‘The Effect of Omni-channel Implementation on Supply
Chain Efficiency in the Automotive Industry’
Bachelor Thesis
International Supply Chain Management
Academic Year 2020-2021
December 2020
Author: Bjorn van den Bogaart
SNR: 2001118
ANR: 116798
Supervisor: Mrs. D. Lases Figueroa / Dr. ir. F. Fang
Program: Bsc. Business Economics (BE)
Faculty: Tilburg School of Economics and Management
Word count: 7938
,Management Summary
This research contributes to the existing gap in the literature about the influence of omni-
channel implementation on the supply chain efficiency, focused on the automotive industry.
This is one of the industries that is evolving towards a next-generation industry, due to the
efficient use of emerging technologies. This research defines supply chain efficiency and the
omni-channel strategy. Thereafter, it highlights the inefficiencies in the automotive industry
supply chain. It ends with an illustration of the effect of omni-channel implementation on
supply chain efficiency.
The conclusion is drawn that due to the opportunities that the omni-channel strategy provides,
the supply chain efficiency in the automotive industry could be improved. Disappearance of
boundaries and data sharing across all channels, creating synergies and creating more
alignment within the supply chain. These are examples of opportunities of the omni-channel
strategy that could (partially) solve the inefficiencies in the automotive industry supply chain.
However, there is a careful note that must be added to this conclusion. The automotive
industry supply chain is very complex. There are many challenges remaining to raise the
supply chain efficiency in the automotive industry. Also, omni-channel implementation brings
challenges. There are multiple components that need to be aligned to make the supply chain
more efficient.
2
,Table of contents
Management Summary............................................................................................................2
Chapter 1 - Introduction..........................................................................................................4
1.1 Introduction......................................................................................................................4
1.2 Problem Indication............................................................................................................4
1.3 Problem Statement............................................................................................................6
1.4 Research Questions...........................................................................................................7
1.5 Research Design................................................................................................................7
1.6 Thesis Structure.................................................................................................................8
Chapter 2 – Omni-channels.....................................................................................................9
2.1 Omni-channel: Detailed description and Comparison......................................................9
2.1.1 Multi-channel...........................................................................................................10
2.1.2 Cross Channel..........................................................................................................10
2.1.3 Omni-channel...........................................................................................................11
2.2 Challenges.......................................................................................................................12
2.3 Opportunities...................................................................................................................12
2.4 Conclusion......................................................................................................................13
Chapter 3 – Supply Chain Efficiency....................................................................................14
3.1 Supply chain: Detailed description.................................................................................14
3.2 Supply Chain Efficiency.................................................................................................15
3.3 Conclusion......................................................................................................................18
Chapter 4 – Inefficiencies in the Automotive Industry.......................................................18
4.1 Supply Chain in the Automotive Industry......................................................................18
4.2 Inefficiencies in the Automotive Industry.......................................................................20
4.3 Conclusion......................................................................................................................21
Chapter 5 – Omni-Channels and Supply Chain Efficiency in the Automotive industry. 21
5.1 Omni-Channels and Supply Chain Efficiency................................................................21
5.2 Omni-Channels in the Automotive Industry...................................................................23
5.3 Conclusion......................................................................................................................25
Chapter 6 – Conclusion..........................................................................................................25
3
, 6.1 Conclusion......................................................................................................................25
6.2 Limitations of this Thesis................................................................................................26
6.3 Recommendations for future research............................................................................27
References................................................................................................................................27
Chapter 1 - Introduction
1.1 Introduction
‘The internet is expanding rapidly into every market and many geographic locations’.
(Morton et al., 2001 – p501). This is a quote from an article of ‘The Journal of Industrial
Economics’ written almost twenty years ago. There has been a significant change in the
retailing world over the past years. For example, in the United States, the sales originating
from online channels increased with 15% every year since 2010 (Gallino & Moreno, 2019).
The automotive industry is an example of an industry which has been developing along with
the growth of online channels. Back in 2000, more than half of the new vehicle buyers used
the internet in the purchase process (Power, 2000). Since then the automotive industry has
evolved towards a next-generation industry that involves modern, autonomous and constantly
connected cars (Kim & Kim, 2018). The efficient use of emerging technologies also has an
impact on the expectations and behaviour of the customers, which expends the boundaries of
many industries (Pantano & Timmermans, 2014). Despite these developments customers still
seem to want a physical experience when it comes to purchases such as a car. They want to
‘Kick the tires’ (Morton et al., 2001).
1.2 Problem Indication
As stated before, many industries have been undergoing structural changes as a result of the
development of online channels. These changes have impacted the way customers behave and
the customer expectations (Pantano & Timmermans, 2014; Gallino & Moreno, 2019).
