The Cost of Doing Nothing

The Omnichannel Supply Chain Dilemma

Retail has evolved into an omnichannel world, where customers expect seamless shopping experiences across brick-and-mortar stores, e-commerce, mobile apps, and third-party marketplaces. But with this transformation comes a significant challenge—managing omnichannel complexity and fulfillment.

Unlike standalone issues like forecasting inaccuracies or stock imbalances, omnichannel fulfillment is a 'multiplier challenge' that amplifies and intensifies every other supply chain issue retailers face. Without a strategy to unify demand planning, inventory visibility, and fulfillment execution, retailers risk increasing costs, reducing profitability, and failing to meet customer expectations.

Let’s explore how omnichannel complexity affects the five biggest supply chain challenges and how retailers can solve them.

I. Failures with Forecast Accuracy Increases Costs

The Challenge:

Traditional demand forecasting models were built for predictable store-based replenishment, not today’s dynamic omnichannel world. With sales occurring across multiple channels, including direct-to-consumer, marketplaces, and store fulfillment, forecasting errors become more impactful.

How Omnichannel complexity amplifies this issue:

• A spike in online orders may deplete warehouse stock  while in-store inventory remains untouched, or one store's stock may deplete. In contrast, another store's stock remains flush, leading to store out of stocks and empty shelves.
• Promotions like “Free delivery on orders over $20” or “$10 off any online purchase” drive increased online sales, necessitating advanced forecasting techniques that account for how Order Management routes orders.
• If demand signals are not aligned with the optimal fulfillment location, retailers may face stockouts in some stores while being overstocked with the same product in others.

How retailers can solve it:

Retailers need a Hybrid AI-powered forecasting solution that accurately identifies unique selling patterns and demand drivers across channels. It must determine where a product could have been sold and align future demand with the optimal fulfillment channel within the network.

II. Limited Real-Time Visibility Disrupts Fulfillment Decisions

The Challenge:

Retailers need to know exactly where their inventory is at all times to fulfill orders efficiently. However, siloed systems often lead to delayed updates, inaccurate stock levels, and misallocated inventory.

How Omnichannel complexity amplifies this issue:

• A retailer might promise next-day delivery on a product that’s out of stock due to an unaccounted-for in-store sale.
• Inventory may sit idle in the wrong location without real-time tracking while another fulfillment center experiences a stockout.
• Third-party marketplace sales may not sync fast enough with inventory systems, leading to overselling and canceled orders.
• Repeat deliveries and subscriptions are essential for timely fulfillment, but traditional solutions often lump these predictable demand signals with daily sales, reducing visibility into key customer demand.

How retailers can solve it:

A cloud-native, AI-powered inventory solution seamlessly integrated with order management on a unified supply chain platform synchronizes stock across warehouses, stores, and third-party partners—ensuring accurate order promises and proactive inventory balancing. 

III. Inefficient Replenishment Leads to Overstocking or Stockouts

The Challenge:

Replenishment planning must balance demand with supply, ensuring products are available without overstocking or waste. In an omnichannel environment, replenishment decisions become significantly more complex.

How Omnichannel complexity amplifies this issue:

• Store-based demand forecasting may trigger unnecessary replenishment for fulfillment hub locations, leading to overstock situations.
• Fast-moving inventory may be misallocated, leaving high-demand fulfillment centers understocked while low-priority locations have excess inventory.
• Seasonal or promotional sales surges may not be detected in time, leading to delays in replenishment and lost revenue.
• Lower inventory levels can result in products being removed from website listings, which can cause missed opportunities for ship-from-store and Buy Online, Pick Up In-Store (BOPIS) customers.

How retailers can solve it:

AI-driven replenishment models can predict shifting demand patterns, ensuring that stock is allocated where needed most while avoiding overcommitment.

IV. Eliminate the Silos: The Key to Operational Efficiency 

The Challenge:

Many, if not most, retailers operate with systems independent of each other for store operations, e-commerce fulfillment, and third-party logistics—this lack of integration results in manual processes, inventory discrepancies, and inefficient fulfillment strategies. 

How Omnichannel complexity amplifies this issue:

• Orders placed online for in-store pickup may not reflect real-time stock availability, frustrating customers and causing canceled transactions.
• Store sales might not sync with inventory systems, leading to misreported availability and stockouts.
• Retailers may struggle to coordinate promotions across sales channels, leading to inconsistent customer experiences.

How retailers can solve it:

A unified supply chain planning platform unifies demand planning, order fulfillment, and inventory management into one system, reducing errors and increasing efficiency. 

 V. Rising Fulfillment Costs Reduce Profit Margins

The Challenge:

Retailers face mounting fulfillment costs as customer expectations for faster and more flexible delivery increase. Shipping from stores, managing last-mile logistics, and handling returns all contribute to rising expenses. 

How Omnichannel complexity amplifies this issue: 

• Retailers may over-rely on costly express shipping to meet customer expectations, eating into margins.
• Inefficient order routing results in higher transportation costs and longer delivery times.
• Returns processing becomes more expensive when inventory cannot be restocked efficiently across multiple fulfillment centers. 

How retailers can solve it:

AI-driven order optimization selects each order's most cost-effective fulfillment method, balancing speed, cost, and customer satisfaction. 

The Solution: Manhattan Active Supply Chain Planning

It's time to consider Omnichannel fulfillment a competitive advantage rather than a challenge.

Manhattan Active Supply Chain Planning provides:

• Hybrid AI-driven demand forecasting that adapts to omnichannel sales patterns.
• Real-time inventory visibility across all channels.
• Intelligent replenishment and allocation for optimal stock placement.
• Unified Business Planning to replace siloed systems with a single, agile platform.

By addressing omnichannel complexity head-on, retailers can turn supply chain challenges into opportunities, improving fulfillment speed, reducing costs, and delighting customers across every channel.