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Omnichannel vs. Multichannel Supply Chain: Understanding the Key Differences

Jul 5, 2023

In today’s fiercely competitive business environment, adopting an effective supply chain strategy is essential. Omnichannel and multichannel supply chains offer two distinct approaches to interacting with customers and target audiences—each with its advantages and disadvantages.  

Multichannel supply chains give customers numerous independent avenues through which they can interact with a business. In an omnichannel supply chain, the channels are integrated into a cohesive system to create a consistent customer experience. Read on to learn about the differences between these two strategies and how you can determine which approach best suits your business’s needs.  

What Is an Omnichannel Supply Chain?

An omnichannel supply chain involves multiple channels sharing data to create a seamless customer journey across all touchpoints. In an omnichannel experience, customers can switch between channels without interruption. For example, a customer could begin a purchase on a mobile application, ask a clarifying question through a desktop website chat feature, and complete the purchase in a physical store—all without needing to repeat steps or reestablish information. An omnichannel approach creates a unified customer journey that decreases confusion and frustration during the shopping experience while meeting customers’ unique needs.  

Increased sales, a streamlined shopping experience, and greater customer satisfaction are just some of the many benefits associated with an omnichannel strategy. However, implementing omnichannel retail is complex, and businesses may encounter challenges along the way.  

Combining isolated channels into an omnichannel system requires coordinating multiple inventories, order fulfillment processes, and customer databases. Achieving this level of integration may require a significant upfront investment in infrastructure and technology. Businesses will need robust data management systems to consolidate and analyze customer data and use that data to balance supply and demand.  

What Is a Multichannel Supply Chain?

In the e-commerce age, shoppers are no longer bound to brick and mortar stores. They might purchase a product through an online store, mobile app, marketplace, or even over the phone. Providing multiple channels through which shoppers can purchase a product or service can help businesses reach a wider audience. Furthermore, by diversifying supply chain processes, businesses avoid the risk of relying on a solitary supply channel.  

However, the multichannel approach is not without its challenges. Many businesses encounter problems caused by fragmentation and incoherence when using a multichannel strategy. For example, channel silos can occur when customer data is constrained to a single, independent channel, forcing customers to reenter information or repeat processes when moving between channels. A lack of channel integration can also complicate inventory management and decrease the overall efficiency of business operations.

Comparing Omnichannel and Multichannel Supply Chains

Multichannel supply chains and omnichannel supply chains are similar in that they both provide multiple avenues through which customers can engage with a brand. However, these supply chain approaches differ in several ways:

  • Customer experience: Multichannel supply chains provide customers with multiple routes for purchasing products or interacting with a brand. However, channels operate independently with little information sharing across channels. Consequently, customers may experience inconsistencies in product availability and pricing or difficulty switching from one channel to another. With an omnichannel system, customers can seamlessly move between online orders, physical stores, or other channels. They experience the brand as a unified entity.
  • Inventory management: In a multichannel supply chain, each channel independently manages inventory and fulfills orders. An omnichannel system approaches inventory management holistically. Inventory and fulfillment processes are synchronized to maximize efficiency and meet customer expectations.
  • Data integration and analytics: Multichannel supply chains often use separate databases for each channel. Omnichannel supply chains merge databases and customer information to paint a complete picture of customers across all touchpoints.
  • Marketing and sales strategy: Sales and marketing are often handled by each channel independently in a multichannel supply chain. Marketing efforts may be focused on promoting specific channels or products, and advertisements are often tailored to each channel’s target audience. On the other hand, omnichannel marketing prioritizes a consistent message and integrated customer experience across all touchpoints. In an omnichannel strategy, the sales funnel is viewed holistically, and customers can easily switch between channels throughout their journey.
  • Flexibility and adaptability: Multichannel supply chains allow for channel-specific optimization but may limit flexibility and make it difficult to adapt to changing market conditions and e-commerce trends. Omnichannel supply chains prioritize flexibility and allow businesses to adapt quickly to changing conditions by reallocating resources across channels.

Choosing the Right Strategy for Your Business

The supply chain strategy you employ will depend on your business’s specific goals, needs, resources, and target audience. If your business is suffering from a lack of cross-channel visibility, dwindling customer satisfaction, or operational inefficiency, consider whether your current supply chain strategy is ideal. Will restructuring your business to incorporate a multichannel or omnichannel approach improve customer experience and promote growth? If so, will the long-term impact justify the initial investment required by the change?  

These are tough questions to answer. When weighing your options, it is important to evaluate your customers’ needs and expectations and consider which strategy will best enable you to meet those needs. You will also need to consider your company’s technological capabilities, existing infrastructure, and budget.  

Successful Implementation of Omnichannel and Multichannel Strategies

Whether you decide to implement a multichannel or omnichannel supply chain, ensure that your chosen strategy is aligned with your company’s needs and long-term objectives.  

Anticipate the challenges you will face when implementing the strategy and devise a plan for mitigating them. What type of technology will you need to manage multiple inventories, integrate data, avoid channel silos, and meet customer expectations? The specific tools required depend on your business, the industry, and your company’s goals.  

Once you have implemented your supply chain strategy, regularly monitor customer engagement and analyze performance metrics. Evaluating data in real time will allow you to continuously fine-tune your strategy and adapt to market trends, customer feedback, and fluctuating supply and demand.  

The Future of Supply Chain Strategies

Increasingly, emerging technologies such as artificial technology and machine learning are used in e-commerce to understand and anticipate customers’ needs and preferences. Algorithms can analyze buyer behavior, inform pricing strategies, steer targeted advertisements, and personalize interactions across channels.  

Businesses that want to maximize growth and improve customer experiences must stay current regarding the latest trends and developments to maintain a competitive advantage and meet customers’ increasingly demanding needs.  

Omnichannel vs. Multichannel Supply Chain

Multichannel retail allows customers to interact with a business through multiple, independently managed channels such as online stores, marketplaces, brick and mortar stores, catalogs, or smartphone apps. In an omnichannel supply chain, all channels are managed in a cohesive, integrated system.  

Multichannel supply chains are channel-centric while omnichannel supply chains are customer-centric. The customer is the top priority in an omnichannel approach, and every aspect of the business is designed to optimize interactions between customers and the brand.  

Companies that want to keep up with the rapidly changing business landscape may want to consider adopting an omnichannel or multichannel approach to improve the customer experience, streamline operations, and drive growth.  
If a career in supply chain management sounds intriguing to you, consider the affordable degree programs at WGU. Our B.S. in Supply Chain and Operations Management can pave the way for an exciting career as an operations manager, facilities manager, buyer/purchasing agent, project management specialist, or other business professional.  

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