1.

INTRODUCTION ON OMNI-CHANNEL DISTRIBUTION

1.1 Importance of Omni-channel distribution

Day by day innovations are rising and as of nature of customers too, customer service has
changed. For example, twenty five years ago service was personal and familiar when issues
formed, they were typically handled face to face with a local manager. Now a days global
corporations have millions of customers. By using customers’ service experts and latest
distribution technologies, these companies were able to focus on dealing with their bread and
butter business.

While knowing the consumer now, the businesses do have to look to the future and remain
agile as the demand shifts rapidly. For instance, while service to the next day was novel a few
years ago, it is common today. It is still not clear how developments and technology can
affect the market. It is where omni channel delivery network 's importance comes in.
Thipaper will address the potential delivery of omni-channels and the effect of omni-
channeldistribution networks compared to the traditional supply chain network

The consumer product and retail landscape continues to evolve every day because how
particular company ‘sustain’ is purely depend upon how they expand their distribution
channel.Omni channel distribution network of the future has different key elements that
combines best practices with digital opportunities. Traditional supply chain networks are not
capable to do same-day delivery with excellence service. The aim of this paper is to
understand the about the Omni-channel distribution of the future and impact of Omni-channel
distribution network comparing to the traditional supply chain network. The study also shows
the significant effect on company’s performance on using Omni-channel distribution
network, and how they provide excellence service. Omni-channel distribution enables
businesses to tailor how their products are purchased and delivered to meet the needs of the
modern customer
Consumers expect to find the items they want in-store as well as online, to use apps to make
purchases with a finger swipe and to have their order shipped to their doorstep the very next
day. Instant customer satisfaction demands have companies struggling to improve their
supply chain to ensure cost-effective on-time delivery, which is where omni-channel
distribution comes into play.

Omni-channel Distribution Strategy aims to synchronize the functions of inventory, logistics,

and distribution across all sales channels to meet consumer demand.
Retailers, suppliers , distributors and wholesalers alike are creating complex omni-channel
logistics strategies to ensure optimum rates of the all-important cost-to-serve metric are
generated by their supply chain. For example , sending a consumer a product from their local
retail store makes more sense than a hundreds of miles away from a fulfillment center.

Figure 1

Online order fulfilled directly to the buyer's home Online order sent for in-store pickup to a
brick-and - mortar store (a popular way to drive new traffic to the brick-and - mortar
storefronts). In-store purchasing of an out-of-store item shipped to the store at a later date or
directly to the purchaser's home Online order submitted via eRetail channel (e.g. Amazon)
and delivered directly to the purchaser's home via eRetailer's or seller's delivery network
Order dispatched directly to the customer from a product supplier or CPG company via
online retail marketplace Online order and in store purchase management.

1.2. Challenges Faced in Omni-Channel Distribution

Omni-channel delivery helps supply chain professionals to synchronize product movement

through all sales channels and comes with a specific set of challenges for themselves. If these
problems are ignored, then they can lead to loss of revenue and brand image dilution. The
following are a list of the nine challenges faced by companies in the omni-channel
distribution sector:

(i) Lack of Inventory Visibility and Metrics

In the omni-channel delivery environment, it's important for companies to know their
inventory status and whether it's at a fulfillment center or retail location. The last thing a
company needs is to make sure its customers can receive delivery next day and not be able to
follow through. In the holiday shopping season the inventory can be especially difficult to
keep track of. Companies must establish an effective order fulfillment mechanism by using a
finely tuned Warehouse Management System (WMS) to tackle this task.

Companies who do the right thing use omni-channel use inventory visibility as a accurate
estimate of potential demand and schedule their supply chain activities accordingly. In
reality, the businesses that do the omni-channel best will sell orders online without even
taking the product physically. E-commerce and order management systems are coordinated in
such a way that online shopping cart orders activate a PO directly with vendor, and
fulfillment is carried out by an outsourced or in-house party within the supply chain of the
company.

The old adage that "you can't handle what you don't measure" remains true when it comes to
inventory management and visibility. Tracking fundamental-inventory related metrics like
Inventory Carrying Costs, Perfect Order percentage and percentage of Orders Filled from
Ideal Inventory Location is critical. To make metrics matter, they have to fit with consumer,
financial, and strategic goals. And, in today's multi-channel supply chain, metrics need to
show how efficiently and cost-effectively product flows through distribution networks to
diverse retail locations, distributors and wholesalers, and end-users.

