Omnichain: Five reasons SMBs should take an omnichannel approach to their supply chain
Omnichannel commerce is the Holy Grail for retailers. In response to changing customer expectations, brands are razor-focused on delivering a seamless experience across every channel, device, and location they serve.
But the benefits of an omnichannel approach aren’t limited to customer-facing activities. The SMB supply chain in particular stands to benefit from greater integration, which can help businesses improve the way they manage inventory and production, fulfill orders, work with partners, and collaborate internally.
For companies looking to work faster and more cost-effectively, it’s time to think in terms of the omnichain.
What is omnichain?
Legacy supply chain operations are often crippled by weak links and laborious step-by-step sequences. But an omnichain approach completely unifies these processes, making it easier to coordinate purchasing, production, inventory, distribution and fulfilment.
Diving a bit deeper into the technology behind an omnichain, this involves a modern approach to supply management whereby supply chain processes are conducted within a single cloud-based environment and using a unified data set. Put simply, this refers to a supply chain that is managed using a single, integrated platform.
Small businesses may be forgiven for thinking supply chain management software is exclusively for the large corporates, and while this may have been true previously, the cloud has made it much more accessible.
Moving past a legacy approach
A true omnichain approach isn’t possible using familiar (yet outdated) tools such as email, paper printouts, and even Excel.
These legacy practices are slow, clunky, and prone to error. For businesses that are already time-strapped and light on resources, these will do little to improve the way they work and will make it difficult to quickly check key metrics, like available inventory, production volumes, or fulfillment time.
Once upon a time, such inefficiencies could be written off as “the cost of doing business”, but no longer. SMBs face increased competition from larger rivals that combine economies of scale with a desire to protect their market share. Add to this rising customer expectations and the quickening pace of market change, and it’s clear SMBs must do what they can to level the playing field.
A cloud-based omnichain approach is the means to that end for small businesses, certainly when it comes to ramping up the speed and efficiency of their supply chain. Here are the five biggest benefits they can expect to see:
1. Unified real-time data
The merits of having a single view of data across the business cannot be understated, especially for time-strapped SMBs. Instead of spending countless hours piecing together outdated information, which invariably results in decisions made on gut feel, real-time data on supplier performance allows companies to optimise their inventory based on solid insight.
2. Global location access
A unified data warehouse also takes away the difficulties many businesses face when trying to determine the location of products, facilities, personnel or partners. This is particularly valuable for SMBs looking to expand to different global markets or develop new products, as it will allow them to maintain a complete view of their supply chain even as it becomes broader and more complex.
3. Partner collaboration
An omnichain approach also opens up new opportunities to work more closely with partners, putting an end to the hours spent on long phone calls or endless email threads. When housed in a cloud portal, purchase orders, specifications and complete records of interactions can be viewed and addressed by authorised partners in any location, at any time.
4. Internal productivity
A more integrated supply chain also improves productivity within the organisation, which also translates to cost-savings. With more of their time liberated from administrative tasks and the manual toil of consolidating data, employees have greater capacity to collaborate on core business priorities that will drive growth.
5. Speed and agility
We’ve all heard the adage that businesses should be proactive rather than reactive, and it’s no secret that the world’s most innovative and disruptive businesses live and breathe this mantra. An omnichain approach drastically reduces the complexity of a company’s supply chain operation, shortening lead times, making processes faster, and promoting the more efficient management of inventory. This is crucial in meeting customer demand for timely service and deliveries in a market where loyalty is hard won and easily lost.
Just as retailers understand that omnichannel is the secret to better serving shoppers, supply chain leaders are seeing the value of a more integrated view of their internal operations, and the cloud has put this omnichain approach within reach. It might be tempting for smaller companies to set this priority aside until they grow, but starting on an outdated foundation will quickly prove unsustainable. By establishing a flexible omnichain today, businesses will be prepared to master the opportunities that lie ahead of them.
NTT DATA Services, Remodelling Supply Chains for Resilience
Joey Dean, the man with the coolest name ever and Managing Director in the healthcare consulting practice for NTT DATA and is focused on delivering workplace transformation and enabling the future workforce for healthcare providers. Dean also leads client innovation programs to enhance service delivery and business outcomes for clients.
The pandemic has shifted priorities and created opportunities to do things differently, and companies are now looking to build more resilient supply chains, none needed more urgently than those within the healthcare system. Dean shares with us how he feels they can get there.
A Multi-Vendor Sourcing Approach
“Healthcare systems cannot afford delays in the supply chain when there are lives at stake. Healthcare procurement teams are looking at multi-vendor sourcing strategies, stockpiling more inventory, and ways to use data and AI to have a predictive view into the future and drive greater efficiency.
“The priority should be to shore up procurement channels and re-evaluate inventory management norms, i.e. stockpiling for assurance. Health systems should take the opportunity to renegotiate with their current vendors and broaden the supplier channel. Through those efforts, work with suppliers that have greater geographic diversity and transparency around manufacturing data, process, and continuity plans,” says Dean.
But here ensues the never-ending battle of domestic vs global supply chains. As I see it, domestic sourcing limits the high-risk exposure related to offshore sourcing— Canada’s issue with importing the vaccine is a good example of that. So, of course, I had to ask, for lifesaving products, is building domestic capabilities an option that is being considered?