Customers nowadays expect some degree of flexibility. An example is outlined by Morton,
Zettelmeyer and Silva-Rosso (2014). They mention that nowadays customers to be able to
buy online, pick up in store, return in store, or buy in store and have a product shipped to a
desired address. In other words, the impact of emerging mobile technologies result in a
customer expecting a seamless shopping experience (Avidar et al., 2019). Examples of
emerging (mobile) technologies in de automotive industry are Internet of Things, big data and
4
, Artificial intelligence (Kim & Kim, 2018). Distribution channels for new cars have remained
the same for many years. They are based on the idea of supplying customers from stock which
is held at car dealers. This idea is not in line with current customer expectations and therefore
the supply chain fails in terms of delivering the exact product preferred by the customer,
which can be seen as an inefficiency in the supply chain (Turner & Williams, 2005). The
combination of all the circumstances mentioned above require businesses to abandon the era
of traditional brick-and-mortar retailing where they work with several different channels
behind. Companies are forced to develop and implement a complex set of strategies in a
comprehensive framework (Kumar et al., 2017).
One way to ensure a seamless shopping experience, which costumers nowadays expect when
they enter a purchase process, is an omnichannel system. An omnichannel is a distribution
channel where flexibility and integration across all channels is allowed (Peltola et al., 2015).
It also defines as a coordinated multi-channel offering which provides a seamless shopping
experience through the combination of the advantages of physical stores with the online
collected information and data (Lazaris & Vrechopoulos, 2014). These omnichannel systems
are mostly used in the retail industry, and not yet in the automotive industry, for this reason
there is a scarce amount of research regarding this subject which causes a gap in the existing
literature (Hryhorieva, 2019). Changes in customer expectations and behaviour, combined
with a globalizing economy, emerges new challenges for many businesses, especially in the
supply chain of the automotive industry (Turner & Williams, 2005). Besides these challenges
there is also the rising competitiveness that plays an important role in the current economy,
which makes it more important to work as efficient as possible (United Nations, 1997).
Research shows an increase in supply chain efficiency as a key strategic goal when it comes
to focusing on containing costs as an organization (Gilbert et al., 2015). Supply chain
efficiency, in general, is defined as choosing the best strategy to distribute the product from a
production plant to the customers (Amiri, 2006).
Given the facts that omni channels are not a commonly used system in the automotive
industry yet and that due to several challenges and the rising competitiveness, supply chain
efficiency is more important than ever(United Nations, 1997; Hryhorieva, 2019). This raises
some interesting questions. Is an omnichannel a suitable system for the automotive industry?
Can the supply chain efficiency in the automotive industry be increased by implementing
these omni-channels in the automotive industry? These are questions which are attempted to
answer in this bachelor thesis.
5
Chain Efficiency in the Automotive Industry’
Bachelor Thesis
International Supply Chain Management
Academic Year 2020-2021
December 2020
Author: Bjorn van den Bogaart
SNR: 2001118
ANR: 116798
Supervisor: Mrs. D. Lases Figueroa / Dr. ir. F. Fang
Program: Bsc. Business Economics (BE)
Faculty: Tilburg School of Economics and Management
Word count: 7938
,Management Summary
This research contributes to the existing gap in the literature about the influence of omni-
channel implementation on the supply chain efficiency, focused on the automotive industry.
This is one of the industries that is evolving towards a next-generation industry, due to the
efficient use of emerging technologies. This research defines supply chain efficiency and the
omni-channel strategy. Thereafter, it highlights the inefficiencies in the automotive industry
supply chain. It ends with an illustration of the effect of omni-channel implementation on
supply chain efficiency.
The conclusion is drawn that due to the opportunities that the omni-channel strategy provides,
the supply chain efficiency in the automotive industry could be improved. Disappearance of
boundaries and data sharing across all channels, creating synergies and creating more
alignment within the supply chain. These are examples of opportunities of the omni-channel
strategy that could (partially) solve the inefficiencies in the automotive industry supply chain.
However, there is a careful note that must be added to this conclusion. The automotive
industry supply chain is very complex. There are many challenges remaining to raise the
supply chain efficiency in the automotive industry. Also, omni-channel implementation brings
challenges. There are multiple components that need to be aligned to make the supply chain
more efficient.
