Like the links in a necklace, supply chains are only as strong as each section. It takes just one weak connection for the chain to work less effectively or even to stop functioning. Correcting imperfections would be fairly straight forward if it weren’t for the pace of change that supply chains must accommodate.
Against a background of omnichannel user experience and an explosion in smartphone shopping, retailers must find new ways to perfect fulfilment and address pain points. We spoke to REPL’s newest recruit, digital supply chain expert Leigh Laramy, to discover how retailers can master the art of fulfilment.
Talking ‘Bout a Revolution
“Traditionally, supply chain management was seen as a linear, step-by-step process”, says Leigh Laramy, supply chain senior principal at REPL. “Stock was ordered, receipted at warehouse, stored, picked, packed and dispatched. The challenge was to make all those steps work.”
But when retailers relied on poor forecasts and handwritten paperwork, it was impossible to know how much or what type of products were coming into the warehouses. Poor receipt, lack of system driven putaway and movements resulted in poor stock control, high wastage and local retail stores losing out on products thus missing a sale or disappointing a consumer.
Without an accurate platform there was a lot of wastage as items remained in warehouses and went out of fashion or out of date. And without visibility, no one could tell when certain products were running out or building up making it difficult to take smart decisions.
In short, there were weak links throughout the supply chain which wasn’t as connected as it needed to be. A revolution was required to update manual, time-consuming steps and combine them into a connected whole supported by technology.
Leigh says: “today retailers are looking for a much more connected digital supply chain where they can see what’s happening all the way back to sourcing products. A place where they can pass information both up and down the supply chain, react to and predict demand and therefore react to fulfilment.”
Abandoning Entrepreneurial Guesswork and Embracing Information
Without the information provided by connected supply chain software, retailers can’t respond effectively to what’s going on and what’s going to change in the supply chain. And the move to omnichannel retail means retailers must provide thousands of suppliers and millions of customers with a place to plug in to the system. They all need an easy way to send orders over and complete returns; a massive pain point for many retailers.
Yet change isn’t defined solely by retailers’ requirements. Customer demand is also driving alterations in supply chain systems. As Leigh notes: “20 years ago when you bought a product and you didn’t like it, you probably wouldn’t have taken it back. Today people go online, order the same product in two or three different sizes and they might even wear it once or twice before sending it back.”
This puts an enormous amount of additional strain on the supply chain which now needs to work efficiently both ways. The flow of products from one end of a linear process to the other now sees a large quantity of items flowing back the other way from customer to retailer.
Leigh notes that this has resulted in fulfilment having a big impact on brand perception and customer service: “if I want product A and they haven’t got my size, I want the retailer to say how they’re going to solve that problem. Should I go to a different store? Is there an alternative product?”
Being able to respond to customers in this way relies on artificial intelligence and data mining at the back end to:
- Make the customer journey experience the best it can possibly be by using AI algorithms to predict future delivery times, look at historical data, weather reports and customer feedback amongst other stats. Instead of looking at an incoming schedule, this information enables better activity and resource planning to continuously refine the schedule.
- AI technology is also being used to route vehicles by connecting to traffic systems to ensure deliveries arrive as quickly as possible. Some retailers have saved millions of pounds by using this kind of tech. Similarly, autonomous delivery robots use AI to learn their journey including bumps in the pavement and how to avoid pedestrians and other hazards.
- Clever data mining supports business intelligence and data warehousing with up to date stock and forecasting decisions. By integrating and applying factors like buying behaviours, shop layouts, sales and returns data, delivery speed, environmental factors and human bias to the supply chain, more accurate decisions can be reached and better decisions taken.
With the right combination of technological solutions at the front end, retailers can connect to this intelligence to offer seamless digital supply chain information and enhanced customer service.
As Leigh describes: “the shopper expects a seamless experience, whether it be in store or on-line. They expect to be able to question in-store assistants and get an answer on stock availability, latest offers and how they can track down that perfect item if it is not on the shelves. This is where mobile devices for assistants are extremely useful. Today’s shopper is short of time and therefore this quick turn around of information is favorable.”
