Omni-channel must be at heart of supply chain to boost retailer profitability, says DHL report

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Retail growth in the omni-channel era is being hampered by rising customer expectations and legacy supply chains, according to the latest report from DHL Supply Chain. The new report spells out the benefit to retailers in establishing unique omni-channel supply chains to drive sustainable profit.

Eighty six per cent of retailers believe today’s supply chains are not up to the challenge of fulfilling omni-channel retail. In response, DHL has identified the key elements for retailers to consider in order to achieve success:

  • a supply chain with omni-channel at its heart should be a priority for retail business strategy
  • a customised, fully integrated cross-channel inventory allows for back-end optimisation, and for e-commerce and high street stock to be merged and dynamically reallocated on a minute-by-minute basis. At present, whilst 81% of retailers have achieved cross-channel visibility, only 16% can effectively transfer inventory across channels.
  • It’s not a one-size-fits-all solution; retailers need to take a holistic approach and design their supply chain in line with their overarching strategy to ensure that it sufficiently supports the direction and focus of the business.

E-commerce fulfilment and logistics costs have been found to be up to four times more per unit than those required for traditional bricks and mortar models. The new report encourages each retail enterprise to devise a tailored logistics solution to the omni-channel profitability challenge.

“Consumers have come to expect a convenient retail experience in the form of shorter delivery times, free deliveries and returns, and full online inventory in stores as a matter of course, but within traditional supply chain frameworks, this can be extremely expensive to deliver,” explains Jonathan Pilbro, DHL’s VP of business development.

“However it is possible to meet customer expectations while achieving profit targets. Retailers need to reconfigure their supply chains according to the new demands being placed on them.”