“Domestic supply chains are sparse or have a high dependence on overseas centres for parts and raw materials. There are measures being discussed from a legislative perspective to drive more domestic sourcing, and there will need to be a concerted effort by Western countries through a mix of investments and financial incentives,” Dean explains.
Wielding Big Tech for Better Outcomes
So, that’s a long way off. In the meantime, leveraging technology is another way to mitigate the risks that lie within global supply chains while decreasing costs and improving quality. Dean expands on the potential of blockchain and AI in the industry.
“Blockchain is particularly interesting in creating more transparency and visibility across all supply chain activities. Organisations can create a decentralised record of all transactions to track assets from production to delivery or use by end-user. This increased supply chain transparency provides more visibility to both buyers and suppliers to resolve disputes and build more trusting relationships. Another benefit is that the validation of data is more efficient to prioritise time on the delivery of goods and services to reduce cost and improve quality.
“Artificial Intelligence and Machine Learning (AI/ML) is another area where there’s incredible value in processing massive amounts of data to aggregate and normalise the data to produce proactive recommendations on actions to improve the speed and cost-efficiency of the supply chain.”
Evolving Procurement Models
From asking more of suppliers to beefing up stocks, Dean believes procurement models should be remodelled to favour resilience, mitigate risk and ensure the needs of the customer are kept in view.
“The bottom line is that healthcare systems are expecting more from their suppliers. While transactional approaches focused solely on price and transactions have been the norm, collaborative relationships, where the buyer and supplier establish mutual objectives and outcomes, drives a trusting and transparent relationship. Healthcare systems are also looking to multi-vendor strategies to mitigate risk, so it is imperative for suppliers to stand out and embrace evolving procurement models.
“Healthcare systems are looking at partners that can establish domestic centres for supplies to mitigate the risks of having ‘all of their eggs’ in overseas locations. Suppliers should look to perform a strategic evaluation review that includes a distribution network analysis and distribution footprint review to understand cost, service, flexibility, and risks. Included in that strategy should be a “voice of the customer” assessment to understand current pain points and needs of customers.”
“Healthcare supply chain leaders are re-evaluating the Just In Time (JIT) model with supplies delivered on a regular basis. The approach does not require an investment in infrastructure but leaves organisations open to risk of disruption. Having domestic centres and warehousing from suppliers gives healthcare systems the ability to have inventory on hand without having to invest in their own infrastructure. Also, in the spirit of transparency, having predictive views into inventory levels can help enable better decision making from both sides.”
But, again, I had to ask, what about the risks and associated costs that come with higher inventory levels, such as expired product if there isn’t fast enough turnover, tying up cash flow, warehousing and inventory management costs?
“In the current supply chain environment, it is advisable for buyers to carry an in-house inventory on a just-in-time basis, while suppliers take a just-in-case approach, preserving capacity for surges, retaining safety stock, and building rapid replenishment channels for restock. But the risk of expired product is very real. This could be curbed with better data intelligence and improved technology that could forecast surges and predictively automate future supply needs. In this way, ordering would be more data-driven and rationalised to align with anticipated surges. Further adoption of data and intelligence and will be crucial for modernised buying in the new normal.
These are tough tasks, so I asked Dean to speak to some of the challenges. Luckily, he’s a patient guy with a lot to say.
On managing stakeholders and ensuring alignment on priorities and objectives, Dean says, “In order for managing stakeholders to stay aligned on priorities, they’ll need more transparency and collaborative win-win business relationships in which both healthcare systems and medical device manufacturers are equally committed to each other’s success. On the healthcare side, they need to understand where parts and products are manufactured to perform more predictive data and analytics for forecasting and planning efforts. And the manufacturers should offer more data transparency which will result in better planning and forecasting to navigate the ebbs and flows and enable better decision-making by healthcare systems.
Due to the sensitive nature of the information being requested, the effort to increase visibility is typically met with a lot of reluctance and push back. Dean essentially puts the onus back on suppliers to get with the times. “Traditionally, the relationships between buyers and suppliers are transactional, based only on the transaction between the two parties: what is the supplier providing, at what cost, and for what length of time. The relationship begins and ends there. The tide is shifting, and buyers expect more from their suppliers, especially given what the pandemic exposed around the fragility of the supply chain. The suppliers that get ahead of this will not only reap the benefits of improved relationships, but they will be able to take action on insights derived from greater visibility to manage risks more effectively.”
He offers a final tip. “A first step in enabling a supply chain data exchange is to make sure partners and buyers are aware of the conditions throughout the supply chain based on real-time data to enable predictive views into delays and disruptions. With well understand data sets, both parties can respond more effectively and work together when disruptions occur.”
As for where supply chain is heading, Dean says, “Moving forward, we’ll continue to see a shift toward Robotic Process Automation (RPA), Artificial Intelligence (AI), and advanced analytics to optimise the supply chain. The pandemic, as it has done in many other industries, will accelerate the move to digital, with the benefits of improving efficiency, visibility, and error rate. AI can consume enormous amounts of data to drive real-time pattern detection and mitigate risk from global disruptive events.”