Your Omnichannel Strategy Is Failing? Blame the Supply Chain.
Although the term "omnichannel" has become most associated with success in retail and consumer goods, few companies are confident in their omnichannel abilities, according to a new study by Ernst & Young and the Consumer Goods Forum. They blame the supply chain.
The study, “Re-Engineering The Supply Chain For The Omnichannel Of Tomorrow,” draws on the views of 42 senior executives from the world’s largest consumer products and retail companies. Its key finding is that 81% of executives believe the supply chain--an integral part of any seamless online-offline commerce experience--is holding back their omnichannel strategies.
“Supply chain and customer experience can’t be treated as separate from marketing anymore,” said Gary Angel, principal of the digital analytics center of excellence at EY. “No matter how great your marketing is, if the person arrives at the store, or the Web site via online or mobile, and the item is out of stock, you’re going to lose that sale.”
The CMO must now have a relationship with the chief experience officer, and the chief operations officer as well, since the supply chain is an operational discipline, he added. Without synergy among these three groups, omnichannel is not attainable.
The study defines omnichannel as providing consumers with a seamless shopping experience across multiple platforms, both online and in-store. It found that although executives said they believed omnichannel will be the key driver of growth, only 38% said omnichannel initiatives have a positive impact on profit margins today, and just 5% described their omnichannel strategy as established. A whopping 76% said they think that supply-chain transformation, rather than incremental change, will be required to succeed, but 37% said a lack of senior leadership support for omnichannel is a key barrier.
“The supply chain gets so ignored in the omnichannel, omniconsumer discussion because it’s not sexy,” said Marcie Merriman, executive director of EY’s consumer engagement, digital strategy, and retail innovation practices. “It’s the pipes in your house. The pipes in your house are not something you really pay much attention to. They’re not something you highlight or you’re excited about, but when they stop working or they break, you sure as heck know it.”
The same goes for the supply chain in an omnichannel world. Merriman continued: “If it’s not working, nothing else is going to work, and it’s all going to fall apart. But as long as it’s going along, well, it’s not usually the rock star, but it’s a very, very important capacity.”