now utilized as mini-fulfillment centers
• Best buy has seen 22% increase in online revenue since implementation in 2014
• Target is now able to reach 91% of U.S. households by ground within 1-2 days35
• More than 1/3 of Target stores are able to fulfill Target.com orders

37. Order Fulfillment
• Companies are having to get innovative with Order Fulfillment Methods
• Amazon is a prime example
• Products in fulfillment centers are placed randomly throughout the warehouse
• Ex. 100 drill bits in the warehouse. They will be split up and scattered throughout the warehouse.
• Reduces picking bottlenecks to create a more efficient fulfillment process
• Amazon does last mile shipping on bicycles in select cities.36
• Reduces transportation overhead
• Avoidance of congestion in large cities
• Same day deliveries

38. Implementing Pick and Pack Technology
• “Picking labor is often the single biggest cost within the four walls, and inefficient picking systems can have a
huge impact on a DC operation’s costs.” Silverman
• With the increased complexity of operating a multichannel distribution center, picking becomes more
important to keep costs down. Companies are implementing new technology such as totally automated
picking systems and voice assisted picking22
• Implications: these technologies can greatly increase the speed and accuracy of picking operations in warehouses and
distribution centers, helping to get things out the door faster and more accurately
• Pick and pack robots are able to communicate with other information system's, they receive information on
the order and are responsible for accurately putting together all pieces of the order
• Voice assisted picking software allows warehouse employees to receive direction from an automated systems
to assist in picking an order, this increases the speed orders leave the warehouse as well as accuracy28

39. Packing Robots
• Robots now exist that can scan an orders dimensions and pack it faster than
a person without wasting materials, increasing efficiency and speed25

40. Pricing
Pricing Approach Definition Purpose
Channel-Specific Price “Pricing based on the channel” - Optimize price and margin in
each channel
Omni-Channel Price The same in every channel”
-Consistent price info in all
channels
-Ease the customer experience
- Remove barrier to purchase
Combination “Omni-Channel price, with
exceptions”
- Provide a unified buying
experience5

41. Pricing
• Consumers are starting to use their smartphones in-store to compare prices
before purchasing to ensure they get the best price
• According to a Placed survey, 49% of shoppers planned to use online
coupons while shopping (out of 14,645)
• Opportunity arises to use online coupons while customers are inside to
increase the chance of a purchase
• Give customers the option between home-delivery and store pick-up39

42. Pricing
• When designing, building and optimizing the appropriate pricing and promotions strategy, the following
factors should be taken into account
• Scope and Scale
• Determine which locations and channels should be given preference over others and when
• Consumer Response
• Knowing if the demand for a product will increase or decrease when a specific pricing option is implemented
• Competitor Pricing
• Determining if and when it makes business sense to match their prices
• Delivery Options
• Understanding the cost of free delivery or the consequences of charging for delivery2

43. Customer Service
• Retailing today is all about the customer’s experience.
• Omni-channel has expanded on this even further than before.
• For retailers going beyond brick-and-mortar into the virtual world, it’s no
longer just about the in-store experience.
• It’s about end to end experience that begins whenever and wherever the customer
orders:
• In the store, on a smartphone, or on the store’s e-commerce site.

44. Customer Service
• Companies that have connected all their customer service channels report an 89
percent customer retention, compared to 33 percent for those that haven’t
(Aberdeen Group)13
• Larger companies have raised the bar for customer service
• Contact instantly through social media, live chat, or text messaging
• Smaller companies will have to adapt to such standards
• BeFrugal.com try and steer their customers to self-service in the form of FAQ pages
• Staff need to be trained correctly for (unhappy) customers when they are
contacted through any of the channels8
• Contact center’s needs to have employees assigned to positions they feel most
comfortable13

45. Customer Service
• Successful companies stand by their options presented to the customer
• John Huehn notes “It’s important not to force-fit customer into the
communication model that’s more convenient for you as a company”
• Remain consistent across all channels
• Customers hate repeating themselves again over and over again to different
representatives
• It's crucial to keep detailed profiles of your customers and document
interactions with them, so any other staff member who deals with that
customer will already have his or her information.
• Use text-based channels as a “front door” for communication8

46. Customer Service
• The emerging new channels are causing firms to decrease or even freeze
their contact center budgets
• Regularly measure the impact of each activity taking place across the
customer journey to identify their cost and benefit for the business
• Companies incapable of adapting rapidly to these new channels should
consider investing in outsourcers13
• Outsourcers already have the technology, management, and delivery expertise and can
ensure a seamless operational transition for non-voice consumers
• However, customers are frustrated with offshore accents, agents with no power to
solve problems, and overly scripted interactions

