Omni-channel Distribution Research Articles

Modernizing Competition Policy and Law: The Impact of Marketing Developments on the Legal Treatment of Price Maintenance in the United States, the European Union, and China

Competition policy and law toward price maintenance (e.g., resale price maintenance, unilateral price policies, minimum advertised prices) draws on scholarly perspectives and theory developed over a half century ago. Since that time, changes to marketing practice have caused scholars to question the practical relevance of the perspectives and theory and to call for the modernization of competition policy and law toward price maintenance. Responding to these calls, the authors examine three important developments in contemporary marketing practice and assess their impact on the legal treatment of price maintenance in the three largest economies: the United States, the European Union, and China. Their analysis reveals significant differences in how each jurisdiction is responding to (1) increasing market concentration and accompanying shifts in interfirm power, (2) advances in information technology and the commercial use of the internet, and (3) developments in cross-channel shopping and the rise of omnichannel distribution. Their findings pose implications for future public policy, marketing practice, and academic scholarship and contribute to the modernization of competition policy and law.

A multi-objective mathematical model of financial flows in Omni-Channel distribution systems

Nowadays, companies and financial institutions have different strategies and priorities aligned with their financial goals and digital maturity; however, they rapidly make efforts to meet customers’ ever-changing expectations. One of the technologies that can meet the needs and expectations of customers faster and more accurately is the Omni-channel distribution system. Within this system, a set of distribution channels is defined. In addition to increasing the level of service and customer satisfaction, the amount of product demand and sales increases, resulting in more revenue and profit. The present study aimed to design a mathematical multi-objective Mixed Integer Linear Programming (MOMILP) model to investigate the relationship between different components of an Omni-Channel system and an innovative retail business model in the form of a financial approach for the optimization of profitability. In order to confirm the accuracy of the proposed mathematical model, numerical experiments were carried out using near-reality data based on an integration of Non-Dominated Sorting Genetic Algorithm II (NSGA-II) and Red Deer Algorithm (RDA). To solve the problem, the input parameters of this algorithm and mathematical model were provided in the form of problems with three sizes: small, medium, and large. The problem with the small size provided a fast and highly precise optimized response.

Omnichannel Distribution to Fulfill Retail Orders

Problem definition: Although the analytical literature extensively studies distribution channels, empirical evidence on the value of omnichannel distribution is limited, especially for the omnichannel used by manufacturing companies to fulfill retail orders. I empirically evaluate the extent to which the dual–distribution center (dual-DC) distribution channel and the factory-direct distribution channel contribute to fulfilling orders from retail stores compared with the traditional single–distribution center (single-DC) channel. Academic/practical relevance: Many manufacturing companies develop their distribution omnichannel to fulfill retail orders. To make proper decisions on various channels, they need to understand the trade-offs between different order-fulfillment measures and costs in different distribution channels. Methodology: I exploit two switches in distribution channels of a manufacturing company to its retail customers: one from single-DC to dual-DC distribution and the other from single-DC to factory-direct distribution. To account for the trade-offs between order fulfillment and the costs associated with each distribution channel, I develop three equations for fill rate, lead time, and production and distribution costs in a difference-in-difference framework and then estimate the equations using proprietary data of retail orders and delivery records. Results: The results quantify the contributions of distribution channels to order fulfillment. Compared with the single-DC distribution channel, the dual-DC distribution channel raises the fill rate by 0.4% and reduces the lead time by 9.7% without incurring additional costs, whereas the factory-direct distribution channel increases the fill rate by 0.5% and provides a 5.2% cost savings but extends the lead time by 12.5%. I further analyze these contributions to order fulfillment across demand variability and order quantity. Managerial implications: The findings provide manufacturing companies with valuable knowledge of their distribution channel choices and means to find a cost-effective distribution channel to improve order fulfillment for various customers and products.

