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Decide where you integrate: MCO does not equal MCC!

It’s the beginning of the year and our campus here at Bangalore is abuzz with client visits, with sometimes the Bangalore campus alone hosting 4-5 client visits in a single day. Budgets are being cast, everyone is looking for the right drop box to put their IT dollars and wait for maximum magic for the amount spent. While I am not involved in a majority of these visits, there's one industry vertical where SCM practice consistently gets invited to present their point of view, viz., Retail. My reasoning for this is that there’s really no other industry where one encounters so many best-of-breed SCM packages strung together by each of these retailers in a collage uniquely their own.

Without a single exception, going to those meetings means playing bingo with the mother of all transformational thoughts in retail - MCC. One really cannot talk supply chain to a retail audience without starting off on Multi-Channel Commerce (MCC) within the first 10 seconds of the conversation. However, what happens afterwards many a time is a tangential leap into the glories of e-commerce, site building tools, content management, search & browse capability, elegant design of shopping carts, personalization, loyalty management...the works. Before you realize it, the world would have shifted inexorably to a discussion around web-channels and how to leverage them better.

Not for a moment am I discounting the importance of internet as a channel to increase your sales revenues. In fact, soon it may become your default channel, if not for actual buying, at least for making all the buying decisions. Thus, all the buzzwords that I liberally sprayed across above are all important and critical, but does that make it MCC? Well NO, not by a big mile. For years, retailers, large and small, have been running an online channel, a call center channel, a stores channel and other sundry channels (EDI-based, direct order transfers, long-term contracts, special orders for large/national accounts etc) as separate establishments which meet only at a financials level. I prefer to call this MCO or Multi-Channel Operations, rather than Multi-Channel Integration (MCI) which is the precursor to enabling true MCC. Running disparate channels and integrating them during financial consolidation for the purpose of reporting quarterly results is not the way MCI happens. On the contrary, MCI happens during supply chain design itself where we need to weigh the process flows among the gamut of functions enabling customer order fulfillment (order capture, sales order management, order fulfillment, inventory management, replenishment planning, purchase order management etc.) and then take calls on where one wants his/her MCI design to converge.

Using Sterling Commerce, we've enabled multiple retailers to have a single source of truth regarding orders at an order header/order line/unit quantity level, keeping track of whatever supply chain exceptions are important to each client. SterComm's Multi-Channel Fulfillment (MCF) solution can do this pretty well, but for retailers looking at further convergence, enabling global inventory visibility and having allocations based on this visibility is the next level of evolution (with SterComm itself or otherwise). Regardless of whether we have a single order management system consolidating/tracking the life cycle of orders captured from diverse sources, if inventory is still disparate, the efficiencies one realizes would still be only partial.  

I do agree that holistic views of inventory and its synchronization is easier said than done (all such discussions finally trace themselves back to the importance of master data management, at least at an item/customer level). However, if your back-end supply chain can deal with the complexity, the improvement in inventory turns across multiple holding points would be a significant benefit that merits taking this route. Further back in your supply chain, if one has the appetite for it, retailers can try some level of PO consolidation as well. Again, POs can come from multiple sources (starting with the replenishment POs spewed out by the demand planning system/s), but like we did with one distributor some time back, if parent-child linkages can be effectively established, we can trace each shopping cart SO all the way to the consolidated PO that goes to the supplier and keep the link intact until both the linked SO and PO are closed in their respective life cycles.

Each of these thoughts may merit more discussion and I would welcome your views. Meanwhile, if someone says they have an MCC strategy, do check back with them where exactly the channels are converging in the supply chain and what information is shared across them. Chances are that they're talking MCO and limiting convergence to their accounting books.



Though I have not been involved much into the retail scenario, but on going thru the article I can relate it to the business of one of the major electronics retailer in the US. Their online channel has the capability to track the item inventory at the store level, i.e saying that while purchasing online, you can simultaneously check if the product is available at a store of your choice and then pay online and then have the option of either the product being delivered at the doorstep or being picked up from the store immediately. I do not say that this is a pure case of MCC but it appears to be a definite step towards MCI from the customer point of view. Do let me know if my perspective of MCC/MCI/MCO on your thoughts is correct.

You're right Saurabh, this is again a case of exposing stores inventory to drive up fulfillment rates for the online channel. We have just done something similar in a fashion retailer with quite spectacular results. Looks like your electronics retailer has also implemented the same model.

Typically, retailers 'segment' the inventory at the store for "store" and "online" channels. This gives them better visibilty on channel based sales and also on order promising.

It's quite wonderful to see that recent implementations that are referred above actually have such sophisticated inventory Management that online orders are promised store inventory.

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