2
,Table of contents
Management Summary............................................................................................................2
Chapter 1 - Introduction..........................................................................................................4
1.1 Introduction......................................................................................................................4
1.2 Problem Indication............................................................................................................4
1.3 Problem Statement............................................................................................................6
1.4 Research Questions...........................................................................................................7
1.5 Research Design................................................................................................................7
1.6 Thesis Structure.................................................................................................................8
Chapter 2 – Omni-channels.....................................................................................................9
2.1 Omni-channel: Detailed description and Comparison......................................................9
2.1.1 Multi-channel...........................................................................................................10
2.1.2 Cross Channel..........................................................................................................10
2.1.3 Omni-channel...........................................................................................................11
2.2 Challenges.......................................................................................................................12
2.3 Opportunities...................................................................................................................12
2.4 Conclusion......................................................................................................................13
Chapter 3 – Supply Chain Efficiency....................................................................................14
3.1 Supply chain: Detailed description.................................................................................14
3.2 Supply Chain Efficiency.................................................................................................15
3.3 Conclusion......................................................................................................................18
Chapter 4 – Inefficiencies in the Automotive Industry.......................................................18
4.1 Supply Chain in the Automotive Industry......................................................................18
4.2 Inefficiencies in the Automotive Industry.......................................................................20
4.3 Conclusion......................................................................................................................21
Chapter 5 – Omni-Channels and Supply Chain Efficiency in the Automotive industry. 21
5.1 Omni-Channels and Supply Chain Efficiency................................................................21
5.2 Omni-Channels in the Automotive Industry...................................................................23
5.3 Conclusion......................................................................................................................25
Chapter 6 – Conclusion..........................................................................................................25
3
, 6.1 Conclusion......................................................................................................................25
6.2 Limitations of this Thesis................................................................................................26
6.3 Recommendations for future research............................................................................27
References................................................................................................................................27
Chapter 1 - Introduction
1.1 Introduction
‘The internet is expanding rapidly into every market and many geographic locations’.
(Morton et al., 2001 – p501). This is a quote from an article of ‘The Journal of Industrial
Economics’ written almost twenty years ago. There has been a significant change in the
retailing world over the past years. For example, in the United States, the sales originating
from online channels increased with 15% every year since 2010 (Gallino & Moreno, 2019).
The automotive industry is an example of an industry which has been developing along with
the growth of online channels. Back in 2000, more than half of the new vehicle buyers used
the internet in the purchase process (Power, 2000). Since then the automotive industry has
evolved towards a next-generation industry that involves modern, autonomous and constantly
connected cars (Kim & Kim, 2018). The efficient use of emerging technologies also has an
impact on the expectations and behaviour of the customers, which expends the boundaries of
many industries (Pantano & Timmermans, 2014). Despite these developments customers still
seem to want a physical experience when it comes to purchases such as a car. They want to
‘Kick the tires’ (Morton et al., 2001).
1.2 Problem Indication
As stated before, many industries have been undergoing structural changes as a result of the
development of online channels. These changes have impacted the way customers behave and
the customer expectations (Pantano & Timmermans, 2014; Gallino & Moreno, 2019).
Customers nowadays expect some degree of flexibility. An example is outlined by Morton,
Zettelmeyer and Silva-Rosso (2014). They mention that nowadays customers to be able to
buy online, pick up in store, return in store, or buy in store and have a product shipped to a
desired address. In other words, the impact of emerging mobile technologies result in a
customer expecting a seamless shopping experience (Avidar et al., 2019). Examples of
emerging (mobile) technologies in de automotive industry are Internet of Things, big data and
4
, Artificial intelligence (Kim & Kim, 2018). Distribution channels for new cars have remained
the same for many years. They are based on the idea of supplying customers from stock which
is held at car dealers. This idea is not in line with current customer expectations and therefore
the supply chain fails in terms of delivering the exact product preferred by the customer,
which can be seen as an inefficiency in the supply chain (Turner & Williams, 2005). The
combination of all the circumstances mentioned above require businesses to abandon the era
of traditional brick-and-mortar retailing where they work with several different channels
behind. Companies are forced to develop and implement a complex set of strategies in a
comprehensive framework (Kumar et al., 2017).
One way to ensure a seamless shopping experience, which costumers nowadays expect when
they enter a purchase process, is an omnichannel system. An omnichannel is a distribution
channel where flexibility and integration across all channels is allowed (Peltola et al., 2015).
It also defines as a coordinated multi-channel offering which provides a seamless shopping
experience through the combination of the advantages of physical stores with the online
collected information and data (Lazaris & Vrechopoulos, 2014). These omnichannel systems
are mostly used in the retail industry, and not yet in the automotive industry, for this reason
there is a scarce amount of research regarding this subject which causes a gap in the existing
literature (Hryhorieva, 2019). Changes in customer expectations and behaviour, combined
with a globalizing economy, emerges new challenges for many businesses, especially in the
supply chain of the automotive industry (Turner & Williams, 2005). Besides these challenges
there is also the rising competitiveness that plays an important role in the current economy,
which makes it more important to work as efficient as possible (United Nations, 1997).
Research shows an increase in supply chain efficiency as a key strategic goal when it comes
to focusing on containing costs as an organization (Gilbert et al., 2015). Supply chain
efficiency, in general, is defined as choosing the best strategy to distribute the product from a
production plant to the customers (Amiri, 2006).
Given the facts that omni channels are not a commonly used system in the automotive
industry yet and that due to several challenges and the rising competitiveness, supply chain
efficiency is more important than ever(United Nations, 1997; Hryhorieva, 2019). This raises
some interesting questions. Is an omnichannel a suitable system for the automotive industry?
Can the supply chain efficiency in the automotive industry be increased by implementing
these omni-channels in the automotive industry? These are questions which are attempted to
answer in this bachelor thesis.
5
