Unlocking Omnichannel Value for Your Business and Customers

Convenience is the secret of e-commerce’s success: shopping anytime and anywhere, on the sofa in the evening, on the train to work. Customers now also expect goods to arrive not only quickly and reliably, but exactly when and where they want them. The COVID-19 pandemic has significantly strengthened this trend: the number of high-speed delivery apps has risen rapidly since 2020. The success of delivery providers shows that retail companies are only viable in the future with flexible and robust fulfillment strategies and processes.

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Omnichannel unlocks relevant opportunities but introduces new challenges for retailers

A recent study showed that 30 percent of retail customers expect “turbo delivery”. Delivery is therefore part of the customer experience; shopping does not end with conversion, but with the handover of the goods. Smooth and fast delivery on the desired date or the same day is now considered standard–many services even offer deliveries in less than 30 minutes. These services have become a must-have for customers, and some retailers are establishing partnerships to support and scale rapid delivery.

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“Customers expect goods to arrive exactly when and where they want them.”

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Otherwise, players will register a significant loss in market share over the next year with an increasing risk of outplacement.

During the last decade Retailers strongly invested on “front-end” processes innovation for example eCommerce solutions, Digital Marketing and Customer Experience Design.

In recent years the focus shifted towards “back-end” components where Omnichannel Order Management is one of the core buildings blocks and nowadays one of the “hot-topic”.

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In such an unprecedent-changes context, the Omnichannel Order Management assumes a key strategic role for a Retailer Business, with other supply chain systems, such as Warehouse Management System (WMS) and Transportation Management System (TMS), represent the key enablers of the Omnichannel Customer Experience.

They support the “customer-facing” processes with information, workflows and process optimization and orchestration. To win the future in Retail, Players have to consider both the customer-centric and the cost-optimization directions, focusing their effort on strategic initiatives to generate business impacts as the Omnichannel Order Management evolution can deliver.

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Omnichannel Order Management is one of the key components of the omnichannel framework and forms the interface between the company’s “back-end” and “front-end” assets.

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The Omnichannel Order Management as the basis for the omnichannel experience

The Omnichannel Order Management is a key element of the new customer-centric approach for the omnichannel evolution. It allows optimizing, orchestrating, automating, and streamlining the order fulfillment decisions and processes on the basis of business strategic objectives such as margins, customer experience, and others.

It improves efficiency and enables the harmonization of digital and physical touchpoints into a single, concentric view that provides customers with a seamless omnichannel experience along the entire journey.

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Additional Omnichannel Order Management capabilities

There are many Omnichannel Order Management solutions that have been developed both by Enterprise Solution Providers and new market challengers. Despite the fact that all of them cover the core Order Management capabilities, some have also developed extensions and additional modules that allow retailers to manage Order Management adjacent processes within a single solution.

Examples of these include:

• Inventory Visibility: A single dashboard provides an overview of all the retailer’s inventories, including distribution centers, dark stores and much more. It provides visibility for goods already in transport within the logistics network – including external third-party suppliers. It also displays information that supports optimal inventory planning and the calculation of indicators such as “Availability to Promise” and “Availability to Sell”.

• Store Fulfillment: The entire order-processing sequence in the stores becomes visible. A special user interface can guide employees through the processing activities such as Pick & Pack. The various tasks are listed and can be prioritized according to delivery time, for example.

• Customer Service: This includes managing after-sales processes with specific workflows, for example, returns regardless of the original purchase channel. Customer care is supported with order tracking information via dedicated dashboards.

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Omnichannel Order Management impacts relevant Retailer dimensions

A recent experience by BCG Platinion demonstrated how the implementation of a Omnichannel Order Management is more than an IT project. It involves multiple business units and affects the operating model, processes, customer experience and satisfaction, and business results.

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Operating model

The Omnichannel Order Management rollout requires a redesign and expansion of the operating model at enterprise level.

New job roles need to be defined, areas of responsibility expanded, and the online and offline product assortment may need to be adjusted.

The introduction of Ship from Store will bring changes to the way sales staff and in-store processes work as new activities such as Pick & Pack are added.

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Processes

The Omnichannel Order Management guarantees the integration of different shopping channels and manages order intake from multiple touchpoints such as online stores or physical stores with multiple delivery options that can be activated depending on the retailer’s delivery infrastructure.

The system identifies the optimal fulfillment location, taking into account relevant business variables such as transport costs, distance or expected delivery date, leading to saving up to 40 percent of fulfillment costs in highly-distributed retailer networks.

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Customer experience and satisfaction

Improved delivery service can increase Net Promoter Scores by an average of 20 percent for retailers.

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Business results

Introducing new use cases such as express pickup or next-day delivery.

Improving the customer experience, and the ability to use any node in the logistics network as a delivery center leads to higher order volumes and opens up cross-selling potential—and increased revenue.

Potentially, every single inventory distributed across the network can be sold to a customer online.

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Selling goods quickly increases margins and makes marketing promotions such as discounts on landed goods obsolete.

The Omnichannel Order Management improves the efficiency of processes involved in E2E.

It optimizes delivery—especially in the last mile—and reduces manual activities thanks to a set of predefined user interfaces and automated workflows that limit human error.

It also has the potential to reduce inventory management costs.

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Retailers must choose the right Omnichannel Order Management solution that meets their specific needs. This decision will depend on the market context and competitive landscape, the required functionality, order volumes and performance, and the intended IT architecture. However, although choosing the solution is an important step, it is the implementation process and the choice of implementation partner that have proven to be most critical to the project’s success.

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Based on its hands-on experience, BCG Platinion has identified seven key lessons learned from Omnichannel Order Management implementation

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Coordination of Omnichannel Order Management and the overall IT roadmap: Order Management deployment must be coordinated with other IT initiatives to enable synergies with other systems, such as WMS, and to minimize rework and inefficiencies.

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Revision of the operating model: New roles and capabilities are needed to manage the new use cases and make the associated business decisions—for example, defining assortments for shipping from stock.

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Project length and a standard-first approach: With a Commercial Off the Shelf (COTS) Solution and a standard-first approach, the E2E implementation journey typically takes less than one year, although this will depend on the level of customization and retailer volumes and scopes.

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Framework to define the target architecture: BCG’s omnichannel architecture framework can be the starting point for analyzing the current retail architecture to define the target architecture and implementation approach. One resulting example could be a hybrid solution based mainly on COTS with some custom-developed microservices that are differentiating for the retailer, who own the Internet Protocol.

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Establishing program governance: Independent program governance is important for the success of omnichannel transformations and omnichannel order management projects, including project organization, PMO, technical design authority, quality assurance, and change management. It must be able to marshal stakeholders such as executive sponsors, IT and business leads/experts and delivery teams to ensure that milestones are met and that strategic decisions for business and IT are made.

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Designing the journey based on the customer experience impact: Omnichannel Order Management use cases should be defined and prioritized depending on their impact on customer experience, on NPS and top-line levers.

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Contextual knowledge, key competencies and roles: Understanding the architecture ecosystem and processes is as critical as agreeing on architecture principles up front; key roles include the Product Owner and Enterprise Architect, as well as business and tech stakeholders on all key domains, for example Logistics.

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Omnichannel Order Management is a strategic element for retailers’ business model transformation, competitive differentiation, and operational excellence. The good news is that omnichannel order management programs can also be funded thanks to solid business case opportunities generating fast returns on investments.

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