Understanding gender differences in logistics innovation: A complexity theory perspective

Innovation is now more critical for logistics than ever as the industry faces rapidly developing challenges with omnichannel distribution and the coronavirus pandemic. Extant studies of the drivers of logistics innovation have focused on firm-level attributes, largely neglecting micro-level attributes associated with individual logistics professionals engaged in the innovation process as well as the environments in which they work. This includes gender differences, which have been established as critical in both the innovation and logistics literature bases. Consequently, we draw on organizational management research and complexity theory to evaluate gender-specific combinations of logistics innovation antecedents, including individual-level attributes such as self-efficacy, willingness to change, and creativity, as well as job-level attributes such as job satisfaction, training, and job complexity. Although structural equation modeling reveals extremely limited insight into these antecedents, including gender differences, qualitative comparative analysis (QCA) identifies four combinations of attributes for women and seven combinations for men that lead to high levels of logistics innovation. Importantly, the results not only demonstrate that there is no clear single recipe for effective logistics innovation but also corroborate the extant literature indicating that women and men approach innovation differently. Combined, our findings offer important insights into how firms can orchestrate their logistics innovation teams to meet rapidly changing customer needs.

The Future of Omni-Channel Retail: Predictions in the Age of Amazon

The Future of Omni-Channel Retail: Predictions in the Age of Amazon

Optimisation of the Two-Tier Distribution System in Omni-Channel Environment

This paper deals with the problem of the design and configuration of a distribution system that supports the delivery of goods to customers using various commercial channels. In this sense, a modelled distribution system, called an omni-channel distribution system, should ensure the delivery of the same products in different ways while guaranteeing its highest efficiency. The authors propose a single-criterion mixed-integer programming model for the configuration of a complex distribution system of goods in an omni-channel environment. A minimized cost function, composed of key logistics elements including transport, warehouse location, and manipulation processes, is the objective function. The model was experimentally verified, and as a result, potential savings of around 5–8% of the omni-channel design distribution system costs versus the multi-channel distribution system costs were identified. In the paper, an extended sensitivity analysis is also performed to show how specific parameters of the model can change the final recommendation.

The effect of optimizing warehouse locations on omnichannel designs

Omnichannel distribution integrates stores and warehouses to fulfill online and store demand. This research studies the performance of four channel designs: (i) ship-from-store, (ii) ship-from-warehouse, (iii) ship-from-store-and-warehouse, and (iv) ship-from-warehouse with backhauling from the store inventory to the warehouse. Our focus is on omnichannel retailers who carry a single product category. A profit maximizing mixed integer linear programming model (MILP) is presented to determine the optimal locations and capacities of omnichannel warehouses, and the product flows from suppliers to warehouses, warehouses to the stores, and warehouses and stores to online markets. The online demand earned by the firm in each market is determined endogenously in the model as a function of the shipping time (distance) and the level of competition in the online market. Different warehouse capacities capture economies-of-scale in operating costs. To cover a wide range of different products, computational results are presented for five product categories, each considered separately, with widely differing cost characteristics. Results show that the ship-from-warehouse design generates greater profit than ship-from store for four product categories. However, the ship-from-store-and-warehouse design is better than both of the more restrictive ship-from-store or ship-from-warehouse designs, with the advantage growing as the percentage of online demand increases. Results also document increasing benefits from optimizing the number, locations and capacities of omnichannel warehouses as the demand increases. The magnitude of the profit advantage of different omnichannel designs is shown to depend strongly on the product category and percentage of demand that is online.

How Under Armour accelerates and sustains omnichannel start-up success with performance management

In the last decade, retail and distribution operations have experienced the ever-evolving omnichannel demand of their customers. For many supply chain organisations, solutions for the omnichannel shift were implemented in existing warehouse space. By taking to the oars, the marketplace has been able to meet their customers’ omnichannel demand, but for how long? In many cases, operations have been retrofit beyond reasonable efficiency and without room for scale. Under Armour’s Baltimore distribution house experienced the same. The strategy for a distribution house start-up, designed with omnichannel in mind, became the clear path forward. Much like the omnichannel shift, facility start-ups have many unique challenges. As Under Armour prepared to open the doors of the omnichannel distribution house (ODH), a broader start-up strategy emerged. The distribution team elected to implement a holistic performance management programme, including leadership training, process improvements, engineered labour standards and labour management software tools. Performance management, while not commonly implemented at the beginning of a facility life cycle, would create a continuous improvement culture for the ODH team, establishing resilience to change and motivation to overcome obstacles common with warehouse start-ups. In this paper, we will share how Under Armour utilised this performance management strategy to overcome human and operational start-up challenges and accelerate success in their ODH.

