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 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, which greatly refine supply chains. Many people want to know what 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 can monitor all the available stock in real time and update its availability status and movement. 

This automation not only gives a company greater inventory visibility but also makes managing stock much easier. At first glance, this multi-channel approach seems pretty bulletproof, but it does come with its own 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, they also make logistics operations more complex for companies. These complexities mainly arise because 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 online 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 

Businesses face many challenges when operating through both physical stores and online channels. Balancing inventory levels between these two platforms can be daunting.

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 buy from the online shop predominantly, 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 also customer dissatisfaction if they find the product out of stock in one of the distribution centers. However, 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 industry’s inherent nature. 

Because of the multiple distribution centers, it becomes difficult to keep track of packages accurately. Inaccurate package tracking can cause customers to be frustrated and negatively impact customer loyalty.

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 significantly. This is because it is harder to classify and identify packages when they are 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. This is the reason modern consumers expect real-time updates about delivery time from e-commerce companies.

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. The businesses that 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 on meeting customer expectations, 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 most issues in an omnichannel system, including supply chain challenges. 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  and keeps your inventory aligned with your supply chain strategies.

2. Shipping directly from the storefront 

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

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

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 route planner software to automate logistics operations and fulfill customer orders efficiently, driving omnichannel logistics operations faster than before. However, choosing the right route planner can be quite confusing as there are so many options.

Overall, understanding consumer behavior can help ensure timely delivery, which in turn keeps the customer happy.

Upper Makes Your Omnichannel Delivery Operations Faster and Smoother

To keep up with increasing customer loyalty, you must ensure timely delivery. However, 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 and inventory management.

Fret not! Upper is here to save the day again with the fastest vehicle route planning 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 last mile routes.

Regardless of the channel you use to ship from, Upper gives you the best routes to ensure your deliveries arrive at customers’ doorsteps in a timely fashion. Start offering a superior customer experience today by using Upper to create the delivery routes you need 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 who desires convenience.

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

Speaking of 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 days free trial.