As brick and mortar stores re-think their route to market, Arthur Dardoumbas, Director – Supply Chain Solutions at ThreeSixty Supply Chain Group says many companies are driving forward with their implementation plans before considering the strategy, which is having a significant impact on their ability to service their customers.
A truly omnichannel offering creates a single customer experience across an entire brand, with sales and marketing aligned to create a consistent experience for the consumer regardless of the platform used to purchase or browse.
While many retailers are moving in the direction of a full omnichannel experience, Arthur says this development should be considered a major shift for the entire business, not just the supply chain. “This isn’t just about the supply chain or distribution; this is about every department in the business. IT, HR, marketing, sales, web design and finance – every single person in the business has a role,” Arthur says.
Arthur and the team at ThreeSixty, an Australian-based supply chain consultancy, have held senior roles in a number of different global organisations servicing multiple industries. This experience has given them the ability to approach any project with an overarching view and consider all aspects of the business rather than seeing supply chain as a siloed entity.
Bringing a mixture of different capabilities across a number of disciplines, ThreeSixty offers more than supply chain consulting, with capabilities in property, systems, project management and change management. According to Arthur, these disciplines are absolutely crucial in any successful omnichannel project.
“Omnichannel is a change in mindset. Real omnichannel is holistic. It’s about what channel you use to reach your market and customers, and how your distribution supports that. If I can’t navigate your website, I’ll jump onto the next one. If the pricing and marketing campaigns are different across the different platforms, you will lose me as a customer,” he says.
A case study: GOLDEN ABC
The strategy of approaching omnichannel with a holistic lens has been central to the recent work that ThreeSixty has been doing with a major fashion retailer in the Philippines.
GOLDEN ABC is a multi-brand international fashion enterprise that is home to some of the most iconic brands in the region, including Penshoppe, Regatta and Oxygen. Founded in 1986, the retailer now has more than 1,000 strategically located sites across South East Asia and has been growing at a record pace, with the opening of 200 stores last year alone.
“The Philippines is the second most populated country in South East Asia, with a population of nearly 110 million people and GOLDEN ABC has been experiencing an overall growth rate of around 30 per cent year on year, through a 200% increase in e-commerce without having the appropriate omnichannel pillars in place to take e-commerce to even greater volumes,” Arthur says.
GOLDEN ABC selected ThreeSixty to implement their omnichannel strategy after experiencing first-hand the way they approach every project with commitment and dedication to the entire business.
“Many consultants come into a business and present to the Board their capabilities, and that’s it. When we arrived at GOLDEN ABC, we went out of our way to understand their business. We visited their physical stores across the multiple brands, and we spent time in their distribution centre in jeans, boots and a vest. Only then could we develop the right strategy,” Arthur says.
When Arthur and Derek Tan, Director of Project Services at the consultancy, first started working with GOLDEN ABC, the main goal was to build an automated DC to help the retailer meet the projected growth in retail and e-commerce across their multiple brands.
“After the design phase and into the implementation of their new automated DC, GOLDEN ABC asked us to support them with their omni-channel implementation. When we worked with the team and delved into the detail, we noticed how keen they were to execute immediately. Our job was to help them see how to align the entire business to deliver on the important channels to market,” Arthur says.
As a result of working closely with GOLDEN ABC and identifying their requirements, ThreeSixty was then able to develop a true omnichannel strategy for them. “With omnichannel, it’s not just about building a new DC with increased processing power and speed to market, you have to look at the integrated supply chain across the physical retail stores, your e-commerce customer, the online marketplaces, the website, everything, and we needed to ensure these steps were considered holistically,” Arthur says.
ThreeSixty hosted a number of strategy days where every area of the business was represented in a board room to cover the current fears, frustrations and challenges. From there, the team built a strategy and a road map with recommendations for the short, medium and long-term targets
When COVID-19 hit and put many international projects on hold, GOLDEN ABC’s plans were significantly impacted. “We have integrators working on the new DC from all around the world and we are of course based in Australia. We could no longer travel to the Philippines,” Arthur says.