(ii) Poor Visibility into Inventory in Transit

In general, both major companies and start-ups have relatively poor visibility in transit
inventory, which has resulted in increasing demand for real-time visibility solutions for
freight. Leading omni-channel distribution solutions allow visibility not only in shipments
and trucks but also in orders and stock-keeping units. These solutions also integrate
optimization capabilities and collaborative capabilities which facilitate communication
between trading partners and the exchange of data and knowledge. Leading solutions have
begun to incorporate machine learning capabilities and exploit a wider range of data sources
including weather , traffic, location and social networking to enable predictive capabilities
and determine more accurate Estimated Times of Arrival.

(iii) Segmented Supply Chain Processes

If the various supply chain processes in a company don't fit together, it can't guarantee
customer loyalty across the board. Larger companies typically have several private
warehouses and distribution centers, operated by both in-house and outsourced operators
working on different systems. As a result, they employ different strategies to ensure smooth
operation of their supply chain. The key to overcoming this supply chain segmentation is to
merge these processes, instead of making them operate in silos

(iv) Unreliable Order Fulfillment Processes

When a business promises its customers that they will receive delivery on the same day or
next day, it has to deliver on that guarantee. An inefficient method of order fulfillment can
lead to delays in delivery, which can prevent potential customers from doing business with
that firm. A smart way to ensure a smooth order fulfillment process is to use the correct
technologies to assist in predicting potential delivery or shipment delays.

(v) Finding the Right Transportation

There are several different ways to bring a product delivered to the customer's door from a
brick-and - mortar supermarket or fulfillment center. The challenge is to find the most
effective and reliable transport solution that will keep consumers satisfied without pushing up
the cost of the landed product. For omni-channel logistics it is important to choose the right
shipping method for the appropriate customer situation.
(iv) Reverse Logistics

For any product the return phase should be as smooth as the initial delivery. In this modern
world of the omni-channel, consumers expect to be able to return items they have bought in
store or via mail. It is doubtful that businesses that do not deliver this ease of return can
produce repeat business. The introduction of a sound reverse logistics network within the
omni-channel logistics architecture is crucial for successful customer service.

(vii) Manual Processes

One of the leading causes of inventory inaccuracy across supply chain nodes is the continued
use of manual processes to collect inventory data, often paper-based. Implementing a WMS
with the capabilities of radio frequency ( RF) and barcode scanning is a easy but necessary
first step. Additional steps have been taken by the most innovative organizations to simplify
inventory collections, for example by using drones and RFID tags. This automation allows
them to compare outcomes, detect differences and build a clearer image of their inventory.

(viii) Overlooking Physical Transformation

While digital transformation has earned the lion's share of attention from analysts and
technology firms alike, companies need to be careful not to lose sight of physical change. The
system of flowing truckloads from large distribution centers into stores has become obsolete.
Businesses will upgrade their supply chain and distribution networks to succeed in this
emerging market, where delivery speed and reduction of inventories are paramount. In an
attempt to become more flexible and better meet with consumer preferences for quicker
delivery, leading businesses are trying out new distribution methods.

2. RESEARCH METHODOLGY

2.1 Studying the impact of Omni-channel distribution network compared to the traditional
supply chain network

The Omni channel (OC) is an automated method of meeting multi-channel demands

such as a physical store, call center, fax, internet , and mobile apps with seamless customer
service. The rise of emerging technology and mobile applications draws online networks to
consumers. The business-to - business (B2B) and business-to - consumer (B2C) landscape is
evolving rapidly, and will change even more rapidly in the coming years. The increasing
popularity of online purchases means conventional brick-and - mortar retailers need to build
new delivery networks across various channels to satisfy customers.The retail industries are
facing a difficulties of managing the online demand along with traditional demand, which
leads to the origin of the Omni channel

The motivated consumer of today wants a consistent shopping experience across all
retail platforms – online, offline, or both. For example , retailers must provide pick-up store
for items that are requested on the internet. The growth in channel size diversity and the
transition from single to multi-, then to omni-channel marketing has made shopping and
purchasing more convenient for customers, but more difficult to handle for marketers — both
upstream and downstream retailers. An ongoing Forrester study shows that, while 71 percent
of all customers are hoping to see in-store stock online, half hoping to buy online and be
available, only a third of retailers have even operationalized,even the basics such as store
pickup, cross-channel inventory visibility, and store-based fulfilment.

Omni-channel retailing includes consistently coordinating the customers experience

over all communication directs – coming up, on the web, and on cell phones. . As customers
utilize pretty much every accessible purchasing channel, organizations should be omni-
present.

Traditional supply system and multiple channels -both phase out models?

The conventional supply chain method involves taking raw materials and producing a
tangible product which is sold to a customer afterwards. A traditional supply chain process
features several steps. They include the procurement of raw materials, the production of
goods, the distribution of manufacturing, the selling to end users. But later this conventional
supply chain changed into multi-channel retailing system. Multichannel retailing is where a
business has various forms of purchasing products and services for consumers. Selling via
conventional channels such as catalogues, brick-and - mortar shops, fax, and telephone may
involve this marketing strategy.

