Omnichannel Logistics: Definition, Importance & How to Make Most of it

Do you ever wonder how a product arrives at your doorstep shortly after you order it without any errors? The United States alone in 2021 had 21.6 billion parcels delivered. Seeing how many packages are delivered each day, it is shocking how fast the supply chain is able to operate.

These historically high levels of efficiency can be attributed to systems such as omnichannel logistics as they refine the supply chain greatly. Upon hearing this, many want to know what exactly omnichannel logistics is and how it works.

This curiosity is justified as the concept of such a system is often very alluring to businesses looking to speed up their processes. That is exactly why in this article we will look at the inner functions of an omnichannel logistics system and the challenges faced with its use.

What is Omnichannel Logistics?

Omnichannel logistics or distribution is the process of fulfilling customer demands via multiple channels. This ensures that customer expectations regarding stock availability are fulfilled. This is possible because of the ability to look at all sales channels at once for stock availability. 

These channels include everything from brick-and-mortar stores to online portals and apps. An omnichannel logistics system is able to look at all the available stock in real time and is able to update its availability status and movement. 

This automaton not only gives a company greater inventory visibility but also makes managing stock a lot easier. At first glance, this multi-channel approach seems pretty bulletproof, but it does come with its own set of challenges that businesses have to deal with.

Common Omnichannel Logistics Challenges

While omnichannel logistics operations make it easier for customers to find what they want, it makes operations more complex for companies. These complexities mainly arise from the fact that the process uses multiple sales channels to deliver goods. 

1. Difficult to perform reverse logistics

When a business uses multiple channels to deliver goods to meet consumer demand, they run into the issue of handling reverse logistics. Reverse logistics is basically when the product has to be retired back to the producer or retailer.

This process is quite simple in businesses that use a single channel for sales but when you have multiple channels, it is not easy to understand which channel is best equipped to handle the returned product. This issue has the potential to make reverse logistics totally impossible.

2. Irregular inventory restocking 

Let’s say that you have two channels for sales, a few brick-and-mortar stores, and an online shop. Now if your customers decide to predominantly buy from the online shop then you are left with a situation where you have an excess amount of stock in your brick-and-mortar store. 

Because the system relies on customer demand it becomes nearly impossible to synchronize inventory flow. Many logistics providers have seen online warehouses completely empty and store shelves full because of this system.

This can not only lead to wastage of stock but it can also lead to customer dissatisfaction if they find the product out of stock in one of the distribution centers. Though you could always use the EOQ formula to make your inventory management more accurate and efficient.  

3. Tracking packages is harder

Most logistics companies provide tracking for every individual package that they ship. While this can be done with omnichannel logistics, it is much more difficult to execute because of the inherent nature of the industry. 

Because of the multiple distribution centers, it becomes hard to accurately keep track of packages. Inaccurate package tracking does cause a lot of frustration in customers and it can negatively impact your customer satisfaction.

4. Greater chances of packages being lost

When dealing with both online and offline channels the chances of packages being misplaced or lost can shoot up by quite a margin. This is because it is harder to classify and identify packages when they are being mixed with packages from other channels.

Omnichannel logistics do weaken the power of supply chain management in most scenarios. Shipping packages in this way could lead to some serious losses down the road if you are not careful, as missing packages can rack up fast. 

5. Costs more than single-channel logistics networks

Running multiple sales channels is not cheap by any measure. In fact, it can get a lot more expensive when compared to single-channel logistics solutions. This is why most businesses refrain from going the omnichannel route to begin with.

Not only does omnichannel logistics cost more, but it also makes existing processes more complex. Though the businesses that do use omnichannel logistics, do so because of consumer demand. Thankfully there are ways to counter the difficulties of omnichannel logistics.

How to Make Omnichannel Logistics Faster?

The supply chain processes in an omnichannel system are optimized primarily for the benefit of consumers. Because of its focus to meet customer demand, it can often prove to be slower than single or multi-channel logistics. Though there are still ways to make the process faster.

1. Better warehouse management

A better warehouse management system can make all the difference as it is the origin of the majority of issues in an omnichannel system. This is especially true of e-commerce businesses as their omnichannel warehousing has a much greater workload. 

Many are used to thinking that organizing a distribution center is a complex and time-consuming process. While this is true to an extent, it can be made easy with a proper warehouse management guide at hand that gives you the easiest ways to make your warehouse efficient.

2. Shipping directly from the storefront 

When businesses using an omnichannel logistics system get an order they are usually tempted to ship the product from a warehouse, distribution center, or manufacturing center. Though it is best to refrain from this standard practice to maintain stock levels across the board.

While it is important to meet demand, it is also important to have some level of inventory optimization wherever possible. This is why you should ship items from your local retail store at times to avoid a disproportionate depletion of inventory. 

3. Using routing software to make deliveries faster

Best routes are an integral part of any delivery and it is quite obvious that omnichannel delivery systems need them the most to make their deliveries faster. The fact that route planning is a very time-consuming and draining process is common knowledge these days.

This is why businesses choose to automate this process by using a route planner to drive omnichannel logistics operations faster than before. However, choosing the right route planner can be quite confusing as there are so many options. 

Upper Makes Your Omnichannel Delivery Operations Faster and Smoother

To keep up with increasing customer loyalty, you have to ensure timely delivery. But the frustrating traditional processes may not allow businesses to achieve desired customer retention rates due to shipping delays, bad delivery routes, and ineffective supply chain management.

Fret not! Upper is here to save the day yet again with the finest routing knowledge for your delivery operations. With features such as route planning you not only save hours of time on planning but also save time performing deliveries as your delivery agent will be following the best routes.

Regardless of the channel that you use to ship from, Upper gives you the best routes to make your deliveries arrive in a timely fashion. Start offering a superior customer experience today by using Upper to create the delivery routes in existence with a few clicks.

Wrapping Up

Despite the difficulties faced by large distribution centers, the future demand does seem to lean in favor of omnichannel logistics. This is because it is built to cater to the consumers first making it the obvious choice for any consumer that desires convenience.

Such different systems do cause a disruption in the supply chain activities but if the customer demand is great enough it soon becomes the standard with continuous improvement. If a business believes in omnichannel logistics then they should pursue it by all means necessary and improve their supply chain processes.

Speaking on improvement, it is also advisable to have software like Upper to help you bring your delivery goals to fruition and have better inventory management. When you use Upper, you get access to top-of-the-line route planning features that are sure to amaze you. Try it by yourself with our 7-day free trial.