How Brands Can Overcome the Logistics of Going Global
Brexit and its long-awaited impact have once again been the talk of the nation in recent weeks. This time, however, time is well and truly running out. With just weeks left for final Brexit negotiations to take place, and , fears of a no-deal scenario continue to grow.
Retailers have faced a myriad of challenges this year – from local lockdowns and a , to heightened competition online. Now, as we near the end of the year – Brexit chaos, which has been mounting in the background, is set to cause even more disruption to UK supply chains. Just recently, retailers shipping from Felixstowe Port in Suffolk witnessed” due to pre-Brexit stockpiling in the lead up to Christmas. This provided just a glimmer of the future challenges the UK could face over the coming months.
Not only are current eCommerce operations going to be impacted, but future plans for cross-border growth are likely to have been quashed amid current Brexit uncertainty. Despite the opportunity for online expansion, which has become increasingly evident following the pandemic, expanding across borders – in times of such economic and political uncertainty – can be extremely daunting. In fact, warned that Brexit uncertainty was already hitting their ability to invest and plan for the future.
Growth in the face of uncertainty
As we near the end of 2020, many brands will be feeling conflicted between a vision for growth and the need to batten down the hatches whilst waiting for the imminent storm to pass. The closure of physical stores amid local and national lockdowns has seen the global in recent months – highlighting a significant opportunity for retailers who are brave and agile enough to pursue it. In fact, according to , 53% of consumers had shopped more online during the pandemic than they had previously, with more than 77% agreeing that they expect to continue purchasing online more once lockdown is over. Even more interestingly, a quarter of shoppers said they had tried new online retailers due to lockdown – indicating the potential for new and emerging players.
That said, a number of challenges lay in wait for brands with operations across the UK and EU, many of which have the power to crumble a business if not accurately assessed and prepared for.
So, as we enter the final Brexit countdown, just how prepared are brands for the months ahead? And, with growth online a key strategy for many brands next year, how can retailers overcome the logistics of upscaling their online offering beyond the UK?
Preparing for the unknown
Despite a twelve-month transition period, preparing for the unknown has by no means been an easy task. In fact, PFS’ indicates that despite the end of the EU Exit transition period being less than six weeks away, little more than half (54%) of UK retailers believe they are either fully prepared, or will be for Brexit by the end of 2020. And, surprisingly, despite two-thirds (67%) of retailers believing Brexit could cause an order backlog in the first quarter of 2021, nearly a third (29%) of UK online or omnichannel retailers have admitted that they are still yet to make any preparations at all.
When it comes to managing any successful omnichannel retail operation, business continuity is essential. Being aware of any kinks that could form in the supply chain, such as delays at customs and unknown taxes and tariffs, is therefore vital to ensure the business can continue to run smoothly. If those kinks aren’t ironed out, customers will soon feel the impact.
The retailers that are putting measures in place now, such as using to get goods to customers on time, will be those that not only survive but thrive post-Brexit. By utilising a mixture of distribution centres, micro-fulfilment centres and even brick-and-mortar locations, brands can effectively bring the product closer to consumers and diversify their inventory pull – something many retailers are already seeking to do in the wake of COVID. Reviewing where customers are located and determining how inventory should be dispersed across regions can vastly improve retailers’ chances to get products where they are most needed and maintaining vital customer satisfaction levels.
Expansion is still an option
Whilst multinode fulfilment options can enable effective expansion across Europe, extensive VAT reporting requirements involved in processing international orders will be another roadblock faced by brands looking for international growth. In this instance, implementing a can be a useful solution – relieving the retailer of upcoming VAT challenges. By enlisting a third-party MoR, products are then sold in the MoR’s name on the retailer’s behalf. Essentially, once the customer presses the ‘buy now’ button, the MoR instantly buys the product from the retailer meaning the sale is managed through them, in a way that is transparent to the customer. By taking ownership of the product at this stage, tax responsibilities fall to the MoR rather than the brand, eliminating the need to the retailer to be VAT registered in multiple countries and removing the potential headache associated with VAT administration.
This year has been full of both challenge and opportunity for retail. And, whilst many brands have battered financially by the constraints brought on by COVID-19, there is a glimmer of hope on the horizon for growth. Whilst we are already seeing the potential impact of Brexit on our supply chains, full border controls on goods entering the UK has been delayed until – providing retailers some relief from the full force of Brexit. Retailers should be using this time to build resilience into their supply chains, ensuring all options are evaluated and no stone left unturned. Whilst 2021 is set to bring further challenge, those who do prepare now, will be ready to reap the online growth opportunities on offer.
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.”