In our regular blog from Oliver Guy retail industry director at Software AG tells us how the omni-channel dream can be achieved once your supply chain network, store network and individual systems come together to form an ‘orchestra,’ with which the retailer can play an ‘omni-channel tune.’
Omni-channel retailers have a formidable challenge when trying to match, or even beat, retailers such as Amazon. Many retailers have the legacy of an existing store network, which can prove advantageous when competing with pure-play online but still needs to be serviced in the traditional way while also delivering new services. Amazon.com, with its well-honed business model with highly streamlined operations for online order fulfillment, does not have the challenge of customers buying online and picking up in store, for example.
The publication Information Age reports that a siloed IT legacy is a significant barrier to omni-channel. Most retailers still have existing networks, supported by processes and systems from multiple vendors which often provide limited interoperability between each other or with external systems such as suppliers, delivery companies and the IT service providers specialising in omni-channel orchestration.
In addition, supply chains are often designed for the single-channel world—resulting in cost disadvantages and margin erosion for omni-channel retailers.
As consultants Ernst & Young have observed: “Omni-channel growth will dilute margins unless the supply chain changes.”
Your supply chain network, store network and individual systems are a form of orchestra with which you can play an omni-channel ‘tune.’ Failure to conduct this orchestra will result in margin erosion—online orders will require high levels of human interaction which can lead to errors, or orders will be delayed during periods of peak demand.
While many retailers have invested in front-end Web stores, the next stage is to ensure the customer promise is met. As Paul Coby, CIO of UK department store retailer John Lewis, said to the National Retail Federation (NRF) in New York: “Having a pretty and award-winning front-end online and mobile is really important to have, but they’re useless unless you’ve sorted the back-end technology, because customers expect fulfilment to be accurate and on time.”
The “pretty” front-end and back-end technology and processes have to be seamlessly automated to achieve this.
The following elements are essential:
- Clear process design—omni-channel processes must be codified in such a way that they can be applied systematically and adapted in the future.
- Connectivity—you need the ability to connect and interact the multitude of systems across your enterprise as well as the ones outside that need to be involved in the omni-channel process.
- Process orchestration—you must have the ability to execute the omni-channel processes automatically and control the interactions between different systems.
Not only do these elements act as the basis with which to control your orchestra but they also give you real-time actionable insight into your omni-channel business. This insight is the foundation for automated corrective actions to ensure the orchestra continues to play the right tune.
Conducting your orchestra is our third and final milestone on the omni-channel journey. Next, we will summarize these milestones and offer some further suggestions to smooth your path. Stay tuned.