A Decision-Making Framework for Inventory Positioning in an Omnichannel Business Environment

A Decision-Making Framework for Inventory Positioning in an Omnichannel Business Environment

Albert Wee Kwan Tan (Malaysia Institute for Supply Chain Management, Shah Alam, Malaysia) and David Gligor (University of Mississippi, Oxford, USA)
DOI: 10.4018/IJISSCM.2019010105

Abstract

Omnichannel is an evolving business model that has been gaining increased popularity among retailers. This business model allows firms to use a variety of channels to interact with their customers and fulfill their orders. Customers can order online and pick up later in the store, or they can choose to have the products delivered from a nearby store. Due to the complexity of fulfilling customer orders via omnichannel models, positioning inventory is a key challenge in supporting this type of business model. This article presents a framework for assisting companies in deciding under what condition to centralize or decentralize their inventory to fulfill customer orders without disrupting the shopping experience.
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Literature Review

Technological advancements have facilitated the development of omnichannel businesses which have emerged as state-of-the-art models enjoying popularity among both, retailers and customers (Raynor and Christensen, 2003). Omnichannel denotes a type of business that integrates and uses multiple channels to interact with consumers and fulfill their orders. Verhoef et al. (2015) defined effective omnichannel management as the flexible and cooperative management of a variety of channels and customer touchpoints. As such, customers can access real time information about product offering and their orders through the company’s website. The ‘empowered customers’ require a consistent shopping experience across the retail channels – online, physical stores or both. They can order online, pick up later in-store, or they can choose to have products delivered from nearby stores.

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