Traditional multiple channel network for multi-track transactions and distributive channels
used to be a standard expression. As the word shows, the market types apply to a wide variety
of networks. "Working in storehouses" explains this supply chain – the channels still exist
next to each other without association. For example , customers can not agree on various
platforms, triggering an online request and picking up the item in the shop. The channels are
not built in as such. Seen from the shopping inclinations of the consumers, this paradigm is
obsolete today. It is inefficient and threatens customer loyalty, because the boundaries
between the individual channels are for customers.

Omni-Channel – a Different Mind-Set

And what is omni-channel 's the right alternative for? Yet again, the market practice is
correlated with different networks of transactions, but as the term "omni" implies, all
networks are in view. The consumer can buy on all channels, and all data about the buying
process can be viewed on all channels, preferably in real time. Numerous retailers have
adopted this approach before. We integrate their platform on the web and shops to control
reach their enormous consumers and the ease of Internet shopping to boost revenues.
 Take Walmart,The worldwide leading retailer has deployed several omni-channel initiatives.
For example, it offers a pay-with-cash option which lets customers order merchandise online
and pay with cash at its stores. This permits customers who do not own a credit or debit card
to buy online, which boosts online traffic. Also, officesupplies giant Staples has launched a
“buy online, pick up in-store” program to fight declining in-store sales and profits.

Additionally, more Staples stores offer "kiosks" where consumers can go online, pick
from over 100,000 products and have them shipped free to over 98 percent of North America
on the next business day. When shopping is completed, customers can complete their
purchases either at the kiosk or in the store ledger. Another highly creative, omni-channel
example: UK retailer Tesco has opened a virtual grocery store at a subway station in South
Korea. Commuters can shop off a massive digital monitor that looks like a set of store
shelves by scanning QR codes on their smartphones. Upon completion of the web-based
shopping cart transaction and payment the items are shipped to users home within the day.

All these developments in the business are made possible by transparent data and
convergence processes. And all of these examples show clearly that omni-channel isn't just a
multi-channel evolution. Omni-channel is a totally new approach, a new way of thinking
about the systems of business. A multi-channel approach focuses on maximizing selling
activities within each channel; an omni-channel approach focuses on the individual needs and
preferences of consumers, total revenue and developing a unique consumer experience and
long-term customer loyalty in the increasingly complicated and competitive business
environment. .. Single source of data for all distribution channels is a key prerequisite for a
effective omni-channel strategy. And, seeing the supply chain as an integral part of the value
chain, it is absolutely important to provide a single source of stock data

In a traditional supply chain, to move goods from the factory to the end customer, you
go through a multi-level supply chain built up of a factory warehouse, an international
warehouse, distribution centers throughout the world, and stores. So if a retailer wants to ship
goods straight to a customer the only place where all the products are in stock is the store
level.
 The significant effect would result from the usage of a B2C channel, or a B2B
channel that would fundamentally change the quantity of requests being handled. The
physical handling is altogether different relying upon whether you work from production
units delivered to stores or from boxes shipped to customers. For most retailers, the
distribution center ships as many deliveries as there are stores, with some deliveries being a
full truckload. Shifting that volume of sales to a B2C channel requires filling a truck with
boxes holding only one to five items, and many thousands of boxes a day. The major impact
is increasing the number of deliveries exponentially while decreasing the number of line
items in the system. Also, The volatility of online shopping allows businesses to broaden the
inventory of products they hold in stock to optimize consumer demand – as getting exactly
the correct product available is crucial to keeping customers willing to deliver as quickly as
possible. Retailers therefore need to extend the stock-keeping unit portfolio and the the
number of supply lines delivered per supply. For example, not long ago a shoe sales company
running a shop required about 100 types of shoes to fulfill most customer requirements –
which was a lot. Today, Zalando, Zappos and shoes.com intimates offering more than 20,000
styles to stay competitive, the same shoe store must be able to offer and ship almost every
brand and type of shoes.

Delivery From Store or Distribution Center?

The introduction of an omni-channel mechanism typically involves the development or

implementation of a "ordinary" e-commerce strategy for a conventional enterprise. The
business has to freeze the distribution process somewhere down the chain, and send products
directly to the consumer. The most likely option is the fulfillment center because it is close to
the end user and the warehouses are already set up to deliver boxes which simplify the
switch. But stores may be shipped from several fulfillment centers, and a customer order may
need to be fulfilled from several distribution centers In this situation, delivery to the customer
from the store may be simpler. Depending on variables like transportation expense, picking
efficiency or trained manpower, supply chains will have to choose between the two models –
store delivery or distribution center delivery.