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Supply chain challenges in a multichannel world

Posted on by Faye

Supply chain challenges in a multichannel world

Prova’s Faye Callaghan has been immersing herself in the world of logistics since joining the team earlier this year. Here she muses on her introduction to multichannel retailing…

Advances in technology are changing the way in which people shop. Gone are the days when people needed to travel to make a purchase, spending an age browsing stores and personally comparing products from different outlets. In the multichannel world where customers can shop online from their home computer, during their lunch breaks or through a simple app on their smart phones, retail supply chains are facing a barrage of challenges in meeting real-time customer demands. Even this week, we’ve heard how Tesco is investing in ‘click and drive through’ infrastructure.

Traditionally, distribution centres (DCs) were set up to pick and send orders to stores, replenishing stock in large amounts. Individual customers order in much smaller quantities and, while DCs must still cater for store-based operations, they are now also expected to invest time and resources in fulfilling these much smaller, bespoke orders. This requires a review of current supply chain operations and adaptations to processes within the DC.

The multichannel world has also led to a shift in the service that customers expect from retailers. In the case of online orders, customers expect to be offered the option of next day delivery and, as retailers compete for custom, the cut off point for orders to qualify for such delivery is under pressure to become later and later. Supply chains need to be adapted to cope with such demands so customer expectations are met and their loyalty is secured.

The option for customers to ‘click and collect’ also poses challenges for the supply chain. Ordering an item online and picking it up from a local store of the customers choosing is often offered as a free (to the customer) delivery option. How do retailers fulfil such orders without incurring delivery costs themselves?

Multichannel retailing allows for the offer of extended product ranges without being limited to the footprint size of any given shop. Careful consideration must be given to how far the extended range should go so that stock can be carefully managed and the question of where to store the additional goods does not become a problem.

Retailers must manage their supply chains in order to keep up with the ever changing manner in which customers shop. Demands are increasingly made in real-time and customers expectations are only getting higher. Retailers need to adapt their supply chain to cope with this evolving multichannel trend whilst, where possible, keeping costs down. This is no mean feat in our multichannel world.

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