Strategic Distribution Management: Omni-Channel Retailing Review

This report reviews an article focused on the evolution of omni-channel retailing and its impact on supply chains, emphasizing strategic distribution management. The analysis includes a summary of the article's key points, which centers on structuring omni-channel supply chain networks for cost-effectiveness and customer responsiveness. The report delves into the underpinning theories and frameworks, notably the omni-channel retail framework, discussing the roles of physical and online channels, and the impact of aggregation on logistics costs. The discussion of results and conclusions highlights the importance of matching channel strengths to product characteristics and customer needs, and the influence of production technology on omni-channel capabilities. The article's contribution lies in building knowledge about supply chain and distribution management, helping organizations understand the strengths and weaknesses of each channel, and improving their strategies for profitability. The report also covers the importance of understanding customer information gathering and the significance of multiple channels in enhancing overall profitability and supply chain management.

THE EVOLUTION OF
OMNI-CHANNEL
RETAILING AND ITS
IMPACT ON SUPPLY
CHAINS

TABLE OF CONTENTS
Table of Contents.............................................................................................................................2
INTRODUCTION...........................................................................................................................1
MAIN BODY..................................................................................................................................1
Summary of the article.................................................................................................................1
Underpinning theories and framework of the article...................................................................2
Discussion of results and conclusion...........................................................................................3
Contribution of the article............................................................................................................4
CONCLUSION................................................................................................................................6
REFERENCES................................................................................................................................7

