Omnichannel Fulfillment Challenges for Manufacturers

Giving your customers the ability to make their purchases through a variety of different platforms is known as omnichannel fulfillment.

This entire concept is one that has been around for quite some time now. However, the invention of the internet really put this fulfillment mode on the map.In this blog post, we'll explore the biggest challenges manufacturers face with omnichannel fulfillment and share best practices for overcoming them.

And as online shopping gets quicker, easier, and more efficient, more purchases are being made than ever before. As a direct result, retailers and others working within a supply chain struggle to keep up with the high demand.

Due to the mass prevalence of omnichannel fulfillment from competitors, however, the only real option is to find a way to make it work.

But it isn't just a struggle for smaller retailers. In fact, many manufacturers face this problem to a much greater extent.

In particular, the issue that manufacturers face is in regards to fulfillment. Since the costs of materials and employee wages have risen in addition to other non-controllable factors, order fulfillment is an area in which the manufacturing industry has to be very frugal.

Below, we will outline some of the biggest challenges that many manufacturers face when working with retail distribution partners that offer omnichannel options to consumers. Better yet, we'll also talk a bit about how some of these challenges can be addressed.

The Biggest Problem is Product Fulfillment

In today’s world, consumers and retailers expect merchandise delivered on time. Whether an order is placed online or at a brick and mortar store, nobody is happy to hear that something is out of stock or that the estimated delivery time is delayed.

From the manufacturers’ point of view, there are several challenges they face in trying to keep up with consumer demand, such as:

Difficulty acquiring raw materials

Since manufacturers need raw materials to produce the goods that are sold by retailers, the harder it is to acquire raw materials, the harder it will be to make shipments on time. Difficulties in acquiring raw materials come from increases in shipping costs and increases in tariffs. Because of these price increases, manufacturers use less raw materials. And the materials they do have are difficult to secure.

Using Outdated Equipment and Techniques:

In order to keep up with the increased number of orders being placed, manufacturers must increase their production capacity. However, problems arise when the manufacturers’ equipment and processes are outdated and unable to scale and increase output as needed.

Employee Turnover Rate

Even though unemployment is down, the turnover rate in the manufacturing industry has consistently been high. This is a big problem, as manufacturers invest a lot of time and energy into training new employees. Once these employees quit, especially fairly quickly, all of that time and energy has been wasted and productivity and fulfillment are negatively affected.

Now that we’ve discussed three of the biggest challenges for manufacturers working to fulfill omnichannel retail demand, let’s discuss some strategies manufacturers can use to improve their operations and keep up with the ongoing increases in demand.

Best Practices for Omnichannel Manufacturers

In today’s market, retail omnichannel affects almost every aspect of a business. Employees, consumers, distribution centers, and warehouses are all affected by the company's omnichannel options... for better or for worse.

For manufacturers to keep up with the changes in the industry, it is essential to follow best practices that strengthen the manufacturing supply chain and improve product fulfillment. You can see how these approaches play out in practice in Redwood's case studies.

Here are some best practices for manufacturers to start implementing:

Use Drop-Shipping

The idea behind drop-shipping is that retailers skip the middle-man and have products sent to customers directly from manufacturers. This bypasses the need to wait for LTL and FTL carriers who might experience delays.

Offer All Possible Shipping Options to Consumers

Since there are several different shipping modes including overnight, LTL freight, FTL, parcel, or white glove, manufacturers need to ensure they are providing retailers all of the possible options.

By settling on the best possible shipping option when sending goods to their partners, manufacturers need to treat this step as a priority.

This fosters a healthy rapport between partners.

Improve Communication with Partners

While many manufacturers have strong relationships and communicate directly with their retail partners, they should consider branching out and opening up communication with other channels involved in the supply chain, such as shippers, suppliers, employees, and others.

How Omnichannel Manufacturers Benefit

Omnichannel operations are great for retailers, but they are even better for manufacturers!

Here are some benefits manufacturers will gain from investing in making changes:

More Opportunities for B2B Growth

With more B2B (Business to Business) relationships flowing in a wide omnichannel network, manufacturers have the opportunity to increase business opportunities. Networking is an important part of any successful business. And there is no better time to do some networking than when around those of like-mind.

Improved Relations with Partners

Omnichannel fulfillment in all its forms is here to stay, no doubt about it. Omnichannel options are so prevalent that it is almost commonplace at this point. Manufacturers who adapt accordingly stand a good chance of majorly benefitting from new partnerships. More specifically, they benefit from networking with retailers who may require their services at some point.

Sure, this can be achieved without omnichannel options. However, omnichannel processes expand a business's horizons and help them become more visible in the broader market.

Final Thoughts

Before the internet made omnichannel marketing possible, the purchasing process was quite a bit different. In fact, it was much more basic altogether. A brand would advertise a product, consumers would see the advertisement, travel to the store and buy the product.

Simplicity was king.

However, the invention of the internet also signaled the death of more traditional marketing as we knew it. And not only did the way customers found out about new products change, but the way consumers acquired their favorite products changed drastically as well.

Nowadays, you can find just about any product online, press a few buttons and have the product at your day the very next day. Furthermore, there is a very large number of platforms from which to make a purchase.

It’s safe to say at this point that omnichannel marketing and fulfillment is here to stay.

Looking to partner with retailers and improve your supply chain operations? Reach out to the experts behind Redwood's Open 4PL approach to discover how an open ecosystem model can transform your omnichannel fulfillment.