The challenges of moving retail operations abroad
Written by Denise Oakley, GXS
Many retailers are accelerating their expansion ambitions, looking to capture new sales growth away from home in territories that are demonstrating rapid growth. The opportunities far outweigh the threats, but there are significant challenges in managing a global or multi-country enterprise.
1. Global supply chains have to be agile and robust
A global supply chain needs to be agile enough to react and serve multiple markets, depending on business needs, but it must also be robust enough to withstand changing local demands.
Under increasing pressure to buy globally but think locally, many retailers are needing to balance global aspirations with an increasing demand from consumers to reduce product-level mileage in the supply chain.
This has been particularly prevalent in FMCG, where growing consumer demand for an ethical approach from their suppliers is reshaping the way supermarkets and clothing retailers in particular manage their suppliers across the supply chain.
At the same time, consumers expect to see an ever-increasing range of goods to choose from, driving demand for supply chain development that includes near sourcing.
Supply chains need to be more dynamic and move away from the traditional push and pull model, and are responsive to customers in terms not just of products, but of sourcing, manufacturing, transport, animal and environmental welfare, and treatment of employees.
2. Traditional IT systems can’t always manage the complex, extended supply chain
No retailer can grow faster than its overall supply chain infrastructure so knowing the effective range or limitations of the supply chain is key to expanding.
In much the same way that IT has enabled companies to source goods on a global scale cost effectively, those same supply chains can now manage the complexities of distributing not just westwards but also distribute goods to stores around the world, working entirely domestically within foreign countries in an extended way or allowing a truly global, if complex, push and pull retail operation using a network of hub and spoke fulfilment.
Making everything speak the same language in a supply chain that is both flexible and reactive is vital to creating a healthy supply environment that works on a global basis, perhaps spanning multiple time zones or numerous legislative trading areas.
Traditional Enterprise Resource Planning cannot always handle the demands of a non-linear, global supply chain that is multi-faceted and operating in a complex environment of multiple suppliers. In some sectors where just-in-time is necessary, this becomes even more challenging.
3. Connectivity for visibility and agility is critical
Creating a supply chain that is ‘connected’ through web-based solutions helps create increased visibility and agility across all business sectors but can still be a disparate or silo system without the right level of process integration.
Cloud will be a critical tool for supply chain management in the future, offering true visibility over the end-to-end process. While some experts argue at how much real-time data you really need over the supply chain, the true power of the Cloud is only just started to be realised in distribution but has huge potential in making a number of silo systems talk to each other.
4. Supply chain harmonisation is important so suppliers can take part
Extending your business processes beyond the ‘walls’ of your own system can add a significant burden on for those suppliers who are not already equipped to deal with it. Harmonising this process has already become very important, but could prove business critical in the future, along with making sense of the data when you get it.
Some companies have spent time mapping out their supply chains, looking at everything from physical process to supplier interaction in order to locate weaknesses and target strengths to leverage, not only to squeeze out cost efficiencies but also to prepare for supply chain disruptions.
5. While you might expect most or all companies to have done this, in truth most haven’t
Klaus Schwab, Founder and Executive Chairman, World Economic Forum recently summed it up, “Across every sector of society, decision makers are struggling with the complexity and velocity of change in an increasingly interdependent world. We need to explore and develop new conceptual models which address global challenges. The more complex the system, the greater the risk of systemic breakdown, but also the greater the potential for opportunity.”
FedEx is Reshaping Last Mile with Autonomous Vehicles
FedEx is embarking on an expanded test of autonomous, driver-less delivery vehicles to develop its last-mile logistics.
The US logistics firm piloted autonomous vehicles from Nuro in April this year, and the pair will now explore that further in a multi-year partnership. Cosimo Leipold, Nuro’s head of partnerships, said the collaboration "will enable innovative, industry-first product offerings that will better everyday life and help make communities safer and greener".
FedEx will explore a variety of on-road use cases for the autonomous fleet, including multi-stop and appointment-based deliveries, going beyond more traditional applications of the technology in single-route movement of goods from A-B. Exponential growth in ecommerce is spurring its broader experimentation in new autonomy solutions, Fed-Ex says, both in-warehouse and on-road.
“FedEx was built on innovation, and it continues to be an integral part of our culture and business strategy,” said Rebecca Yeung, Vice President, Advanced Technology and Innovation, FedEx Corporation. “We are excited to collaborate with an industry leader like Nuro as we continue to explore the use of autonomous technologies within our operations.”
The changing role of couriers
Unlike structured delivery networks, operating under long-term partnerships and contracts, agility is where couriers deliver true value - and their ability to deftly solve last-mile fulfilment has most acutely been felt during the pandemic. For the billions of people around the world forced to stay at home to protect themselves and their communities from the spreading COVID-19 virus, couriers have been a constant. They may have been the only knock at the door some people experienced for weeks or months at a time.
But the last-mile has been uprooted by a boom in ecommerce, a shift that has been most apparent in the UK, US, China and Japan, according to the Global Parcel Delivery Market Insight Report 2021 by Apex Insight. These are markets with dominant economies and populations used to running their lives with a tap of a screen or double-click of a mouse.
“Getting last mile delivery right has long been a challenge for retailers,” says Kees Jacobs, Vice President, Consumer Goods and Retail at Capgemini. “In 2019, 97% of retail organisations felt their last-mile delivery models were not sustainable for full-scale implementation across all locations. Despite increasing demand from customers, companies were struggling to make the last mile profitable and efficient.”
Jacobs says that the pandemic alleviated some of these stresses in the short term. With no other option, consumers were understanding and tolerant, if not entirely happy, with longer delivery times and less transparent tracking. “But, as extremely high delivery demand continues to be normal, customers will expect brands to contract their delivery times,” he adds.
Last mile's role in ESG
Demand and volume weren’t the only things that have changed during the pandemic - businesses looked closer to home and as a result became more sustainable. Bricks and mortar stores were transformed from mini-showrooms to quasi-fulfilment centres. Online retailers and other businesses sought local solutions to ship more faster. In densely populated London, UK alone, Accenture found that delivery van emissions dropped by 17%, while Chicago, USA and Sydney, Australia saw similar emissions savings.