INTRODUCTION
Distribution management can be defined as a process of overseeing goods movement from
manufactures or suppliers to pointy of sales. It is a term which is normally used for describing
various purposes such as inventory, packaging, supply chain, warehouse, logistics. It is one of
the most important part of a business especially for distributors and warehouses. It affects the
overall profit margin of an organizations as profit margin depends upon how quickly
organizations can turn their goods. Organizations need to build an effective strategy that can
increase their product sales and profit margin an in efficient manner. There are various articles
that are based on strategic distribution management. This assignment will lay emphasis on article
review of a strategic distribution management article “The Evolution of Omni-Channel Retailing
and its Impact on Supply Chains” (Chopra, 2018). This assignment will focus on summary of the
article, underpinning theory and framework of the article, discussion of results and conclusion,
and lastly on overall contribution of the article.
MAIN BODY
Summary of the article
This article mainly focuses on the ways in which omni-channel supply chain network can
be structured in terms of information, transportation, facilities and inventory for both responsive
need of customers and cost effectiveness. For this, this article explores complementary strengths
of online and physical channels so that omni channel portfolio can be created that fulfils
customer request based on their characteristics and choice of the product they choose. According
to this article if an enterprise wants to be successful then they should target service provided to
the customers and price of the product through different channels based on the demand of the
product, information complexity and value of the product that is being sold to the customers.
There are variety of channels that are used to interact with the customers and fulfil their needs,
these channels are known as omni-retailing channels (Chopra, 2018). This interaction between
customers and organization is mainly focused on three things that are: funds, information and
products. If these omni channels are well structured then they can be cost effective and best way
to serve their customer’s. There are mainly two types of omni channels first is physical channels
and another is online channels. Physical channels are used to serve predictable needs of the
customers in a frequent and cost effective manner, whereas online channels are used to provide
variety and fulfil exceptional needs of the customers at a low cost, not only this, physical
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channels can also be used a pickup location ort showrooms for online channel so that product’s
cost can be decreased and customer service can be improved.
This article provides an omni-channel retail framework so that suitability of products and
fulfilment of channel responsibilities can be focused (Chopra, 2018). This framework is built on
distributed network designing which further focuses on benefits and cost of moving information,
funds and product across their supply chain across various product categories and different
industries that are quite different from online channels and physical channels. Other than this the
researcher had focused on reviewing various other articles of other authors. There are various
ways in which online retailers can increase product variety by increasing product categories so
that customers become more focused on the products and can buy more products quite
frequently. This article also explains that the frequent use of online channels has affected offline
purchases in various ways such as online free of cost product return policy or free of cost home
delivery options that are available in online channels which has helped in reducing physical
distance between organizations and products. Demand for online channels is impacting physical
presence of physical channels which has created an issue of customer management across
various and multiple channels. But many times, whenever customers need to buy a costly
product, they prefer using physical channels where they can choose products as per their
specification based on various categories of the products and for this organizations need to focus
on increasing usage of online channels so that customers can be served more effectively.
Underpinning theories and framework of the article
In this article, researcher has simply reviewed various articles and collected secondary
already published information for completion of the article. There are various theories and
frameworks that had been focused in the article such as: omni-channel retail framework. This
framework had been explained using various topics such as: omni-channel retail alternatives,
effect of aggregation on logistic cost, factors that affect aggregation on logistic cost. Omni-
channel retailing refers to use of various channels in order to interact with the customers and
fulfil their orders. Retailers provide price and product information to the customers on the basis
of which customers buy and place their orders. This order information is used by the retailers so
that they can move the product from shop to the customers. After the final payment of the
product is pad to the retailer by the customer. There are various channels through which
customer can buy the product through this process. It has been analysed that fund flow and flow
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of information is almost same for all the retail channels present for customers to buy the product.
There are mainly two types of channels first is online channel and second id retails channel.
Supermarkets, stores, shops etc. these are the examples of traditional stores. Traditional stores
require high investment and funding’s whereas online channels do not require that much
funding’s as compared to traditional stores. There are various kinds of online channel physical
stores where customers interact with the brand face to face, their choice is taken and when
customer decides to buy the product online then thy order it from the website and after ordering
showroom is used as puck up option for product delivery.
There are various kinds of weaknesses and strengths that are associated with each channel
that helps in building a successful supply chain management and generate profit. Each channel
helps in increasing customer value by enhancing customer convenience, providing grater variety
of products, improving customer response and maintaining overall cost of the products. Strengths
of each channel can be increased by focusing on two main things first is performance of channels
in meeting customer’s needs and second is by measuring performance of the channel in terms of
cost. Performance of channels is mainly affected by cost of transportation, facilities, inventory
and information. In terms of logistics cost each and every channel represents either centralized or
decentralized structure of inventory management. But one of the major factor that affects these
cost is aggression. Aggression impacts overall logistics cost, inventory cost, facilities and
transportation cost in different manner for both centralized and decentralized structure. Other
than this there are two other types of cost that affect channel effectivity i.e. cost of physical
facilities and second is cost of operations that take place in these facilities. So, it is important to
study cost associated with each channel their effect on overall operations. This will help the
organizations to understand the effect of cost on overall performance of the channel and ways in
which effectivity of the channel can be increased.
Discussion of results and conclusion
The article helps in comparing various omni-channels on the organization’s overall
performance. Tis articles explains that it is important for firms to match strengths of all the
channels available and their characteristics of selling the products and fulfilling needs of the
customer’s. It can be done by categorizing each product under different categories i.e. value,
uncertainty demand and information complexity. From the above article it has been analysed that
different types of Omni channels has different effect of unpredictable and predictable demand of
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products. In terms of predictable demand of product: traditional channels compete for price,
online competes with availability to provide service at lower price. In terms of unpredictable
demand of product: traditional channels compete on service for high information complexity
products, online channels are more competitive on price rather than home delivery option. It has
also been analysed that effect of low volume/weight/value product and high
volume/weight/value product is also different on traditional channels and online channels.
Traditional retail Compete on price for products with predictable demand in terms of Low
value/weight or volume product, and online channels Compete on ability to provide some service
at a lower price for the same. Whereas, Traditional retail Compete on service for products with
uncertain demand and high information complexity in terms of Low value/weight or volume
product, and online channels More competitive on price than home delivery option.
From the article it had been concluded that in order to strengthen various channels
organizations must develop an omni-channel capability where they can use appropriate channels
based on customer needs and product characteristics. It has been observed that impact of
production technology on omni-channel retail effects an organization in two different manners:
first is poor customization capability or expensive production technology and inexpensive
production technology with customization capability. Poor customization capability favours
centralized production with home delivery or pickup if remote information is effective and
Inexpensive production technology favours local production with showrooms or traditional retail
in which only one structure is profitable where transportation of raw materials to the sales site. In
order to develop an omni-channel capability organization must focus on developing an omni-
channel portfolio which helps an organization to improve their cost position and serve their
customers in a better manner. Organizations can strengthen their ability of using various
channels by increasing their strength, fulfil customer’s request and needs of the customers. It can
be done by building a significant omni-channel portfolio which requires various kinds of
significant changes in logistics and supply chain, so that evolution in customer’s preferences can
be influenced.
Contribution of the article
This article contributes largely in building knowledge about the supply chain. Distribution
management so that organizations can manage both facilities and services in proper manner.
With the help of information available in this article organization’s increase effectivity of their
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business by exploring strength and weakness of each omni-channel. Article also helps in
understanding different ways in which customer’s demand can be analysed such that each
channel can improve their overall supply channel in every sector. This article has helped the
readers to increase their knowledge about different ways in which customer information can be
gathered and collected. Above article plays a vital role in understanding significance of multiple
channel so that organization can develop their strategies in such a manner that they can increase
their overall profitability. This article also helps in improving understanding of supply chain
management system and demand management system. This article also helps in understanding
usage of various kinds of omni channel with the help of which supply chain management system
and overall logistic network in almost every area can be improved for organizations. It can also
be said that this article helps in increasing understanding of readers on various type of omni
channel that can be used by organizations to address customer’s demand and preferences and
also helps in improving capability and ability as this article mainly analyses different omni
channels that may influence client preference and demand for a particular product of service of
the organization. Readers understanding for various types of omni-channels has increased like:
Physical channel, helps in identifying physical existence of products and services of the company
on the other hand, online channel focuses on providing different kinds of facilities or services for
the customers. Readers can also understand effect of aggregation on these channels that affect
overall cost of these channels such as logistics cost, facilities cost etc. So, it can be said that this
article has successfully helped understanding supply chain, information flow, funds and create
more values through consumer while increasing the profit rate. The article also reviews about the
channels that impact on the supply chain through build understanding on weakness and strength.
So, it can be said that this article largely contributes in understanding evolution of omni-
channel retailing and their effect on supply chain. Readers can understand different ways in
which omni-channel portfolio can be build which can be used by organizations to improve their
cost position, understand customer needs and enhance ways in which customers can be served in
a beer manner. In today’s world where usage of online channels is growing drastically, this
article can help the organizations to increase their physical channel or traditional channels
effectivity and usage as well by enhancing strengths associated with the channels.
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CONCLUSION
From the above assignment of review of an article it has been summarized that there are
various kinds of channels that can be used by customers to buy the product. There are mainly
two types of channels that are used by the customers i.e. physical channels and online channels.
It has been observed that online channels are used by the customers more as compared to
physical channel. It has been analysed that physical channels can be used as a representation of
online channels where customers can get information of the products. For this it is important for
organizations to build an appropriate omni-channel portfolio so that any kind of significant
changes within supply chain or logistic network can be maintained by the firms in an appropriate
manner so that customers preference can be influenced in an appropriate manner so that
productivity of the distribution system can be increased and if any kind of changes is required
then it can be done.
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REFERENCES
Books and Journals
Chopra, S., 2018. The Evolution of Omni-Channel Retailing and its Impact on Supply
Chains. Transportation research procedia. 30. pp.4-13.
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