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Why is customer service a key priority for multichannel supply chains?

Supply Chain 2014-2015When asked to identify the key multichannel priorities from a supply chain perspective, 33% of the supply chain executives interviewed al­lude directly to customer service and responding to changing customer requirements.

As published in Retail Week & DWF Supply Chain: Trends and Innovations in Retail 2014-15 report

Supply chain teams are far more customer-focused than they traditionally were, and nowhere is this more clearly seen than in how they are meeting the challenge of multi/ omnichannel adaptation.

The changing nature of shopping is a big part of this challenge, directors say, especially given research that shows shoppers want a 360-degree experience where they can engage through every channel available, from store to smartphone. According to an eBay study carried out by Deloitte – which analysed sales data from 21 European retailers and ques­tioned 2,000 shoppers in UK and Germany – more than 95% of sales made online are in addition to high street purchases. In addition, 31% of people visited a store prior to making an online purchase, while 34% of peo­ple used online channels before making a pur­chase in store.

Omnichannel Shopping P14

The key is making sure the consumer has as much choice as possible, whatever channel they choose. As a supply chain director at a major spe­cialist retailer says: “We want to make sure that when our customer gets to the basket we give that customer as much choice as we possibly can in terms of time and product. The Holy Grail for us is to give them choice but to make the experience as easy as we can.”

“Everything that we are doing in this business is focused on our customers and their demands especially in terms of multiple fulfilment,” says a supply chain director of a major retail group when asked to identify his company’s key multichan­nel priorities from a supply chain perspective. “Our objective is to ensure that whether you are a customer shopping online, in store, ordering from a vendor direct, or ordering for a home delivery through a contact centre, your experience is ex­actly the same.”

The logistics director of a fashion retailer makes the point that in the multichannel era this means extending that guarantee across a global network. Identifying guaranteeing uniformity of service across a global network as the key multichannel priority from a supply chain per­spective, he states: “We have to make sure that our customers globally get a similar experi­ence. That is my responsibility; for inbound and outbound I have to make sure that wherever we are shipping stuff in the world, customers get the same brand experience.”

The main challenge posed by multichannel ad­aptation, a supply chain director says, is the need for “constant adapting, continuous improvement and a lot of this continuous improvement is down to customers and their expectations”.

Multichannel is having “a significant im pact” on the supply chain function, says the supply chain director of a fashion retailer, be­cause of the increasing demands of consumers. How the supply chain responds to new or changed consumer needs is critical both in terms of cus­tomer service and profitability. “Effective supply chains are profit drivers and customer drivers.”

In essence, supply chain input is critical to definitive aspects of multi/omnichannel retail­ing in terms of what retailers are seeking to offer customers and what customers are demanding. “In a multichannel/omnichannel environment customers have a choice of delivery times and a choice of where they want purchases delivered to. When that happens the flow pattern of ful­filment is infinitely more complex and the eco­nomic choices that you wish to present to the consumer and the economic choices you have for your business’s profitability are an interesting supply chain challenge.”

The supply chain director of a fashion retailer sees “opening up service opportunities”, such as evening deliveries or other ways to tailor deliv­ery requirements, as a key multichannel prior­ity, but also stresses that balancing this with the “cost to serve” is critical. “This is basically about convenience for the customer whether they are dropping off a return or picking up a package. We are trying to broaden our level of service to them but balance that with ‘cost to serve’; the fact that the more opportunities you add in, the less volume. Your volume is getting diluted across those opportunities.”

A supply chain director concludes: “The key priority is creating an economically viable cus­tomer-driven operation. What’s interesting about a multichannel environment is the myriad fulfilment scenarios and the myriad economic consequences.”

Watch out for our next blog post which will look at keeping ahead of the game with multichannel supply chains.

If you have any questions or would like more information, please contact Hilary Ross Partner & Head of Retail, Food & Hospitality sector.

This information is intended as a general discussion surrounding the topics covered and is for guidance purposes only. It does not constitute legal advice and should not be regarded as a substitute for taking legal advice. DWF is not responsible for any activity undertaken based on this information.

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Hilary Ross

Executive Partner (London) - Head of Retail, Food & Hospitality

Recognised by The Lawyer as one of the UK’s Top 100 lawyers, I advise clients on compliance and challenges across the EU in relation to products, systems and safety.

Dominic Watkins

Partner - Head of Food Group

I am Head of DWF’s internationally renowned food sector group as well as being Head of Regulatory in London.

Ed Meikle

Partner - Head of Retail Group

I advise on all aspects of intellectual property law, especially advising businesses in retail, food, sport and consumer products on the development, commercialisation and protection of their brands and technology.