Five omni-channel trends impacting retail supply chainsBY Stephen Duncan
With the introduction of omni-channel retailing, customers have not only been given more purchasing options but unparalleled access to product and pricing information. Primarily as a result of the digital age and introduction of personal devices such as smartphones, customers have never been more informed and connected to data. This new breed of customer has in turn impacted our retail supply chains. Here are five touch points where retailers should see an impact:
1) The rise of omni-channel courier services: With more than 10 percent of retail sales now being transacted online, the need for more flexible shipping options has become more prevalent. Companies are struggling to match customer expectations such as same day delivery, office drop off and after work hour’s delivery. This has increased the need for logistics specialists to meet the demands of customer expectations. In conjunction with this is the focus on internal operations as companies look for more proactive solutions, more accurate forecasting and procurement models to ensure orders can be met on time and within budget.
2) Supply chain omni-channel requirements hit the mid-market: Watch for more mid-market retailers to increase the complexity of their omni-channel initiatives in the coming years, placing pressure on wholesalers and manufactures. The challenge for suppliers to these mid-market companies will involve making their supply chains more efficient as the speed to market increases to match customer demand. For example, retailers might look for more direct-to-customer models as they strive to streamline delivery and reduce overheads to stay relevant in the market.
3) Supply chain software offering increased insight: With market pressures increasing it’s highlighted the need for retailers to be more resourceful and proactive. Enabling real-time decisions through reporting and analytics is one of the keys to unlocking this. Many experts such as Gartner are saying that data is the new oil and with growing pressures on businesses, it’s vital to monitor the development of projects through KPI’s to get a true measure of an organisation’s performance outcomes. Supply chain operations should be focusing on software that provides more integrated real-time analytics throughout their solutions, turning transactional data into a real-time decisions. Mid-market software providers are realising this level of insight is critical at multiple levels of the business and many have integrated business intelligence (BI) tools within their offering where this was previously seen as cost prohibitive for most companies to purchase separately.
4) Personalised supply chains: In an ever increasing customer driven market there’s a trend for supply chains to be more customer centric. Gene Tyndall of Tompkins International said "we will see massive changes of operations strategies - which determine capabilities, business and operating models, customer experiences and supply chain strategies - not just by retailers and consumer packaged goods (CPG) companies, but by all businesses.” The challenge moving forward will be to provide this level of personalisation while still remaining profitable. Customer service is expensive but needs to be balanced with infrastructure, process and technology.
5) Packaging evolution: With the onset of more free delivery expectation to remain competitive, look for more emphasis around packaging. In the US for example, package engineering is now offered in universities where a new generation of graduates are focused on cutting edge innovations. Currently some multi-function package designs are being explored by fashion designers. For example Diesel (the denim clothing company) has been trialling pre-packaged clothing within their release cycle. These items can be shipped directly to customers, moved easily throughout the DC or even placed in store as attractive alternatives to traditional displays, providing both form and function. Green initiatives have also been topical as manufacturers continue to provide packaging that is focused on reusability, reduction and recyclability. According to Brian Wagner of Packing & Technology Integrated Solutions, “improved packaging designs can enable a company to reduce the amount of materials used, lowering costs and reducing the amount of material resources required.”
As retail market and customer expectations evolve, so must our supply chains to remain competitive. This is prompted by many of the surrounding omni-channel offerings that are striving to improve the customer experience. Our supply chains in turn need to focus on the impact which will hopefully improve operational insights and develop proactive packaging methods and delivery innovations. The challenge is to not only stay abreast of these evolving trends but strive for ways to remain efficient as they impact our supply chains.