Interview with Wilfred Lam: Omnichannel Logistics at LUXASIA
Retail and e-commerce have grown by leaps and bounds over the course of the pandemic. With more consumers purchasing online, there was an explosive growth in the number of e-commerce stores around the world. To stand out from the competition, companies must now strategize how they can better meet the ever-increasing demands of customers around the world.
Omnichannel fulfillment is becoming the next big step for organizations of all sizes, causing a global rethink about how to ensure customer satisfaction and brand loyalty. In a recent interview, we had the pleasure to speak with Wilfred Lam, Regional Head, Supply Chain at LUXASIA, to give us an insider’s perspective on omnichannel logistics in the retail space.
Note: This interview has been edited for brevity and clarity.
1) Without using the words “e-commerce” and “logistics”, could you introduce yourself and what your company does to our community members?
Wilfred: I am the Head of Supply Chain at LUXASIA, the leading omnichannel distribution platform for luxury beauty and lifestyle brands in the Asia Pacific, present in 15 markets with 200 talents, and driving success for more than 120 brands. I look after all aspects of the demand-planning, inbound logistics, regulatory & customs management, customer service, warehousing and fulfilment (incl. last-mile delivery and returns management). I do this for the entire omnichannel business – online & offline aspects delivered as one.
2) Omnichannel is perhaps the hottest trend in retail supply chain management right now. What is omnichannel in the supply chain, and is omnichannel fulfilment any different from e-commerce fulfilment? If yes, how so?
Wilfred: E-commerce fulfilment looks towards delivering to consumers the stocks that have been specifically set aside in the warehouse for online orders. In contrast, omnichannel fulfilment involves connecting all available stock in any location to satisfy consumer demand – keys to achieving this are real-time data visibility and agility of fulfilment capabilities (at low cost ideally).
We see the spectrum of fulfilment capabilities as a continuum. From the rudimentary normal bulk fulfilment, followed by e-commerce fulfilment, multichannel fulfilment and the platinum standard being omnichannel fulfilment. Most companies today are either at e-commerce fulfilment or multichannel fulfilment.
Omnichannel fulfilment requires a significant amount of investments into technology & systems. Furthermore, there must be end-to-end cross-system integration. Beyond that, agility is how responsive the various aspects of the company’s supply chain – depends on both the network of capable solution providers and the associated cost-to-serve.
At LUXASIA, we have piloted omnichannel fulfilment with our stores (specifically, our Omni-retail concept called escentials). This entails pick-up online orders directly in stores, and sending in-shop orders directly to consumers’ homes from our warehouses, on top of the usual inventory management in retail stores and inventory pools set aside in warehouses. While this has generated some customer delight, to scale this up across hundreds of points-of-sales is a different level of challenge indeed. More pilots and progressive scaling need to be done to understand the complexities of this approach before complete execution across our network.
3) LUXASIA had a 5-year omnichannel transformational journey. Could you share with us what were some of your takeaways during this journey as the Regional Head of Supply Chain?
Wilfred: My top three takeaways during my time as the Head of Supply Chain at LUXASIA are:
Setting the right expectations and managing team spirit throughout the journey:
Going through a transformation journey is difficult for our talents due to the volatility of circumstances and managing the change as the operating context evolves. Just look at the past two years – the pandemic changed our lives so much and nobody expected this global black swan event.
Communication of the goals from top leadership to the rest of the company is crucial in first setting those expectations right. Having a clear end goal in mind to ground the team as we changed the course of directions was what helped to retain talents and achieve our transformation successfully. This was especially true as we undertook this transformation all throughout the COVID-19 period. The team saw us through drastic operational pivots, as well as sharp peaks in online orders.
The appetite for change and investment in technology must increase accordingly to achieve smooth operations for omnichannel fulfilment:
Firstly, for existing systems, the roll-out pace of new features, patches, and upgrades by all systems providers, is already a challenge to manage. Next, we have to keep scanning the market and keep abreast of better applications that can be integrated into our current technology stack.
In-house customizations vs. Off-the-shelf solutions: Generally, people like customizations because it solves the organization’s issues exactly. The fit might be good, but the resources required to tailor and develop the solution may not be worth it. In many cases these days, an off-the-shelf solution that solves the issue already exists. We can actually save precious man-hours and labor when adopting off-the-shelf solutions.
As we gear up the organization for omnichannel fulfilment, it is important to do it holistically as One Team with our partners in the organization. We cannot work in silos and decide on solutions in isolation. Instead, consulting and joint advisory work with our Technology team, Operations team, Planning team, Finance team, as well as commercial teams, is needed to determine how the whole system should work together in an omnichannel manner.
4) Who should consider investing in an omnichannel fulfilment strategy and why?
