Is Your Omnichannel Strategy Driving Customers Away?

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1 Is Your Omnichannel Strategy Driving Customers Away? Featuring: Bob Heaney, Aberdeen Group Brent Halverson, ecmarket Tom Gale, Modern Distribution Management Sponsored by:

2 Speakers Bob Heaney Research Director Aberdeen Group Brent Halverson President & CEO ecmarket Tom Gale Publisher Modern Distribution Management

3 Agenda Introduction Tom Gale Presentation Bob Heaney Presentation Brent Halverson Q&A All Close Tom Gale

4 IS YOUR OMNICHANNEL STRATEGY DRIVING CUSTOMERS AWAY? October 29, 2015 Bob Heaney, Research Director Aberdeen Principal Analyst Retail, Wholesale, and ecommerce Brent Halverson, President & CEO ecmarket

5 FEATURED SPEAKER Over 25 years of distinguished leadership experience in research, analysis, and advisory roles BOB HEANEY Research Director Supply Chain, Retail and ecommerce Coverage area within Aberdeen includes various elements of Wholesale, Retail, and Supply Chain An industry insider and internal advisor to company executives Active in designing, reengineering, selling, and transforming B2B and B2C business processes and the end-to-end supply chain for Fortune 500 companies 5

6 TODAY S AGENDA Is Your Omnichannel Strategy Driving Customers Away? 1. Methodology and Business Context 2. Key Pressures and Actions 3. Automation Advantages of Leaders 4. Hidden ROI of Omni-channel Orders 5. Case Study Examples 6. Key Takeaways, Recap, and Q&A 6

7 ABERDEEN RESEARCH METHODOLOGY

8 ABERDEEN MATURITY CLASS FRAMEWORK DEFINING THE BEST-IN-CLASS Selected Performance Criteria (KPI) Best-in-Class - Top 20% Organizational Goals Employee Performance Total Respondents Industry Average - Middle 50% Bench Strength Respondents are scored individually across KPI Laggard - Bottom 30% 8

9 UNDERSTANDING WHAT IT TAKES TO ACHIEVE SUCCESS P A C E Best-in-Class What you need to do to become Best-in-Class: What processes you should have in place What you need to measure Industry Average Organizational changes you might want to make Data / knowledge management considerations Laggard Technologies you should evaluate 9

10 CLASS MATURITY DEFINITION Definition of Maturity Class Leaders: Top 30% of aggregate performance scorers (28 companies) Automation Followers: Bottom 70% of aggregate performance scorers (67 companies) Mean Class Performance 95.4% of outbound orders delivered to customers complete and on-time 94.6% of orders received from suppliers complete and on-time 0.5% decrease in total landed per unit costs in the past year 7.5% decrease in the frequency of out-ofstock inventory in the past year 86.4% of outbound orders delivered to customers complete and on-time 84.8% of orders received from suppliers complete and on-time 8.5% increase in total landed per unit costs in the past year 0.9% increase in the frequency of out-ofstock inventory in the past year 10

11 ABERDEEN S RESEARCH METHODOLOGY PACE: END-USER INVESTIGATION PRESSURES ACTIONS CAPABILITIES ENABLERS! What is causing organizations to think differently? What strategies are they using to respond to pressures? Why are they achieving greater success? What technologies and services are enabling them to succeed? External and internal forces that impact an organization s market position, competitiveness, or business operations. The strategic approaches that an organization takes in response to industry pressures. The business capabilities (organizational, process, knowledge management etc.) required to execute corporate strategy. The key technology solutions required to support the organization s business practices. 11

12 TODAY S AGENDA Is Your Omnichannel Strategy Driving Customers Away? 1. Methodology and Business Context 2. Key Pressures and Actions 3. Automation Advantages of Leaders 4. Hidden ROI of Omni-channel Orders 5. Case Study Examples 6. Key Takeaways, Recap, and Q&A 12

13 ABERDEEN S RESEARCH METHODOLOGY PACE: END-USER INVESTIGATION PRESSURES ACTIONS CAPABILITIES ENABLERS! What is causing organizations to think differently? What strategies are they using to respond to pressures? Why are they achieving greater success? What technologies and services are enabling them to succeed? External and internal forces that impact an organization s market position, competitiveness, or business operations. The strategic approaches that an organization takes in response to industry pressures. The business capabilities (organizational, process, knowledge management etc.) required to execute corporate strategy. The key technology solutions required to support the organization s business practices. 13

