Achieving Marginal Gains throughout the Supply Chain
The rise in customer expectation is well documented – and in the bid to satisfy the immediate gratification generation, an agile supply chain has become the prime source of competitive advantage. Yet, while organisations clearly recognise the need to uncover every possible efficiency within the supply chain in order to remain competitive, many feel constrained by legacy systems and complex ERP, WMS and POS implementations.
Rather than embark upon a massive supply chain overhaul that will take too long to deliver innovative customer services, organisations need to consider the intelligent use of integrated solutions that can deliver significant marginal gains. From the use of real time information that enables a shift from reactive to proactive supply chain management, to the mix and match use of warehouse technology to reflect different sales models, which could include orders from hypermarkets, convenience stores or individuals online – it is smart integration that can deliver essential supply chain agility.
As Sébastien Sliski, General Manager Supply Chain Solutions at Zetes, insists, with the new war against competition fought not just on price and quality but on the ability to respond to the customer’s ever-changing and increasing expectations, fast marginal gains throughout the supply chain will be a major differentiator.
From the Internet of Things to Artificial Intelligence, and Pick to Light to wearable devices and RFID, the ways in which organisations can harness technology to transform the speed and efficiency of the supply chain appear unlimited. The question has to be asked, therefore, why so many omni-channel retailers are still struggling to come close to meeting customer expectations.
Of course the pace of change is unprecedented. Just as a retailer manages to cobble together a solution for next day delivery, same day becomes the norm. When click and collect in store is put in place, customers suddenly expect a broad range of options, such as ‘Deliver to Me’ or lockers. In the rush to meet customer expectations, organisations are finding existing IT systems and IT processes are simply too slow and cumbersome.
Add in global supply chain volatility and the result is not only a retail model that is sub-par but, even worse, huge operational costs are incurred to operate these new customer facing options. With online returns running at over 30% for some retailers, the cost of returns processing is eradicating any profit. Meeting customer expectations is just one part of the equation when it comes to achieving long term retail success.
Agile Supply Chain
Profitable retailing appears to require dramatic transformation across the supply chain, from manufacturing through distribution, delivery and in-store systems. However, in the face of demands for a better, more agile supply chain, far too many organisations feel fundamentally constrained by the underpinning ERP, WMS or legacy deployments. It appears simply too difficult to embrace the innovative technologies and working practices required to meet customer demands – or certainly to achieve any improvement within a viable timeframe. Expensive, complex and long, high risk IT projects are not tenable given the extraordinary change in customer expectations. Why spend millions delivering a customer service that is obsolete by the time it has been enabled?
Yet while this feeling of technology frustration may be understandable, it is not necessarily justified. It is possible to enhance and extend existing ERP and WMS solutions to gain value and agility throughout the supply chain – with the right approach. And the key is to start small and focus on process, not technology, first.
The underpinning objective has to be to improve visibility. Today organisations are operating blind, with no way to determine the location of a customer order within the supply chain until it arrives at its final destination. That means no way of providing the customer with accurate delivery information and no way of mitigating any problems that arise throughout the process that may affect the customer experience. It is this lack of visibility that fundamentally constrains a retailer to be able to cost effectively deliver service innovation.
Achieving Marginal Gains
Information is the key; by identifying critical processes and immediately capturing transactional events within the business, organisations can enable fast and effective collaboration, as well as a pre-emptive issue resolution. This intelligent process enhancement, focused on specific areas of business pain, followed by the application of relevant technologies – from capturing data to mobilising tasks– can deliver significant improvements, including enhanced inventory visibility and better customer engagement.
For example, providing the store associate with real time visibility of not only what is in the stock room but also the warehouse and other stores transforms customer service and boosts sales.
Similarly, the real time provision of a text regarding a late leaving supplier delivery can enable immediate mitigation of the potential customer impact. Having the functionality to inform the customer that an order will be delivered within the next hour can drive up first time delivery rates and reduce calls to customer service or customers sharing their grievances on social media; cutting costs and improving the overall customer experience. The ability to harness real time information and stock visibility that enables organisations to replace reactive supply chain management with a proactive approach that supports innovative customer services.
By identifying, reviewing and optimising existing processes and then overlaying appropriate collaborative supply chain technology, organisations can achieve marginal gains at every stage of the supply chain – and prioritise biggest areas of pain. Within the warehouse, for example, one of the major challenges today is the need to pick a huge diversity of order types – from the single item direct customer order to the 20 line, 30 boxes per line store order. One size does not fit all in this environment, and those organisations that adopt the best process-technology mix for each order type gain significant improvements in accuracy and productivity.
Fast, effective response to customer demand is becoming a retail essential. But large scale, capital IT projects cannot deliver supply chain agility within a tenable timeframe. A different approach is required. It is the combination of process review and the integration of the collaborative supply chain technology that can deliver marginal gains and enable the cost effective provision of essential customer service innovation.
Pandora and IBM digitise jewellery supply chain
Pandora has overhauled its global supply chain in partnership with IBM amid an ecommerce sales boom for its hand-finished jewellery.
The company found international success offering customisable charm bracelets and other personalised jewellery though its chain of bricks and mortar retail destinations. But in 2020, as the COVID-19 outbreak forced physical stores to close, Pandora strengthened its omnichannel operations and doubled online sales.
A focus on customer experience included deploying IBM’s Sterling Order Management, increasing supply chain resiliency and safeguarding against disruption across the global value chain.
Pandora leverages IBM Sterling Order Management as the backbone it its omnichannel fulfilment, with Salesforce Commerce Cloud powering its ecommerce. Greater automation across its channels has boosted the jeweller’s sustainability credentials, IBM said, streamlining processes for more efficient delivery. It has also given in-store staff and virtual customer service representatives superior end-to-end visibility to better meet consumer needs.
Jim Cruickshank, VP of Digital Development & Retail Technology, Pandora, said the digital transformation journey has brought “digital and store technology closer together and closer to the customer”, highlighting how important the customer journey remains, even during unprecedented disruption.
"Our mission is about creating a personal experience and we've instituted massive platform changes with IBM Sterling and Salesforce to enable new digital-first capabilities that are much more individualised, localised and connected across channels and markets,” he added.
Pandora’s pivot to digital
The pandemic forced the doors closed at most of Pandora’s 2,700 retail locations. To remain competitive, it pivoted to online retail. Virtual queuing for stores and virtual product trials via augmented reality (AR) technology went someway to emulating the in-store experience and retail theatre that is the brand’s hallmark. Meanwhile digital investments in supply chain efficiency was central to delivering on consumer demand.
“Consumer behaviour has significantly shifted and will continue to evolve with businesses needing to quickly adapt to new preferences and needs,” said Kareem Yusuf, General Manager, AI Applications and Blockchain, IBM. “To address this shift, leading retailers like Pandora rely on innovation to increase their business agility by enabling and scaling sustainable supply chain operations using AI and cloud.”
Yusuf said Pandora’s success was indicative of how to remain competitive by “finding new ways to create differentiated customer experiences that protect their enterprises from disruptions to help mitigate risk and accelerate growth”.