May 17, 2020

Amazon and the disruption of the UK grocery, food delivery and home-care industry

Amazon
online shopping
grovery industry
grocery industry
Dale Benton
4 min
Amazon and the disruption of the UK grocery, food delivery and home-care industry

With Amazons expansion of its grocery deal with Morrisons, its launch of
Amazon Restaurants, and a rumoured housekeeping service, incumbents could
see...


With Amazon’s expansion of its grocery deal with Morrisons, its launch of
Amazon Restaurants, and a rumoured housekeeping service, incumbents could
see unusual partnerships as a means to fend off the retail juggernaut.

Amazon’s recent advances into the homecare and food delivery market,
following the much vaunted expansion of its pre-existing delivery deal
with Morrisons, the rumoured launch of a new housekeeping service, as well
as Amazon Restaurants and Amazon Fresh services, could result in incumbent
players taking drastic measures to combat the e-commerce giant. This is
according to Nick Miller, head of FMCG at Crimson & Co, who predicts that
Amazon’s competitors could form unlikely partnerships in order to avoid
losing ground to Amazon.

Amazon announced last week that it would be extending its existing
delivery deal with Morrisons’ to offer one-hour grocery deliveries to
selected postcodes in London and Hertfordshire to Amazon Prime Now
customers, a service which has been named “Morrisons at Amazon.”

Meanwhile, advertisements were seen in the US media two weeks ago for
‘Home Assistants,’ who would work with customers to tidy people's homes,
do laundry, put groceries away and "assure that customers return to an
errand-free home.” If true, this new service would be another convenience
to Amazon Prime Now customer who already have access to Amazon Restaurants
(a home food delivery service) as well as both Morrisons at Amazon and
Amazon Fresh for same-day deliveries on a massive range of fresh and
frozen grocery goods.

Miller commented on the moves, and what it means its competitors: “It’s
pretty clear that Amazon’s aim is to be the one-stop-shop for all
domestic-life conveniences. Whether that be shopping, groceries, takeaways
or cleaning, they want to lead the market – it’s an incredibly obvious and
yet aggressive strategy.

“Convenience, as mentioned is the key word – the customer, for the sake of
an annual fee (that being your Prime subscription) has a central platform
where they can access a wide variety of services and products at their
ease and with confidence in Amazon’s established reputation. As this
service becomes more and more engrained amongst users, loyalties to
competitors will increasingly be challenged – simply, why go to four
places when one does it all?”

Miller continues: “While on paper these plans are impressive there are
questions Amazon will need to address as these markets often entail more
complex service demands and delivery requirements.”

Services like Handy and Hassle are dominating players in the homecare
market. Deliveroo, has developed a leading position in London’s
‘last-mile’ food delivery market, but this has recently seen threats from
Uber with the entry of UberEats. Meanwhile, many of the big supermarkets
maintain grocery delivery services. Ocado, the online grocery specialist
which supports Morrisons’ website, saw its shares fall by 8.5 per cent in
the wake of the Morrisons news.

As Amazon refines and expands its services, these incumbent players will
likely need to innovate to remain competitive. Miller expands on some of
the options available to them: “It’s clear from the diminished outlook on
Ocado that Amazon is a major menace to all players in the food delivery
market. Any company seeking to compete with Amazon in this market will
need to match it on convenience and come close to it on the variety and
breadth of its offering.

“This could be done through innovations in a number of areas. Amazon has
set a forceful example here with its partnership with Morrisons, and a
fast-follower strategy could be appropriate -  creating a more compelling
offering through unusual partnerships. For example, a ‘last-mile’
deliverer such as Deliveroo could partner with a supermarket to offer
grocery shopping and takeaways in one integrated platform. One service
providing a weekly shop and an evening curry through the same account
could be a powerful convenience offering to rival Amazon’s combination of
Restaurants and Fresh.

“Moreover, in this theoretical example, the supermarket benefits from
Deliveroo’s expertise in ‘last-mile’ delivery, whilst Deliveroo gets
access to a wider customer base. This demonstrates how unlikely
partnerships could provide a route to superior service in delivery.
Joining forces with local transport businesses, such as taxi firms, could
also provide a boost to delivery speeds. Either way, thinking laterally
and tapping into pre-existing networks could help companies to compete
with Amazon.

These ideas, however, do not come without their own obstacles, and Miller
commented on some of these: “These kind of innovations would undoubtedly
bring a number of logistical challenges, not least the alignment of the
delivery chain to enable the fastest and best possible experience for the
customer, as well as the coordination of logistics and digital platforms
between two companies. However, approaching the problem from this angle
could prove vital for any company attempting to see off Amazon – a giant
with huge resources and clout behind it.”

 

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Jun 11, 2021

NTT DATA Services, Remodelling Supply Chains for Resilience

NTTDATA
supplychain
Supplychainriskmanagement
Procurement
6 min
Joey Dean, Managing Director of healthcare consulting at NTT DATA Services, shares remodelling strategies for more resilient supply chains

Joey Dean, the man with the coolest name ever and Managing Director in the healthcare consulting practice for NTT DATA and is focused on delivering workplace transformation and enabling the future workforce for healthcare providers. Dean also leads client innovation programs to enhance service delivery and business outcomes for clients.

The pandemic has shifted priorities and created opportunities to do things differently, and companies are now looking to build more resilient supply chains, none needed more urgently than those within the healthcare system. Dean shares with us how he feels they can get there.

A Multi-Vendor Sourcing Approach

“Healthcare systems cannot afford delays in the supply chain when there are lives at stake. Healthcare procurement teams are looking at multi-vendor sourcing strategies, stockpiling more inventory, and ways to use data and AI to have a predictive view into the future and drive greater efficiency.