14 Global Demand-to-Fulfill Logistics Flows: International visibility from satellites and cloud technology DEMAND Global Air Customers Home Delivery Raw Materials Supplier Component Supplier Retail Store Global DC Retail Store Ocean carrier Component Supplier Global DC Raw Materials Supplier SUPPLY 14

15 Profit Pressures-B2B and B2C Convergence New Order-to-Fulfill Logistics Flows New Channels: In all of our studies during the past 5 years, for both B2B and B2C companies alike, the traditional distribution center (DC) ranked as the primary logistic format. This is changing, as shipping direct-to-consumer becomes equally dominate and the lines between segments blur. Shipping Direct-to-Consumer Shipping to or through a Traditional Distribution Center Shipping through Vendor DC bypass, 3PL or e- Fulfillment provider Shipping through a break-bulk facility (i.e. Cross Dock, Transload, or DC Flowthru Facility) Shipping through a Free Port, Freeport Zone, FTZ for customs Shipping Direct-to-store 38% 43% 61% 60% 56% 53% We plan to add capabilities in other areas not checked Channel % 15% 0% 20% 40% 60% 80% Percentage of Respondents n=137 Source: Aberdeen, November

16 Profit Pressures-B2B and B2C Convergence Flows: International visibility from satellites and cloud technology DEMAND Global Air Customers Home Delivery Raw Materials Supplier Component Supplier Retail Store Global DC Retail Store Component Supplier Ocean carrier Global DC Raw Materials Supplier SUPPLY 16

17 Profit Pressures-B2B and B2C Convergence Flows: International visibility from satellites and cloud technology DEMAND Global Air 61% Customers Home Delivery Raw Materials Supplier Component Supplier Retail Store Global DC Retail Store Ocean carrier Component Supplier Global DC Raw Materials Supplier SUPPLY 17

18 Profit Pressures-B2B and B2C Convergence Flows: International visibility from satellites and cloud technology DEMAND 60% Customers Global Air Home Delivery 61% Retail Store Raw Materials Supplier Component Supplier Global DC Retail Store Ocean carrier Component Supplier Global DC Raw Materials Supplier SUPPLY 18

19 Profit Pressures-B2B and B2C Convergence Flows: International visibility from satellites and cloud technology DEMAND 60% Customers Global Air Home Delivery 61% Retail Store Raw Materials Supplier Component Supplier Retail Store Global DC 56% Dc Bypass Vendor/3PL Ocean carrier Component Supplier Global DC Raw Materials Supplier SUPPLY 19

20 Profit Pressures-B2B and B2C Convergence Flows: International visibility from satellites and cloud technology DEMAND 60% Customers Global Air Home Delivery 61% Retail Store Raw Materials Supplier Component Supplier Retail Store Global DC 56% Dc Bypass Vendor/3PL Ocean carrier Component Supplier Global DC Raw Materials Supplier SUPPLY 20

21 Profit Pressures-B2B and B2C Convergence Flows: International visibility from satellites and cloud technology DEMAND 60% Customers Global Air Home Delivery 61% Retail Store Raw Materials Supplier Component Supplier Retail Store 43% Free Port, FTZ Global DC 56% Dc Bypass Vendor/3PL Ocean carrier Component Supplier Global DC Raw Materials Supplier SUPPLY 21

22 Multi Channel Logistics Flows: Evidence of Convergence 60% Shipments to and through a distribution center Was 75%-80% 2-3 years ago 61% Shipments direct-to-customer Was 45%-50% 2-3 years ago Now they are both almost equal at 60/61% Fundamentally moves B2B from bulk to single shipments at execution 22

23 3 ADDED pressures that are vying for optimization. 88% Pricing has become more important 54% Need to create tailored, specific, precision merchandise assortments for customer segment and channel 32% Need to increase gross margin 23

24 ABERDEEN S RESEARCH METHODOLOGY PACE: END-USER INVESTIGATION PRESSURES ACTIONS CAPABILITIES ENABLERS! What is causing organizations to think differently? What strategies are they using to respond to pressures? Why are they achieving greater success? What technologies and services are enabling them to succeed? External and internal forces that impact an organization s market position, competitiveness, or business operations. The strategic approaches that an organization takes in response to industry pressures. The business capabilities (organizational, process, knowledge management etc.) required to execute corporate strategy. The key technology solutions required to support the organization s business practices. 24

