By Peter Turgoose
Much has been written of late about the concept of OmniChannel. OTM wrote about it in July in a piece called ‘OmniChannel – Organisation Design’s Biggest Test’, Googling the word gives you over 3.5m hits. What is clear is that the word OmniChannel has made its way into the management lexicon, what is less clear is what the word actually means, the current Wikipedia entry refers to ‘OmniChannel or Multichannel’ as if they were the same thing. What most people seem to agree on is that it is about the customer getting the same experience no matter what their point of entry into the supplier organisation is. Few agree on how you design an organisation to achieve this.
In this month’s OTM Digest David Howlett has made a call to arms to the Logistics & Distribution sector in his article – ‘Taking centre stage – the increasing strategic importance of distribution, logistics and supply chain to business success’. He quite rightly proposes that there are ‘many new challenges for businesses that have typically been driven by lean thinking and the pursuit of low-cost efficiency’. OmniChannel makes ultimate sense from a customer brand viewpoint for the retailer/manufacturers, but what are the challenges from an Organisation Design viewpoint for the Logistics & Distribution company who have the retailer/manufacturer as their customer and the retailer/manufacturers’ customers as their consumers?
Most, if not all, Logistics & Distribution companies operating in the B2B, B2C and C2C retail sector have been designed around Operational Excellence lines; putting as much as possible of the end-to-end work together, creating multi-skilled roles, maximising flexibility, minimising fixed costs, optimising technology, etc., as well as some outsourcing of the ‘last mile’. They have had to do this in order to compete for profitable business in an increasingly competitive market place. This Operational Excellence design thinking has flowed through to design of the consumer (the e-tailer’s customer) contact points within the Logistics & Distribution company, this makes perfect sense if you are designing an organisation whose boundaries are around a value stream that flows from package collected to package delivered on behalf of someone else.
However, consider this through an OmniChannel lens from the e-tailer’s customer’s point of view where their value stream runs from first experience and then contact with the organisation through to the right product delivered. The problems arise when the Gravitational Pull of the e-tailer and the Gravitational Pull of the Logistics & Distribution company are different; a customer of an e-tailer designed to be customer intimate contacting their operationally efficient carrier is not going to get an OmniChannel experience (see insert), the customer of a manufacturer designed to be a product leader contacting their operationally efficient carrier is not going to get an OmniChannel experience.
Good afternoon, here at xxx our parcels have to be scanned every 24 hours for security purposes. As your parcel has not had a scan since (date) my best advice would be to get in contact with the sender as this is who your contractual relationship is with and they will open an internal investigation with xxx on your behalf.
A genuine response from carrier xxx to an Amazon customer.
If e-tailers want to offer their customers a truly Omnichannel experience , or if Logistics & Distribution companies want to win business from Omnichannel e-tailers both parties must recognise that they can no longer design their organisation in isolation from each other. The winners in the battle to be truly Omnichannel will be those that that collaborate across the boundary they have created in the customers’ view of the value stream. Of course, Logistics & Distribution companies have the additional organisation design challenge of providing services to organisations that have been designed with different Gravitational Pulls in mind. This means that they have to have design criteria that are flexible and agile. The organisation design challenge is not easy but it is achievable, it will give a USP, it will also provide a massively rich vein of valuable customer data.
In conclusion, I will steal David Howlett’s words to Logistics & Distribution – ‘Your time has come. You are finally in the spotlight. Enjoy your coming of age. Be disruptive. Try new things. Take risks.’, and add; Take the e-tailer’s customers’ (your consumers’) view of the value stream and collaborate with your customers to design organisations that between them offer a truly OmniChannel experience.
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