But a connected supply chain doesn’t stop there. They enable the assistant to identify that the shipping forecast is in two weeks time so they can ask the customer if they can get the item prepared and sent to their preferred address.
Says Leigh: “people want that journey in high-end retail. They need to know you’re on the button, you can get what they want now. And even if it’s not there, they want visibility including tracking who’s personally wrapping and delivering it.”
And this isn’t only happening at the high end; heightened service expectations are trickling down to the low end. Consider Amazon’s same-day delivery services that we track from our mobile devices. Retailers can expect more duress on the supply chain as customers continue to demand additional services and a better experience.
Benefits of Connectivity
Despite the pressures, with every challenge comes opportunity. And those retailers who seize the benefits offered by technology enjoy the following advantages:
- Reduced risk – some retailers are still manually pricing up expensive items – they can easily stick the wrong price sticker on a pair of exclusive sunglasses which can be sold. Modern supply chain software removes the need for manual intervention and reduces the risk of human error.
- Enhance efficiency – retailers often do jobs manually with a lot of repetition. Technology is available to remove inefficiencies and it also opens up the opportunity to cut back on the workforce and offer a more diverse range of products.
- Full in-store visibility – a single view of stock brings together a retailer’s entire suite of systems and combines information from suppliers, warehouses, back office and storage systems in local shops. This ensures retailers know where all their products are at any time.
- Complete end-to-end clarity – enables retailers to see what’s happening at every stage of their supply chain enabling them to plan more effectively and ensure ethical standards.
- Predictive capability – joined-up systems with advanced capabilities like data analytics empower businesses to strategise in line with market requirements and assess viability, trends, costs and profit.
However, implementing the technology that revolutionises retail supply chain systems isn’t a one-size fits all approach.
Best Practice or Best Process?
“I think the fundamentals of supply chain from a consumer view – order item, it gets picked, packed and dispatched and tracked to my delivery point – are not really going to change,” says Leigh. “However, the location of those goods and the way that you warehouse them, the way you use robotics and the way your delivery services work is where the change will happen. There are lots of different ways to bring the box in, look after it and get it out.”
With so many retailers operating an enormous variety of legacy systems – and in some cases maybe even paper systems – Leigh notes that: “there’s no one best practice you can hit on as each project needs to be dealt with on its own merits”
For instance, a supply chain system project might be driven by the fact that a retailer has a back end system they can’t get rid of because they’ve invested heavily in it. In every case there will be limiting circumstances, says Leigh: “it’s about finding what’s going to deliver the most seamless solution for that business. There are a host of WMS systems on the market and careful consideration to match functionality to the business needs must take place. It is important that any integration team can deliver good systems, processes and most importantly a happy workforce and consumer.”
Instead, the best solution is to replace best practice with best process which involves:
- looking at the business in terms of size, investment, growth, the type of products in place now and those the retailer wants to include in the future and offer to new customers
- understanding operational best fit to determine:
- which combination of technology – from robotics to applications – will work with the retailer’s existing systems
- how well specific warehouse systems will turn into back office systems
- which POS systems are in use on the shop floor and how they’ll link to the retailer’s back office systems and warehouse
- establishing the best approach to systems architecture to ensure systems are fit for purpose today, tomorrow and into the future
Key to future-proofing supply chain systems in this way is the ability to take a helicopter view. By bringing in an external consultancy, retailers get a rare opportunity to take a step back. As Leigh recognises: “Businesses are in turmoil and they often have massive problems with their legacy estate and historical systems. That’s why it’s important to have a short, medium and long term approach. The good news is, there are often relatively simple things retailers can do to give themselves a competitive edge in the marketplace.”
In today’s world, visibility of accurate information is power. Wherever your customers are buying a product – in-store or online – your staff need accurate information so you can provide the exceptional service customers have come to expect. Connected digital supply chain technology is the solution. Now all you need is the expertise to implement the right solution for your retail business.