But the team at ThreeSixty soon adapted and were having regular conference calls with GOLDEN ABC to keep the project moving. However, the biggest impact to the project was COVID-19 restrictions causing all of the retailer’s physical stores to be impacted, with their huge consumer base forced to shop online. This accelerated the omnichannel strategy and implementation plan ThreeSixty had developed.
“The best way GOLDEN ABC could reach their customers now was through their website or an e-commerce marketplace,” Arthur says.
Before COVID-19, GOLDEN ABC’s total e-commerce sales were around two per cent of overall volume, but the new DC was being designed to support around 20 per cent of total volume.
However, like most retailers, COVID-19 has seen a huge acceleration of GOLDEN ABC’s e-commerce volumes, and the retailer found itself dealing with nearly six times the volume with processes that could not service this demand.
“They were using legacy systems to pick and pack orders as well as trying to apply the same processes for store picking to the e-commerce customers. From my experience this does not work,” Arthur says.
The three-year plan for the new DC was designed with flexibility built in, ensuring that if volume increased there would be no issue dealing with demand. “Our modelling included scenarios such as this level of demand, and the DC would have been able to cope no problem,” Arthur explains.
As a short-term solution, ThreeSixty is currently working with GOLDEN ABC to adapt aspects of the initial omnichannel strategy so that some of the benefits can be realised now, to meet the demands of its growing online consumer base.
“As we can’t wait for the new DC to come online to service the major spike in e-commerce volume, we are working with GOLDEN ABC and reviewing their data and current processes and coming up with a new strategy that will work within the constraints of the footprint and systems they have,” Derek says. The need to service the online customer is paramount, and we all needed to adapt and find interim, quick solutions that were part of the longer-term strategy.
Some of the initiatives include utilising a model to increase speed to market, ensuring that the IT systems are aligned, and increasing customer service capacity to handle the increased communication needed with customers.
The customer service element is a fundamental part of the e-commerce puzzle and according to Derek, if this is overlooked the impact can be detrimental to the business. “The e-commerce consumer is unforgiving. If you mess up an order, you will know about it. They will post online and share their experience with their friends and the wider market,” Derek says.
As the orders started to pile in, GOLDEN ABC’s first approach was to increase its picking staff and extend operating hours, but because the style of picking was not adapted to meet the demands of e-commerce, this led to delays and an increase in errors as well as a lack of integration between IT systems.
“We have developed a systems, process and people approach to determine what the right solution is. As a result, we’ve changed the pick and pack process without the heavy capital investment of a new DC, and have managed to increase GOLDEN ABC’s e-commerce output and improve how they service their customers. They have also seen a dramatic reduction in pick errors and order cancellations,” Derek says.
ThreeSixty is now implementing some of the strategies that were regarded as long-term goals in a three-year project timeline, in the space of two to three months.
“Many businesses have had to turn on their e-commerce strategy in a matter of months or risk failing,” Derek says.
The inner circle
According to Arthur, ThreeSixty is more than a supply chain consultancy, and this is evident in its commitment to its customers during challenging times. “GOLDEN ABC don’t just see us as their supply chain advisors – we’re a trusted partner – and involved in the entire business and decisions that need to be made. This is true omnichannel strategy because the supply chain touches every aspect of the business,” Arthur says.
Derek echoes this sentiment and says that the relationship between the two organisations is very constructive and beneficial. “We’re not afraid to give direct feedback and ask them to take a step back and consider what the objective is, and whether a particular initiative supports that,” he says.
There is a distinct cultural alignment between the two businesses and Arthur says that the way GOLDEN ABC looks after and grows its people is a reflection of ThreeSixty’s own approach.
“We’re very happy with the strong business relationship we enjoy with ThreeSixty. It’s based on a cohesive partnership anchored in mutual trust and respect, and has allowed us to transform our supply chain,” Bernie H. Liu, Chairman and CEO at GOLDEN ABC says.
“The success of this project won’t be in the property or the automation, it will be in the people who work on this project and make it happen, and those who operate it going forward,” Arthur concludes.
Read more about ThreeSixty’s services here.
This article appeared in MHD Supply Chain News on 16 October 2020.