How to Design your Company’s Omni – Channel Distribution Network

As omnichannel shopping becomes the new norm, FMCGs and retail companies must be ready to deliver fast, perfect omnichannel service. To do so, these companies will require a new supply chain network approach.

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An omnichannel distribution network is a multichannel approach to sales that seeks to provide customers with a flawless shopping experience, whether they are shopping online from a desktop or mobile device, by telephone, or in a store. An omnichannel approach means there is integration between distribution, promotion, and communication channels on the back end. It combines physical and online commerce or e-tailing.

The FMCG landscape is evolving fast with companies trying to pace up with the leading online retailers. With all the difficulties and uncertainties that the COVID-19 pandemic brought for consumer product companies, the crisis has also accelerated a pre-existing trend toward omnichannel. Online sales have increased significantly across many product categories, and many consumers have tried out new shopping behaviors since the beginning of the pandemic.

However, many FMCG companies are still struggling to adopt the omnichannel strategy, given its supply chain requirements, particularly in terms of speed, complexity, and efficiency.  Consumers expect to receive their products anytime and anywhere and with minimal delays between order and delivery, as well as with a high level of convenience. Traditional supply chain networks are often not built for same-day delivery with excellent service.

Put your customer’s need first; to start, companies need to adopt a clear perspective on what the consumer really wants, today and in the future. This understanding will inform them which channels to serve, which products and services to offer, and where to offer them. To have this detailed understanding of consumers requires connecting consumer data. This information should be combined with consumer-behavior insights gathered from consumer interviews, observations, and the latest research from market experts. You can use advanced analytics to process all this information and gain a clear understanding of consumer expectations. For consumer goods companies to understand their consumers today, they must look to the future and make sure they stay flexible as the market changes rapidly.

Be fast and collaborative; In an ever-unpredictable environment with constantly changing consumer needs, evolving partnerships, and developing competition, reacting quickly is critical to ensure that the supply chain network is responsive, flexible, and efficient. Therefore, companies should remain alert in their thinking and gather a cross-functional team to develop the future supply chain network in a stable environment. This means determining fulfillment options suitable for each consumer, product, and location segment and to define the required product flow.

Look for partnerships and share resources; taking advantage of existing infrastructure such as warehouses and retail stores is necessary with ever – an unstable environment. Actively seek partnerships not only in your own value chain but also with other industries.

Sharing infrastructure brings co-operations, costs, and split risks and enables better consumer service and faster delivery times. Establish with your partner commercial terms for compensations such as sharing margins. Another example of existing partnership resources in connecting inventory is enabling companies to offer products that are already close to the consumer instead of putting additional inventory into the market. This can increase the availability of certain products with minimal effort.

Rising consumer expectations for faster delivery have triggered the development of more innovative fulfillment options. When identifying existing assets within a company and its partners’ networks, it is important to consider innovative fulfillment options. Your main advantage of these fulfillment options should be proximity to the consumer although operations are less efficient and more costly and they require additional capabilities.

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To conclude, regardless of how the omnichannel distribution network looks, it is important to stay flexible and adjust to any changes. Think early about new capabilities and never stop learning. For an effective omnichannel experience, a new way of thinking about the supply chain is always crucial. The supply chain needs to be adjusted based on changing market conditions. Companies should follow a responsive approach that enables them to adjust quickly to changing trends, options, and consumer expectations. The above principles can help determine the approach to building the network and environment of the future.

Mombasa, Kenya.

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