An Omnichannel Distribution Model to Better Serve Online Customers
Name
scm2020-aouad-an-omnichannel-distribution-model-to-better-serve-online-customers-capstone.pdf
Description
Supply Chain Management capstone research project
Size
1.58 MB
Format
Adobe PDF
Checksum (MD5)
dc41078f928345816f1c919f3e030e01
Author(s)
Aouad, Wassim
Ganapathi, Nikhil
Date Issued
July 24, 2020
Abstract
With the rising adoption of e-commerce and online shopping, many retailers are facing the
challenge of transitioning across channels to offer a seamless customer experience. One way of
addressing this challenge consists of leveraging omnichannel retailing. Our sponsor company, a
large US grocery retailer, is striving toward providing an omnichannel customer experience in
the US retail grocery market. To help our sponsor to achieve this objective, we analyzed how to
best integrate the company’s offline and online distribution channels for one of its brands in
Massachusetts. We leveraged the insights from the analysis to build a mixed integer linear
program that optimizes the company’s operational costs while meeting the customer demand and
complying with the facilities’ capacity constraints. We also conducted multiple scenario
analyses, such as an unexpected increase in the online demand due to unforeseen situations like
the COVID-19 crisis, in order to assess the flexibility and robustness of our proposed model. Our
omnichannel model enables the sponsor company to achieve substantial cost savings, as the
associated transportation, handling and facility opening costs are ~22% lower than those incurred
by the current distribution network. Finally, the scenario analyses demonstrate that our
omnichannel model is flexible and reliable, allowing our sponsor to absorb a 37% increase in the
online customer demand in the most cost-effective manner (i.e., without having to incur
additional costs on top of the current network’s costs).
Subjects
Omnichannel
Network Design
Supply Chain Strategy
Persistent DSpace Link