“The priority should be to shore up procurement channels and re-evaluate inventory management norms, i.e. stockpiling for assurance. Health systems should take the opportunity to renegotiate with their current vendors and broaden the supplier channel. Through those efforts, work with suppliers that have greater geographic diversity and transparency around manufacturing data, process, and continuity plans,” says Dean.

But here ensues the never-ending battle of domestic vs global supply chains. As I see it, domestic sourcing limits the high-risk exposure related to offshore sourcing— Canada’s issue with importing the vaccine is a good example of that. So, of course, I had to ask, for lifesaving products, is building domestic capabilities an option that is being considered?

“Domestic supply chains are sparse or have a high dependence on overseas centres for parts and raw materials. There are measures being discussed from a legislative perspective to drive more domestic sourcing, and there will need to be a concerted effort by Western countries through a mix of investments and financial incentives,” Dean explains.

Wielding Big Tech for Better Outcomes

So, that’s a long way off. In the meantime, leveraging technology is another way to mitigate the risks that lie within global supply chains while decreasing costs and improving quality. Dean expands on the potential of blockchain and AI in the industry

“Blockchain is particularly interesting in creating more transparency and visibility across all supply chain activities. Organisations can create a decentralised record of all transactions to track assets from production to delivery or use by end-user. This increased supply chain transparency provides more visibility to both buyers and suppliers to resolve disputes and build more trusting relationships. Another benefit is that the validation of data is more efficient to prioritise time on the delivery of goods and services to reduce cost and improve quality. 

“Artificial Intelligence and Machine Learning (AI/ML) is another area where there’s incredible value in processing massive amounts of data to aggregate and normalise the data to produce proactive recommendations on actions to improve the speed and cost-efficiency of the supply chain.”

Evolving Procurement Models 

From asking more of suppliers to beefing up stocks, Dean believes procurement models should be remodelled to favour resilience, mitigate risk and ensure the needs of the customer are kept in view. 

“The bottom line is that healthcare systems are expecting more from their suppliers. While transactional approaches focused solely on price and transactions have been the norm, collaborative relationships, where the buyer and supplier establish mutual objectives and outcomes, drives a trusting and transparent relationship. Healthcare systems are also looking to multi-vendor strategies to mitigate risk, so it is imperative for suppliers to stand out and embrace evolving procurement models.

“Healthcare systems are looking at partners that can establish domestic centres for supplies to mitigate the risks of having ‘all of their eggs’ in overseas locations. Suppliers should look to perform a strategic evaluation review that includes a distribution network analysis and distribution footprint review to understand cost, service, flexibility, and risks. Included in that strategy should be a “voice of the customer” assessment to understand current pain points and needs of customers.”

“Healthcare supply chain leaders are re-evaluating the Just In Time (JIT) model with supplies delivered on a regular basis. The approach does not require an investment in infrastructure but leaves organisations open to risk of disruption. Having domestic centres and warehousing from suppliers gives healthcare systems the ability to have inventory on hand without having to invest in their own infrastructure. Also, in the spirit of transparency, having predictive views into inventory levels can help enable better decision making from both sides.”

But, again, I had to ask, what about the risks and associated costs that come with higher inventory levels, such as expired product if there isn’t fast enough turnover, tying up cash flow, warehousing and inventory management costs?

“In the current supply chain environment, it is advisable for buyers to carry an in-house inventory on a just-in-time basis, while suppliers take a just-in-case approach, preserving capacity for surges, retaining safety stock, and building rapid replenishment channels for restock. But the risk of expired product is very real. This could be curbed with better data intelligence and improved technology that could forecast surges and predictively automate future supply needs. In this way, ordering would be more data-driven and rationalised to align with anticipated surges. Further adoption of data and intelligence and will be crucial for modernised buying in the new normal.

The Challenges

These are tough tasks, so I asked Dean to speak to some of the challenges. Luckily, he’s a patient guy with a lot to say.

On managing stakeholders and ensuring alignment on priorities and objectives, Dean says, “In order for managing stakeholders to stay aligned on priorities, they’ll need more transparency and collaborative win-win business relationships in which both healthcare systems and medical device manufacturers are equally committed to each other’s success. On the healthcare side, they need to understand where parts and products are manufactured to perform more predictive data and analytics for forecasting and planning efforts. And the manufacturers should offer more data transparency which will result in better planning and forecasting to navigate the ebbs and flows and enable better decision-making by healthcare systems.

Due to the sensitive nature of the information being requested, the effort to increase visibility is typically met with a lot of reluctance and push back. Dean essentially puts the onus back on suppliers to get with the times. “Traditionally, the relationships between buyers and suppliers are transactional, based only on the transaction between the two parties: what is the supplier providing, at what cost, and for what length of time. The relationship begins and ends there. The tide is shifting, and buyers expect more from their suppliers, especially given what the pandemic exposed around the fragility of the supply chain. The suppliers that get ahead of this will not only reap the benefits of improved relationships, but they will be able to take action on insights derived from greater visibility to manage risks more effectively.”

He offers a final tip. “A first step in enabling a supply chain data exchange is to make sure partners and buyers are aware of the conditions throughout the supply chain based on real-time data to enable predictive views into delays and disruptions. With well understand data sets, both parties can respond more effectively and work together when disruptions occur.”

As for where supply chain is heading, Dean says, “Moving forward, we’ll continue to see a shift toward Robotic Process Automation (RPA), Artificial Intelligence (AI), and advanced analytics to optimise the supply chain. The pandemic, as it has done in many other industries, will accelerate the move to digital, with the benefits of improving efficiency, visibility, and error rate. AI can consume enormous amounts of data to drive real-time pattern detection and mitigate risk from global disruptive events.”

 

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