The Impact of Omni-Channel on Manufacturers

Much has been said about how omni-channel is transforming the retail industry, but what impact is it having on manufacturers? How is it affecting their supply chain and logistics processes?

“Whether you’re a retailer or manufacturer, you always have to be thinking about responding effectively and profitably to customers,” said Doug Kimball, Product Marketing Director at JDA Software, in a recent episode of Talking Logistics. “You have to think in terms of profitable customer commerce — that is, delivering a personalized and seamless response to customer demand across all channels profitably. That sounds great, but it’s not that easy to do…To meet customer needs, manufacturers have to look at the three Cs: customer centricity, the convergence of the digital and physical supply chains, and collaboration.”

Which manufacturing industries are being affected the most by omni-channel? “Would it be too easy to say ‘all of them’ and be done with the question,” joked Doug. He pointed to the pharmaceutical, electronics, consumer goods, and automotive industries as leading the way, and then he added:

In my mind, the industries that are the furthest ahead and will stay ahead are those that are [working on improving] end-product visibility, whether it’s on-the-shelf visibility [for retail-centric manufacturers] or on-hand material visibility [for manufacturers supplying production lines].

In other words, although many of us equate omni-channel with retailers and consumers, if you peel back the onion and look at what’s really happening, omni-channel is really just an extension of what companies across all industries have been striving toward for years: having timely and accurate visibility to true customer demand and consumption at the shelf or production line, and having the ability to fulfill orders on time (which these days means faster and more frequently) and profitably.

In the clip below, Doug shares some examples of companies that are leading the way, including 3M, Nike, and Oakley.

I also asked Doug if omni-channel is as high a priority for manufacturing CEOs and CFOs as it is for their retail counterparts. “It is, but it has to become even more so,” he said. “The manufacturing C-suite is still behind the eight ball. For example, less than 25 percent of companies have a Chief Supply Chain Officer. To me, that’s a huge miss and [signals a lack of priority] given to the supply chain…The increase in B2B commerce has forced omni-channel into the forefront of their vision, so they’re paying more attention to it and it’s becoming a priority, but manufacturers still have disjointed processes and operate in functional silos.”

I encourage you to watch the rest of my conversation with Doug for additional insights and advice on this topic. Then post a question or comment and share your perspective!