Omnichannel As a New Challenge for Logistics

Today, logistics networks need to be more flexible and universal than ever. The development of a new generation of retail business — with showrooming, no-line commerce, and webrooming — requires logistics providers to change or at least adjust the way they work. All customer channels need to be targeted in a hasty manner, promptly and seamlessly.

Today, brands prefer to merge online and offline channels, using both streams to target as many customers as possible. Users expect fast service with control over each step of the process.

Logistics providers need to provide transparency and build trust — and this is what an omnichannel approach does best.

What is Omnichannel in Logistics?

An omnichannel approach ‘is an approach where customers can connect to the companies via many mediums while getting the same quality of experience, regardless of which channel they use.’ It’s different from a traditional multichannel approach, where users previously felt the differences between channels.

The omnichannel approach is based on a highly-personalized approach — marketing, sales, and logistics work together to deliver the most seamless experience. Logistics and supply chains build a foundation for consistent fulfillment of orders that come through various channels.

Omnichannel logistics is especially relevant with the rise of social commerce — the combination of e-commerce and social media shopping where brands allow users to make purchases directly from their accounts. Now, users expect these shopping experiences to be immediate, both in processing and delivery. Logistics have to live up to such ambitions by quickly delivering these instant orders.

Use Cases for Omnichannel Logistics

Let’s see how omnichannel logistics can adapt existing models to grow customers’ expectations and deliver value to businesses and their end clients.

Omnichannel warehousing and fulfillment centers

The traditional warehousing approach, based on segmenting supply chains on the types of products, isn’t working anymore. Businesses have to increase their product ranges by expanding into different niches, and they need to fit them all in.

The solution is to build an omnichannel warehouse, adapted to pick-and-pack services for different types of goods. For instance, Helian Home, a major Chinese clothing manufacturer, built an intelligent warehouse, equipped with an automated management system. The warehouse automatically identifies the product by scanning unique barcodes on each package, sorts them, and handles delivery and returns.

In the future, all clients will be able to automate their pick-and-pack activities to pay not for the package size or time, but only the amount of completed work without overpaying.

‘Anytime, anywhere’ delivery models

Now, customers expect their purchases to be delivered 24/7. Retailers and logistics companies have to treat every order as an urgent one because customers don’t want to wait.

This can be achieved with automated parcel lockers, such as DHL Packstation. This is a network of parcel lockers where drivers can pick up packages anytime and deliver them to end clients. Customers can also drive to the lockers on their own, using them like vending machines.

Another solution is smart delivery, like with CarDrops.sg. Parcel lockers provide storage opportunities, but not delivery itself. This service, however, assigns a delivery agent to those who can bring the order to the customer in a truck (these are usually drivers who are taking a similar route in the customer’s direction and have space in their cars or trunks). The service is now being tested by DHL and Amazon and already has thousands of customers.

Cross-channel omnichannel platforms

These digital platforms will be shared between retailers, logistics companies, and manufacturers for tracking inventory, order fulfillment, and customer interactions. Such tools will use online and offline storage and contain a full order database.

With Big Data and Artificial Intelligence, companies can analyze the dynamics of their order fulfillment, get smart insights on customer satisfaction, and receive statistics. Shipwire is an example of an online order management platform that connects online and offline shops. Retailers can track merchandise, and orders from online shops are automatically sent to the Shipwire. The platform fulfills the order from the inventory automatically while the team only monitors the results.

Challenges of Omnichannel Logistics

Omni-channel logistics enable many innovations, as we’ve seen; however, there are some difficulties behind the practical implementation of these solutions.

Lack of inventory visibility and metrics

If retailers aren’t aware of the progress of logistics activities, they can set unrealistic delivery goals. Logistics companies will end up with a constant stream of orders with impossible deadlines they can’t physically fulfill. If a business doesn’t track carrying costs, active orders, and profits, businesses can lose their entire budgets and disappoint customers.

Poor transit visibility

Transportation can bring surprises due to road accidents, product damage, or vehicle issues. If retailers, manufacturers, and logistics providers can’t keep each other informed about unexpected problems, they will not be able to fulfill orders on time.