Providing a System Dynamics Model to Evaluate Time, Cost, and Customer Satisfaction in Omni-Channel Distribution: A Case Study

The shopping experience in Omni-channel distributions is influenced by the physical environment of the buyer, delivery time, and the cost of production to distribution of the goods which have a significant impact on customer loyalty and customer satisfaction. This study presents a system dynamics approach to identify the variables affecting the three aspects of customer satisfaction, cost, and delivery time, as well as the relationships among these variables in omni-channel distribution. By reviewing previous studies and expert opinions identifying important variables, followed by generating different scenarios in the Vensim software, the optimal values of the important variables are estimated. It is observed that by approaching the values of the fourth scenario – increase in the amount of market competitiveness indices, customer referral rate, marketing costs, technology etc. and decrease in the maintenance costs – the highest customer satisfaction and the lowest cost and delivery time can be achieved.

INCREASING POTENTIAL OF DISTRIBUTION CHANNELS FOR CREATIVE THAI HAND-WOVEN TEXTILE PRODUCTS IN THE DIGITAL ECONOMY

The research was to investigate the omni-channel distribution system for the weaving community enterprises. This research was qualitative, utilizing a case study approach. The results identify the limitations of selling creative products only through physical stores, which are unable to respond to customers’ purchasing behaviors and needs. Nevertheless, the online channel alone cannot communicate the delicacy of handmade woven products through digital media since they need to be touched and worn to be fully appreciated. This dichotomy led to the design and development of the first version of the system. The research encourages the weaving community enterprises to widen their market in order to be able to compete in digital economy. It provides valuable practical insights into local weaving community enterprises and their ability to market their creative products in the digital era. This research fills a gap in the literature relating to the customer journey and the integration of distribution channels and sheds light on the need for local weaving community enterprises to adapt to the current market conditions.

Omnichannel Strategy and Consumer Behavior in Distribution Channels: Trends in the Ophthalmology Sector.

Changes in consumer behavior are forcing companies to rapidly shift their distribution channels toward an omnichannel model. In the case of the ophthalmology sector, however, the purchase of contact lenses and prescription glasses requires professional examination by a trained eye specialist. This peculiarity of the sector affects the shift toward omnichannel. This paper is novel in that it addresses a research gap by studying the distribution channels for regulated products and services such as health products that required a closer professional service. This paper addresses the transformation of companies toward an omnichannel model using a common scientific forecasting method (i.e., the Delphi method) to identify trends and problems. In this scenario of high complexity and uncertainty where there is insufficient relevant quantitative information for decision making, the Delphi method is applied to ensure a consensual decision-making process. Consensus was reached by a panel of 11 experts on the Spanish ophthalmology sector after three rounds of questioning. The final set of indicators involve 19 different criteria grouped into four categories (1) current situation of the distribution channel, (2) changes in distribution channels, (3) trends and near future of the distribution channel, and (4) consequences and adaptations for supply chain agents. The results from each round of consultation were then analyzed by means of statistical analysis with SPSS and discussed for each category. The results confirm that traditional intermediaries face difficulties to avoid being squeezed out of the sector because of shortening distribution channels and the entry of new online intermediaries with service integration models. We identify future scenarios and define actions that different agents can take to enhance their competitiveness in the short and long term. The arrival of omnichannel distribution is inevitable in the ophthalmology sector, entailing a major transformation from a rigid traditional distribution model to a more complex and flexible model following the entry of new online intermediaries.