25 B2B and B2C Convergence a Call to Action The Business Case: Addressing the challenge of the convergence of B2B and B2C requirements Defining and Understanding the Impacts: The trend of companies shipping direct-to-customer vs. to, or through, a distribution center continues to accelerate The New Logistics Formats: Confirm B2B and B2C convergence is changing how Best-in-Class companies must orchestrate their demand-to-fulfill process A "Call to Action": To address the B2B/B2C demandto-fulfill process reengineering There is a growing challenge that companies face in the convergence of B2B and B2C requirements, which constitutes a Call to Action for today s business executive across retail, wholesale, manufacturing and ecommerce industry segments, as the lines become more blurred. 25

26 NEW IMPACTS AND CALL TO ACTION 80% of wholesale distributors say that they are concerned about the impact to costs and profitability with more B2C orders Increase in order density and the growth in B2C order types Labor/shipping costs due to the introduction of more split case quantity fulfillment and parcel delivery Compression in the order to deliver cycle time that comes with matching same day and 2 day delivery for the new B2C orders Manual and special offline processing as traditional B2B EDI systems are supplanted by more complex manual flows like /fax and phone orders 26

27 ABERDEEN S RESEARCH METHODOLOGY PACE: END-USER INVESTIGATION PRESSURES ACTIONS CAPABILITIES ENABLERS! What is causing organizations to think differently? What strategies are they using to respond to pressures? Why are they achieving greater success? What technologies and services are enabling them to succeed? External and internal forces that impact an organization s market position, competitiveness, or business operations. The strategic approaches that an organization takes in response to industry pressures. The business capabilities (organizational, process, knowledge management etc.) required to execute corporate strategy. The key technology solutions required to support the organization s business practices. 27

28 TODAY S AGENDA Is Your Omnichannel Strategy Driving Customers Away? 1. Methodology and Business Context 2. Key Pressures and Actions 3. Automation Advantages of Leaders 4. Hidden ROI of Omni-channel Orders 5. Case Study Examples 6. Key Takeaways, Recap, and Q&A 28

29 MANUAL IMPACTS AND CALL TO ACTION In the 3 year period the number of wholesalers processing manually ( /fax /phone) decreased by; 34% on B2B orders 24% on B2C orders The Top 30 Automation Leaders in 2014 are: 350% more likely to automate via portal for B2C orders 333% more likely to automate via portal for B2B orders compared to Bottom 30 Automation Followers in

30 TOP PERFORMERS ARE.. 3.5X MORE LIKELY TO AUTOMATE ONCE MANUAL ORDERS Forcing your customer to place orders through your website may be counterproductive and open the door for web browser based pricing comparisons. Caution, ask yourself: Is Your Omni-Channel Strategy Driving Your Customers to Shop Competitors? 30

31 IS YOUR OMNI-CHANNEL STRATEGY DRIVING YOUR CUSTOMERS TO SHOP COMPETITORS? B2B customers would prefer not to have to enter both into their own PO system and then reenter line by line using the sellers web portal. The browser based portal is a target for shopping banners, for specific items and prices, with links to buy from a competitor s shopping website. Product items and descriptions are saved in cookies marketed by search engines like Google and Bing to target and entice your customers to comparison shop. 31

32 ABERDEEN S RESEARCH METHODOLOGY PACE: END-USER INVESTIGATION PRESSURES ACTIONS CAPABILITIES ENABLERS! What is causing organizations to think differently? What strategies are they using to respond to pressures? Why are they achieving greater success? What technologies and services are enabling them to succeed? External and internal forces that impact an organization s market position, competitiveness, or business operations. The strategic approaches that an organization takes in response to industry pressures. The business capabilities (organizational, process, knowledge management etc.) required to execute corporate strategy. The key technology solutions required to support the organization s business practices. 32

33 TODAY S AGENDA Is Your Omnichannel Strategy Driving Customers Away? 1. Methodology and Business Context 2. Key Pressures and Actions 3. Automation Advantages of Leaders 4. Hidden ROI of Omni-channel Orders 5. Case Study Examples 6. Key Takeaways, Recap, and Q&A 33

34 HIDDEN ROI OF A STREAMLINED CLOUD-READY AUTOMATED SOLUTION Cash to Cash Conversion - Calculated as the sum of: + Days Inventory Outstanding (DIO) - the current inventory level and how many days are required to sell this inventory + Days Sales Outstanding (DSO) - the current sales and the amount of days it takes to collect the cash from these sales Less: Days Payables Outstanding (DPO) - the average number of days before inventory debt must be paid back to vendors 34

