Supply Chain Transformations Must Prepare for No New Normal
“We’re entering ‘the new normal.’”
No doubt, we’ve all heard or read that sentence somewhere. It’s an understandable soundbite that depicts the trying times experienced over the past three years, made up of both political and economic trajectories, as well as unforeseen “black swan” events. But with disruptions continuing to ensue, it appears “normal” is not on the agenda.
And, more pressingly, for businesses hoping for a consistent, albeit new, state of play, will they be engaging in transformations that are resilient to the continuous pivots and sideswipes taking place?
For retail, these questions are particularly pertinent. A lot has been made about how they should transform their supply chains to be more agile and robust. But this will only work if they are preparing for the fact that there is no new normal.
While trying to keep up with the pace of change, retailers must also address the velocity of change –the speed at which situations can change or pivot.
Below are four key strands that retailers should be preparing for through their supply chain digital transformations.
A Changing Consumer
Consumers are also evolving their shopping behaviors, both from a practical standpoint and in their expectations. Where/When they shop is more spontaneous or responsive, they expect more visibility into stock availability to meet quicker fulfillment demands and might make buying decisions based on sustainability awareness and green credentials.
Meanwhile, on the behavior front, above all else, the new-age consumer wants utmost personalisation, and a retailer has to be agile and predictive enough to fulfill every individual’s specific priorities.
Simply, hyper-local personalization is now a must. Preference-driven assortment, through the filter of connected, AI-driven tools, can leverage customer data for personalized experiences and engagement. And “connected” is the key word here, as it must also incorporate more expansive and varied fulfillment choices across the omni-channel spectrum. An additional consideration of value versus waste must also be addressed with digitized pricing and markdown solutions, so that stock is equally available and affordable – while remaining profitable – at all times.
A Changing Market
Shop online? Shop in store? Buy online and pickup in store (BOPIS)? Deliver today, next day, at the customer’s discretion? Use micro-fulfilment centres or deliver from store?
The level of choice and flexibility that must be afforded by the omni-channel retailer makes assortment, pricing, labor and – chiefly – order management far more difficult than in years past. Perhaps the biggest challenge of all, is that consumers don’t care about any of these challenges. In fact, 90% of consumers expect their interactions to be consistent across all channels. Beyond that, they even expect the process to be clearer, quicker and more personalized, despite the additional complexity.
Online hasn’t quite taken over the world in the way that some predicted. In fact, internet sales are trending towards a similar pattern seen before COVID although the story does differ by sector. Stores are still very much in play, but what has changed is the way that stores are being used. Assortment must be targeted towards what people are coming to view, not just what they’re predicted to walk out of the store with – and also geared towards what is being picked not just bought. This complexity of inventory and assortment can’t lead to waste or being left with outdated stock. Similarly, order management needs dynamically manage inventory across distribution centres and stores, to ensure omni-channel fulfilment is both responsive and profitable.
A Changing World
The barrage of unforeseen, outside influences brought on by significant economic and political challenges across the globe emphasize quite how important the notion of agility is. Just as significant, though, is in realizing the power of AI even in more volatile times, as retailers try to adjust to the changing industry and consumer patterns that formulate in the aftermath of such events.
Predictive and digitized, connected, supply chain solution is a must get ahead of changes. For example, inflation is leading many retailers to revisit their category strategies to reflect changes in purchase behavior. Enhanced end-to-end visibility is key while at the same time going granular by understanding the different dynamics for each item, location, channel, or day in order to optimize inventory, pricing and assortment. These improvements in decision-making and productivity, whether in planning, managing across the supply chain or improving efficiency around store, are other ways that new tech can offset the burden of economic hits.
A Changing Supply Chain
The customer experience around the supply chain is the next battleground. Providing visibility to inventory and delivery options in real-time is a must. Same-day delivery or collection will be table stakes within two years. With most consumers engaging digitally at some point in a purchase, enabling this digital supply chain across all touch points is imperative. Flexible omni-fulfilment operations delivering a connected experience meeting the differentiated consumer needs across price, convenience and speed will be top of the list of customer expectations.
Today, it is not just disruption that must be mitigated, it is delivering the right supply chain experience. Otherwise, what is available to sell (ATS) in the form of readied stock, can soon fail to translate into available to promise (ATP), should any of the labor, transport, production or sourcing efforts go awry. Supply chain solutions that link all facets, with visibility and optimization in real-time, will be critical to deliver the customer experience both retailers and consumers now demand.
A digital omni-channel fulfilment network must account for every single element that might hinder or expedite ultimate deliveries, before translating that information clearly to the end consumer, for an optimized, personalized and – above all else – achievable presentation of purchase options.
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About the Author:
Wayne Snyder has worked in retail for more than 20 years and is a recognised expert in planning and supply chain operations. As Vice President, Retail Industry Strategy, EMEA at Blue Yonder, Wayne is responsible for the company’s retail strategy across EMEA, working closely with leading retailers to ensure they maximize full value from their technology and supply chain investments. Learn more about Blue Yonder: www.blueyonder.com
A version of this blog post ran in Retail Merchandiser‘s November 2022 issue.