A Combined Benders Decomposition and Lagrangian Relaxation Algorithm for Optimizing a Multi-Product, Multi-Level Omni-Channel Distribution System

The development of supply chain distribution systems from single- to multi-channel networks for delivering items to end customers has effected many changes in the retail sector. Following the adoption of multi-channel distribution strategies and rapid development of relevant technologies, the Omni-channel approach can yield significant benefits and facilitate trade with customers. This paper aims to optimize a multi-product, multi-level Omni-channel distribution network and shipping flows of products within the network under uncertain conditions. A multi-objective mathematical model is developed that minimizes the costs of supply chain while maximizing customer satisfaction over different scenarios. In order to solve the proposed model, a combined algorithm is developed based on Benders Decomposition (BD) and Lagrangian Relaxation (LR). The presented model and solution approach is implemented in a case study of a distribution system, a large e-commerce startup and online store. Five different scenarios with various service levels are investigated and the numerical results are discussed compared to previous findings. The efficiency of the proposed combined BD-LR solution algorithm is also demonstrated. The results obtained from the case study show that higher service levels are correlated with higher levels of customer satisfaction and lower cost of the system.

A Sharing-Enabled Portfolio Approach to Distribution

Abstract An important change over the last few years has been that both consumers and businesses have adopted e-commerce as a supplement to brick-and-mortar retail stores. This has led to the rise of complex omni-channel distribution, in which firms endeavor to provide a seamless customer experience across channels. Consumers and business customers still expect to receive their products quickly and affordably, but with the option to use whatever channel they prefer. A difficulty many firms face is that these disparate channels often require a portfolio of different distribution facilities. These different distribution facilities can be expensive, complicated to manage, or both. We propose that firms can more efficiently pursue omni-channel strategies by utilizing the sharing economy to supplement their distribution network with shared warehousing. In this article, we examine recent developments in utilizing shared, on-demand warehousing and how it can impact distribution in the future.

Performance evaluation of Omni channel distribution network configurations using multi criteria decision making techniques

The Omni channel (OC) is an integrated fulfillment process of satisfying the demands from multiple channels such as a physical store, call center, mail, online and mobile applications with seamless customer experience. The growth of innovative technologies and mobile platforms attracts customers to online channels. The retail industries are facing a challenging task of managing the online demand along with traditional demand, which leads to the origin of the Omni channel. The objective of this study is to identify the four different distribution network configuration of OC and evaluating their performance using different multi-criteria decision making (MCDM) techniques such as analytical hierarchy process, fuzzy analytical hierarchy process and technique for order preference by similarity to ideal solution with respect to cost and service factors. The results obtained through different MCDM techniques show that integrated warehouse and transport—delivery from all Nodes configuration performs better than other configurations. A sensitivity analysis is performed to examine the stability of priority ranking. Also gap analysis is carried out to improve the level of certainty in decision making. This research article is the first of its kind, which applies the MCDM techniques for evaluating the performance of Omni channel distribution network configurations.

A Savings-Based Heuristic for Solving the Omnichannel Vehicle Routing Problem with Pick-up and Delivery

In recent times, new models of commerce have incorporated new decisions and constraints which have led to new variants of classical problems in supply chain management. Modern advances in Information and Communication Technologies have increased the number of marketing channels that are available to consumers. This paper focusses on the new "omnichannel" delivery concept for the retailing industry which addresses the replenishment of a set of retail stores and on the direct shipment of the products to customers (last-mile delivery) within an integrated VRP formulation. The VRP in omnichannel distribution systems consists of a group of retail stores that must be served from a distribution center and a set of online consumers that must be served by the same fleet of cargo vehicles from these retail stores. Since the VRP in omnichannel distribution systems is an NP-Hard problem, we propose a savings-based heuristic for solving large-size instances the VRP in omnichannel retailing. Results show that the proposed heuristic is able to find feasible and competitive solutions in a very short computational time.

Flexible automated warehouse: a literature review and an innovative framework

The logistics market has been impacted by increase of e-commerce, mass customization, omni-channel distribution, and just-in-time philosophy. In order to attend to this dynamic change, automation has been applied in warehouses. Although, some researches point out the lack of flexibility as a bottleneck. Therefore, a comprehensive literature review of recent papers is vital to draw a framework of the past and to shed light on future directions. This paper aims to review published papers in the last ten years related to flexible automation in warehouses and to construct a framework that could guide future researchers in the construction of an innovative conceptual model that may be applied at warehouses in the future. A total of 113 papers published between January 2008 and December 2018 have been selected, reviewed, and categorized to construct a useful foundation of past research. Results showed the key point to achieve a flexible automated warehouse is the combination of automated equipment, data collection technologies, and management solutions. Finally, based on the reviewed papers, an innovative framework of a flexible automated warehouse is proposed.