35 HIDDEN ROI OF A STREAMLINED CLOUD-READY AUTOMATED SOLUTION Cash to Cash Conversion - Calculated as the sum of: + Days Inventory Outstanding (DIO) - the current inventory level and how many days are required to sell this inventory + Days Sales Outstanding (DSO) - the current sales and the amount of days it takes to collect the cash from these sales Less: Days Payables Outstanding (DPO) - the average number of days before inventory debt must be paid back to vendors 35

36 HIDDEN ROI OF A STREAMLINED CLOUD-READY AUTOMATED SOLUTION Cash to Cash Conversion - Calculated as the sum of: + Days Inventory Outstanding (DIO) - the current inventory level and how many days are required to sell this inventory + Days Sales Outstanding (DSO) - the current sales and the amount of days it takes to collect the cash from these sales Less: Days Payables Outstanding (DPO) - the average number of days before inventory debt must be paid back to vendors 36

37 HIDDEN ROI OF A STREAMLINED CLOUD-READY AUTOMATED SOLUTION Cash to Cash Conversion - Calculated as the sum of: + Days Inventory Outstanding (DIO) - the current inventory level and how many days are required to sell this inventory + Days Sales Outstanding (DSO) - the current sales and the amount of days it takes to collect the cash from these sales Less: Days Payables Outstanding (DPO) - the average number of days before inventory debt must be paid back to vendors 37

38 HIDDEN ROI OF A STREAMLINED CLOUD-READY AUTOMATED SOLUTION Cash to Cash Conversion - Calculated as the sum of: + Days Inventory Outstanding (DIO) - the current inventory level and how many days are required to sell this inventory + Days Sales Outstanding (DSO) - the current sales and the amount of days it takes to collect the cash from these sales Less: Days Payables Outstanding (DPO) - the average number of days before inventory debt must be paid back to vendors 38

39 HIDDEN ROI OF A STREAMLINED CLOUD-READY AUTOMATED SOLUTION Cash to Cash Conversion - Calculated as the sum of: + Days Inventory Outstanding (DIO) - the current inventory level and how many days are required to sell this inventory + Days Sales Outstanding (DSO) - the current sales and the amount of days it takes to collect the cash from these sales Less: Days Payables Outstanding (DPO) - the average number of days before inventory debt must be paid back to vendors 39

40 HIDDEN ROI OF A STREAMLINED CLOUD-READY AUTOMATED SOLUTION Cash to Cash Conversion - Calculated as the sum of: + Days Inventory Outstanding (DIO) - the current inventory level and how many days are required to sell this inventory + Days Sales Outstanding (DSO) - the current sales and the amount of days it takes to collect the cash from these sales Less: Days Payables Outstanding (DPO) - the average number of days before inventory debt must be paid back to vendors 40

41 BENEFITS AND ADVANTAGES : TOUCHLESS ORDER AUTOMATION Automation (top 30%) Leaders deliver: 350% higher likelihood to automate B2C orders via customer portals and sales order automation solutions days B2C order to cash/delivery vs 39.4 days on B2B orders bought on credit days Cash to Cash Cycle versus days on B2B orders on credit 100% order accuracy from /fax or PO entry via cloudbased automated conversion vs as low as 70% manual 500% as compared to Followers. increase in touchless orders with no manual intervention. Staff redeployed to handle rush orders and problem solving 41

42 BENEFITS AND ADVANTAGES : TOUCHLESS ORDER AUTOMATION Automation (top 30%) Leaders deliver: 350% higher likelihood to automate B2C orders via customer portals and sales order automation solutions days B2C order to cash/delivery vs 39.4 days on B2B orders bought on credit days Cash to Cash Cycle versus days on B2B orders on credit 100% order accuracy from /fax or PO entry via cloudbased automated conversion vs as low as 70% manual 500% as compared to Followers. increase in touchless orders with no manual intervention. Staff redeployed to handle rush orders and problem solving 42

43 BENEFITS AND ADVANTAGES : TOUCHLESS ORDER AUTOMATION Automation (t op 30%) Leaders deliver: 350% The bottom line: The most higher automated likelihood to wholesale automate B2C companies orders via customer have transformed, as they move portals to address and sale order B2C/B2B automation Convergence solutions and automate manual processes to uncover 2.5 days B2C hidden order to cash/delivery ROI in Cash vs 39.4 to days Cash on B2B conversion orders cycles with negative inventory. bought on credit days Cash to Cash Cycle versus days on B2B orders on credit 100% order accuracy from /fax or PO entry via cloud-based automated conversion vs as low as 70% manual 500% as compared t o Followers. increase in touchless orders with no manual intervention. Staff redeployed to handle rush orders and problem solving 43