47. Customer Service (Nearshore Outsourcing)
• Nearshoring is described as services provided by adjacent or nearby countries4
• Mexico, Canada, and South America for the US market
• Nearshoring will reduce operating costs and also reduce travel time
• Little differences in culture from most near-by countries16
• Most companies say time convenience is the biggest factor of switching to
nearshoring.29
• Even though there are many advantages, language barrier and occasional cultural
holidays are still to be accounted for

48. Reverse Logistics
• Along with an easy hassle free purchasing experience, consumers also demand a RISK
FREE experience!
• Customers seek to reduce their risk when purchasing a product.
• Especially true when online shopping
• A convenient returns policy and process is essential to the complete customer experience
• An independent study shows there is significant impacts resulting from customer return
experiences.27
• 85% of customers WILL NOT shop with you again if the return policy is not convenient.
• 95% of customers WILL shop with you again if the return policy is convenient.

49. Reverse Logistics
Multiple Return Options
• Regardless of how the purchase was made, customers seek to make returns
through the most convenient channel possible.
• In-store, via carrier, via drop points, ect.
As a result…27
• On-line purchases may now be returned at any store location
• In-store purchases may be returned via carrier
• And so on..

50. Reverse Logistics
• Adopting omni-channel strategies may also help in reducing returns.
• The omni-channel experience encourages customers to utilize multiple channels to
assure they’re making the right purchase27
• Using mobile phone to look at product reviews while standing in the store.
• Reduces likeliness of “buyer’s remorse.”
• Contact with the customer after the sale is also important
• Companies are setting up help lines for customers who are having difficulties with a recent
purchase
• Access to better information leads to better purchases and fewer returns.

51. Reverse Logistics
Equipping your company for omni-channel return options
• All return locations must have the proper tools and data to disposition products quickly and
effectively
• Create a predetermined disposition plan for each item in each channel
• Monitoring the speed of flow and minimizing “dwell” time is critical to getting returns back on
shelves and ready to be sold
• Plan for “to be returned” inventory
• Make sure your stock levels don’t rely too much or too little on returns.
• Ex. You may show having plenty of stock, but it is all in the field awaiting returns
• Especially critical for high demand items where low stock = lost sale to a competitor

52. Customer Engagement
• Service experience directly impacts customers’ buying decision, long-term
commitment, brand commitment and likelihood of recommending product
• Increased use in social media and communication channels has presented new
points of contact with customer
• Must meet and engage customers on their terms in order to provide a quality
experience
• Customer experiences must be low-effort to retain customers and increase brand
perception39

53. Customer Engagement
• Customers are beginning to shop in-stores but make actual purchases online
• Retailers are constantly working to develop omni-channel strategies for their
customers
• Good retailers cannot have a separate experience for online and in-stores
• Companies need to provide an experience that will build a strong long-term
relationship3

54. Customer Engagement
• Loyalty programs are designed to encourage and reward customers who purchase
regularly from a retailer
• Kroger Plus Card
• Personalized emails can provide customers with special offers or even in-store
deals
• The use of beacons will allow retailers to alert customers regardless of their
location
• Also tracks the shopper while they are in store3

55. Customer Engagement
• Can machine learning deliver?
• Successful companies today are using artificial intelligence(AI) to benefit
their customer’s experience throughout their journey
• Netflix recommendations34
• Businesses are interacting internally by using omni-channel analytics to
answer questions as soon if not before they arise
• AT&T web platform for end-to-end processes27

56. Benefits of Implementing Omni-Channel
• Increased visibility across the supply chain
• Creates opportunities to optimize inventory
• More options of fulfillment – reach more customers
• Create a seamless shopping experience – raising customer service
• Reduce returns by decreasing buyer’s remorse
• Create more opportunities to engage customers – increasing sales

57. Looking to the Future
• Mobile Alerts
• Right message, Right time, Right shopper
• Information Everywhere
• Mobile app
• Virtual Dressing Room
• After Hours Pickup
• https://youtu.be/4t6x3E6GqGc

58. Review
• What is Supply Chain
• What is Omni-Channel
• Customer Expectations
• Challenges derived from Omni-Channel
• Strategies Implemented to meet Challenges
• Future of Omni-channel

59. Questions

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35. Interview with Kristin Reinert – Target – E-commerce Fulfillment Center
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64. Works Cited
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