Determining Safety Stock for an Omni-Channel Environment

Literature Review

Single-channel means utilizing only a single mean of reaching potential customers. This includes being exclusively brick-and-mortar retail stores, or having purely an online e-commerce business (Hübner, Wollenburg, & Holzapfel, 2016). Figure 1 shows how a single-channel works.

Figure 1.

Single-channel. Source: (Hübner et al., 2016).

Multi-channel are channels working side-by-side without interacting, similar to “working in silos” (Kourimsky & Berk, 2014; Verhoef et al., 2015). There is no logistics or operational interface between the channels. There are no common or shared objectives for the channels but individualized goals, like sales target for each channel (Hübner et al., 2016; Kourimsky & Berk, 2014). The end result for the company is competition, which might create more friction and misunderstanding, than overall better performance. Customers are not able to make purchases across the different channels, as information is not shared across the different channels.

Figure 2.

Multi-channel. Source: (Kourimsky & Berk, 2014).