44 BENEFITS AND ADVANTAGES : TOUCHLESS ORDER AUTOMATION Automation (t op 30%) Leaders deliver: 350% Sales Order Automation leaders higher likelihood (top 30%) to automate are delivering B2C orders via superior customer results portals and sale order automation solutions (below) and are more operationally ready to address the quicker order-todelivery cycles in 2.5 new B2C days and B2C B2B order to order cash/delivery flows vs that 39.4 convert/automate days B2B orders without touches. bought on credit days Cash to Cash Cycle versus days on B2B orders on credit 100% order accuracy from /fax or PO entry via cloud-based automated conversion vs as low as 70% manual 500% as compared t o Followers. increase in touchless orders with no manual intervention. Staff redeployed to handle rush orders and problem solving 44

45 AUTOMATING B2B AND B2C ORDER FLOWS BY CUSTOMER DELIVERS 3.5 x improvement in order throughput Obtain 100% accuracy, and reduce manual intervention. Compete with 2 day delivery standards Capture the hidden ROI associated with negative cash to cash conversion cycles 45

46 TODAY S AGENDA Is Your Omnichannel Strategy Driving Customers Away? 1. Methodology and Business Context 2. Key Pressures and Actions 3. Automation Advantages of Leaders 4. Hidden ROI of Omni-channel Orders 5. Case Study Examples 6. Key Takeaways, Recap, and Q&A 46

47 FEATURED SPEAKER BRENT HALVERSON President & CEO, ecmarket Over 20 years of distinguished leadership experience As President and CEO, Brent leads the overall strategic direction of ecmarket and is responsible for developing the business plan and driving success in all areas of the business including product, finance, support, services, sales and operations. Recognizing that the needs of wholesale distributors were not being met by existing solutions, Brent has led the product strategy and vision behind Conexiom to ensure that it is the only service that delivers 100 percent data accurate, sales order and invoice automation. Brent brings more than 20 years of senior management experience in product management, finance, operations, and research and development in the high-tech industry. 47

48 TODAY S AGENDA Profitable Omni-Channel Commerce and B2B/B2C Fulfillment 1. Methodology and Business Context 2. Key Pressures and Actions 3. End-to-End Event-Driven Capabilities 4. Mobility and Event-Driven Enablers of the Leaders 5. Case Study Examples 6. Key Takeaways, Recap, and Q&A 48

49 Challenge Introduce a solution for inbound order processing for customers that did not have the resources to implement EDI Solution Captures purchase orders that were faxed and ed and transforms and delivers them as EDI orders Key Results Improved order accuracy Faster order processing Improved employee productivity Greater customer satisfaction 49

50 Challenge Manually re-keying orders downloaded from the portal of one of their largest customers costing one FTE 2-3 hours/day Solution Automation saved over 400 hours of labor costs for one customer and automatically processed over 11,000 orders for a single customer Key Results 99.96% correct shipping rate Refocus staff on high value business priorities Improved customer service and loyalty Saved thousands of hours annually 50

51 Challenge Eliminate dual entry requirements of customers creating PO in their system and again in Wacker s portal Solution No change to customer s current order process: over 50% of customers place orders via Key Results Increased efficiency Improves order accuracy Place orders 24/7 Full transparency 51

52 TODAY S AGENDA Profitable Omni-Channel Commerce and B2B/B2C Fulfillment 1. Methodology and Business Context 2. Key Pressures and Actions 3. End-to-End Event-Driven Capabilities 4. Mobility and Event-Driven Enablers of the Leaders 5. Case Study Examples 6. Key Takeaways, Recap, and Q&A 52

53 KEY TAKEAWAYS Omni-channel B2B Convergence with B2C is here New Order to Deliver flows provide the evidence The Impacts Order management through Fulfillment Fundamental Automation capabilities are lacking even for Leaders CALL TO ACTION Get ready now!! 53

54 CONCLUSION Only process changes and adequate investment in all areas of automation to answer the B2C order flows and sales automation will provide the necessary clarity to make decisions that are worthy of the investment dollar and that are transformational in nature 54

55 THANK YOU, ANY QUESTIONS? For more information on this and other topics, please visit

56 Q&A

57 Thank you! Is Your Omnichannel Strategy Driving Customers Away? Featuring: Bob Heaney, Aberdeen Group Brent Halverson, ecmarket Tom Gale, Modern Distribution Management Sponsored by:

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