Total Hockey Optimizes Omnichannel Facility Locations

Omnichannel distribution, which blends brick-and-mortar retailing and e-commerce, is a key challenge for today’s supply chains. In this paper, we report on a study to design an omnichannel distribution system for Total Hockey, a growing U.S. sporting goods retailer in a competitive environment. Management strongly believes that e-commerce success will depend on high service levels characterized by one- or two-day delivery and initially thought that a new omnichannel warehouse located on the East Coast could support its expansion plans. To study the situation, we developed a profit-maximizing optimization model for locating omnichannel warehouses that supports both e-commerce and store shipments. The model uses estimates of e-commerce demand by metropolitan statistical area (MSA) across the United States, while incorporating management’s sales expectations regarding the value of high service levels, e-commerce sales lost to competitors’ stores, and reverse cannibalism from Total Hockey’s own retail stores. Multiple warehouse sizes allow modeling of nonlinear inventory costs. The facility-location optimization model allows exploration of multiple solutions and an assessment of the impact of higher service levels. The results of the study were contrary to management expectations and suggested a significant redesign of the distribution system. We report results for several analyses, implementation details, and managerial insights for omnichannel distribution.

Crowdsourcing Last Mile Delivery: Strategic Implications and Future Research Directions

The rise of e‐commerce over the past 20 years has created an increased need for responsive omnichannel distribution to meet the last mile challenge. Some companies are experimenting with the use of the sharing economy business model to augment distribution strategies. The use of so‐called “Crowdsourced Logistics” (CSL) is becoming more prevalent in practice, but the role in logistics strategy of this new phenomenon has not been thoroughly investigated and understood. Using a contingency theory lens, this research contributes a nascent understanding of howCSLperforms in terms of logistics effectiveness by simulating same‐day delivery services from a distribution center to 1,000 customer locations throughout New York City under dynamic market conditions and by comparing the results to those of a traditional dedicated fleet of delivery drivers. The findings are analyzed to suggest how firms may find strategic benefit usingCSL. An agenda for future research is provided to explore these strategic implications and to deepen knowledge about theCSLphenomenon.

Luxury retailers’ entry and expansion strategies in China

PurposeThe purpose of this paper is to examine internationalising luxury fashion retailers’ entry and post-entry expansion strategies in mainland China.Design/methodology/approachThe study adopts a pragmatic mixed-methods research approach, including a quantitative mail survey and qualitative face-to-face in-depth executive interviews.FindingsDifferent from initial single entry methods, multiple methods are increasingly popular for luxury fashion retailers’ post-entry expansion in mainland China. Although directly controlled expansion strategies have become significant, local partnerships are still important and omnichannel distribution strategies are rapidly growing.Research limitations/implicationsThe findings were generated in mainland China only.Originality/valueThis work provides an understanding of luxury fashion retailers’ activities in the Chinese market from both macro and micro perspectives. It examines luxury fashion retailers’ initial entry strategies, as well as their post-entry expansion strategies in mainland China. Few studies in the area of international luxury fashion retailing have employed a mixed-methods approach with this number of participants.

Managing Multi- and Omni-Channel Distribution: Metrics and Research Directions

The increase in the variety of channel formats, and the progression from single, to multi-, then to omni-channel marketing has made shopping and buying more convenient for consumers, but trickier to manage for marketers—both upstream suppliers and downstream retailers. The first step in managing multi- and omni-channel distribution is to find the specific metrics that will facilitate reliable analysis of the relationship between distribution and marketing objectives. That is our primary goal in this article—to present the metrics, both old and new, that marketers, both suppliers and retailers, need to monitor, and that academic researchers, both theoretical and empirical, should incorporate in their models. We present a basic framework for managing distribution, and summarize the metrics that are relevant to each element of the framework. Then, we lay out what we believe are important questions that multi- and omni-channel marketers are grappling with, refer the reader to what existing academic research has to say about them, and suggest how future research can build off our framework and metrics to supplement what is known and address what is not.