Comment: Click and Collect – The crucial components for success
Retail supply chains are being transformed by the digital revolution. At the heart of this is ecommerce, driven by the digitally savvy consumer seeking a transparent, low cost and customised service. As consumers increasingly hold the power, retailers all over the globe are having to rethink what they can actively do to be fit for today’s purpose while futureproofing their business for tomorrow. Those that don’t, face an uncertain future and potentially follow the recent casualties that are disappearing from our high streets.
So, what can retailers do? The very simplistic answer is clearly to offer more convenient services. However, these need to be captivating, in line with expectations and at the same time, affordable. They must be built on a collaborative business model while underpinned by robust processes and appropriately technology enabled. A pivotal service that most retailers are focusing on is a first-class Click and Collect offering. Long hailed as revolutionary but a nice to have, Click and Collect, can be more cost-effective than home delivery, providing greater engagement with the consumer, increased store footfall and sales potential re-energising the store estate.
However, for the consumer, the reality must live up to the expectation. Failure in execution, especially if repeated, is potentially fatal for the brand. Today’s consumer is more savvy and transient than ever before and if you are lucky, you have one chance to get it right! So, what are the underlying fundamentals of getting click and collect right? Aoife Oconnell, Retail Business Consultant at Zetes explores some of the key considerations for a competitive and consistent Click and Collect offer.
A frictionless and transparent service
Consumers expect a seamless and frictionless experience across all channels, whether that’s in-store, home delivery or click and collect. Inventory accuracy and visibility is crucial - retailers must know with full confidence the location of their products in real-time – whether in the DC, the back of the store, the shop floor or even in-transit. They must also provide their customers the transparency they need to fulfil a purchase and track its progress with ease and crucially mitigating potential risks of losing the sale. As it stands, 92% of consumers believe it is important to receive status updates, yet less than a third of retailers are able to achieve this information.
Visibility is king when it comes to supply chain success. So, it’s somewhat surprising to see that 62% of retailers don’t have access to real-time information regarding product availability, and 72% lack appropriate capability to alert customers about an order fulfilment issue or delivery[i].When a home delivery or click & collect order is fulfilled from the store, for example, there is a very real chance the product apparently in stock could be sold by the time a Store Assistant attempts to fulfil the order – resulting in one seriously unhappy customer.
Full visibility of product, people and locations is pivotal when it comes to addressing these retail challenges. With the right information, a retailer can implement processes that deliver the right customer experience – from giving shoppers the ability to collect from a variety of stores to checking stock availabilities within a specific geographical range. Accurate inventory management is equally important.
Equipped with real-time, end-to-end visibility, a retailer can make proactive and fully-informed decisions. Accurate knowledge of where a product is, from the initial order to delivery; retailers can manage inventory effectively and efficiently and fulfil orders from the most appropriate place, whether that’s from the store or a distribution centre. Additional benefits come in the form of increased stock availability and reduced waste.
Using third-party carriers will also continue to play an important role in responding to consumer demand to collect orders from ever-more convenient locations. However, a retailer needs to understand the importance of being transparent about who is accountable for what and when. A carrier not only plays a role in delivering the order it is also an extension of the retailers’ brand experience and promise.
An efficient operation requires an integrated and collaborative approach. A carrier’s capacity, ability to inform and meeting performance expectations are fundamental. If a customer feels let down by a poor experience, on just one occasion, it directly affects brand perception and future loyalty.
Unless the underlying fundamentals of retail are in working order, a retailer will always be in danger of disappointing customers when it comes to implementing the latest sales and delivery offerings. And that’s not limited to just Click and Collect. Retailers need to ensure that the basic principles of the retail model are upheld.
As current research has shown, despite the increasing popularity of online shopping, many consumers still like to visit a store and Click and Collect gives retailers the opportunity to present an option that fits with the way people want and like to shop, increasing and sustaining footfall in-store, opening opportunities to further engage a customer and upsell.
The important thing to remember is that consumers want choice but they also value relevant, accurate and timely information. Rather than a blanket ‘out of stock’ response, a retailer should aim to be able to inform the customer of alternative fulfilment options to close the sale in the “buying moment” and meet their time window. Those retailers that take a step back to get the basics right will be the ones who successfully secure the sale, time and time again.
NTT DATA Services, Remodelling Supply Chains for Resilience
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.
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.”