Segmented supply chains

The majority of companies today don’t have omnichannel warehousing just yet. This makes the implementation of omnichannel logistics expensive because products have to migrate between multiple distribution centers.

On top of that, operators often have no way of communicating with colleagues and, even if they do, they use different metrics and approaches.

There’s no way for a retail brand, manufacturer, or logistics provider to keep track of multiple warehouses simultaneously if there are so many differences.

Unreliable order fulfillment

Striving to live up to customers’ expectations, businesses promise customers same-day deliveries. Often, these estimates are not based on actual data, and there is no way for logistics providers to fulfill an order. The guarantee is then broken, and the customer doesn’t come back to the brand. The more channels the company uses, the harder it is to keep track of all orders and be realistic with fulfillment promises.

Reverse logistics

Omnichannel logistics implies that returning a product should be as seamless as receiving it. Companies should quickly process and execute requests but, for now, many brands don’t have a set procedure for handling returns. Returns are seen as an additional difficulty for organizations, and not handled properly.

Omnichannel Logistics Technology Solutions

Implementing omnichannel innovations and re-building your business for them is easier when you have reliable management systems in place. It’s one of the most affordable investments business owners can make to improve their logistics, since it only requires software — no physical devices. Let’s take a look at how the software solves these described omnichannel issues.

Warehouse Management System (WMS)

A warehouse management system is a software that collects data on warehouse operations, products’ activities, and auditing. Such tools handle picking, monitoring, and inventory management, and allow oversight of all workers involved in warehouse management.

The warehouse management software allows businesses to track their inventory anytime and anywhere. This data can be shared with partnered vendors — retailers, distributors, etc. This way, businesses can avoid issues with order fulfillment and foresee potential crises.

ERP CRM customization and their deeper integration

In logistics, customer management and enterprise resource planning software increases logistics visibility and helps reduce operating costs. Logistics providers can turn to software developers to customize existing solutions or develop new ones from scratch.

Customized ERP and CRMs include many features that aren’t available in typical tools, such as:

• Delivery management and planning. Custom ERPs allow tracking your vehicles and transported goods, distribute products with the car’s infrastructure, and select the best transportation routes.
• Order fulfillment. The development team can include a proactive order processing module. This set of features will track incoming and fulfilled orders, keep customers updated on order progress, and notify all connected vendors about shipment progress.
• Documentation management. This module will take care of organizing notes, invoices, forwarding messages, and other documents. All of these items will be safely stored in organized folders and available anytime.
• Detailed customer insights. CRMs provide companies with information on customers’ preferences, activities, and contacts. All fulfilled orders are recorded, and some tools even measure the level of customer satisfaction after each order.

Contextual data visualization

Supply channel optimization requires logistics companies to process different types of data from versatile sources. Vendors and logistics providers must be aware of the location, traffic, weather conditions, product materials, and linked transportation risks.

This is why reports and statistics have to be interactive — regular graphs and tables can’t possibly incorporate detailed information on inventory stock levels, dimensions of stock-keeping units, and the number of available units.

The professional logistics management system allows users to work with interactive data and displays the changes in variables visually. Machine learning and AI detect the correlation among multiple variables and determine transportation patterns. If there is a problem, the software can detect the factors that have caused the situation.

Conclusion

Omni-channel logistics is a long-term innovation. This form of delivery and cooperation brings multiple benefits to both clients and businesses. End customers receive fast delivery and get personalized offers, while companies can attract more consumers by using various channels.

E-commerce and social commerce are now taking over traditional retail, and logistics providers need to adapt to new standards. Looking forward, we should be ready to see the ongoing digitalization of logistics.

Using management software and ERP platforms are already a must — it’s the only way to provide transparent connections with customers and partners. Logistics companies should work with experienced developers who can bring analytics, predictive logistics, and real-time management into their supply chains.

At bvblogic, we customize ERP and CRM systems to the needs of logistics companies with your supply chain in mind. Contact our team to build a custom management solution for your company and customers.