Wilfred: The cool answer would be “all companies” but the reality is that it truly depends on 2 factors:
Scale & location of business: If they are a small-sized, entrepreneurial startup, an omnichannel fulfilment model would not make sense due to the lack of scale and accompanying high-cost of implementation and integrations required. On the other hand, mid-sized businesses and larger companies can stand to gain benefits when implementing this model across their network. To delight a wide reach of consumers with differing demands, to stay ahead of the supply chain curve, and to impress potential commercial partners
On multi-market implementation, one needs to understand whether each country/city has sufficient infrastructure maturity or readiness to enable this. For developed markets like Singapore, it is feasible. But it is not the case for developing markets like Vietnam or the Philippines, except in capital cities.
Nature of the business: Companies who have a majority of their business in brick-and-mortar stores would see value in omnichannel fulfilment as stocks located all over the network can be utilized to meet consumer demands at different locations instantaneously. In this same vein, e-commerce stores or digitally native businesses would not see any incremental gain in pursuing an omnichannel fulfilment strategy due to the absence of a physical retail network.
Overall, the success of this strategy would work best for a B2C/ B2B4C business (or any end-consumer facing business) that has a strong retail and online presence, with a high volume of orders to fulfill on an ongoing basis.
5) What are the common challenges businesses face when developing an omnichannel fulfilment strategy?
Wilfred: As far as challenges in an omnichannel fulfillment strategy are concerned, there are mainly two that come to mind:
System infrastructure design + follow-on integration: It is important to have a seamless process from stores to the warehouse and this rests on ensuring system handshake and efficient data flow.
Partner selection for last-mile delivery: Choosing the right partners that are reliable and provide excellent service for last-mile delivery is pertinent not only for operations but also ensures customer satisfaction while protecting brand reputation.
6) Returns management is an essential part of omnichannel commerce. What advice would you give to omnichannel retailers that are trying to optimize their returns operations?
Wilfred: Never underestimate the volume, cost, and complexity of returns management. Especially with e-commerce being a mainstay in consumers’ purchasing habits, returns management has now shifted to become a core workstream of the delivery process.
The costs involved in returns management should not be underestimated as businesses have to consider its execution in line with the company’s policies and guidelines while keeping in mind the expiration date of the goods (if any) and the brand’s reputation. In a more granular sense, the business has to spend time factoring in costs of potential scrapping and on whose account during these returns management processes.
For omnichannel retailers, promotional mechanics that help with the clearance of returns (if they are in good working conditions or with only packaging damage) should be considered. For distributors, there needs to be a clear alignment with brand owners on the approach for returns management. If not aligned, it could lead to operational complications or worse, the souring of relationships.
7) Any advice you would like to share with businesses that are just getting started with omnichannel fulfilment?
Wilfred: If you are just starting out on your omnichannel journey, you may want to consider the following:
Pilot before embarking on a full-scale implementation: When things go wrong, the damage done is minimal and the business can quickly pivot to another solution. A pilot will inevitably yield good lessons that will reduce the risks of errors in full-scale implementation later on.
Having a good understanding of the nature of the consumers specific to the market you are operating in: The level of discernment and demands of the consumers would directly determine if employing this strategy is sensible. For markets with consumers who do not need omni-fulfilment, why do it?
Caveat: Unless it is a group-level initiative or the implementation gives a clear competitively beneficial differentiation.
8) Lastly, what other trends do you foresee happening in the retail and e-commerce logistics space for 2022?
Wilfred: As more companies move into the e-commerce space, warehouse automation will see an increase in uptake over the years across the supply-chain process. Especially for large-scale businesses that need to fulfill a high volume of consumer orders.
In terms of talents, the competition in hiring in this space is growing more aggressive as the talent pool demand is already outstripping supply. Companies need to keep track, anticipate this early and manage their hiring processes accordingly.
As for the general logistics industry trends, we can expect to see:
Topics relating to Sustainable Supply Chains will stay on the agenda
Web3 & Blockchain affecting Supply Chain operations
Increased use of crowdsourcing for Last-mile Delivery
(We would like to thank Mr. Wilfred Lam for taking the time to answer our questions. You can connect with him on LinkedIn here.)
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LUXASIA is the leading beauty omnichannel distribution platform of Asia Pacific spanning 15 markets, powered by 2000 in-market talents. It has successfully enabled brand growth for more than 120 luxury beauty brands to delight local consumers through luxury retail, online & social commerce, and consumer marketing. Since 1986, the company has partnered the world’s finest brands, such as Bvlgari, Calvin Klein, Diptyque, Hermes, La Prairie, Montblanc, and SK-II, as well as established Joint Ventures with the likes of LMVH, Elizabeth Arden, Puig, Shiseido, Yves Rocher, and By Terry. Visit www.luxasia.com to discover more.