The race is on: delivering faster service to the customer, without losing control
From drones to GPS tracking, customer fulfilment strategies are becoming ever more innovative as retailers fight for every available consumer pound. During 2017, retailers will continue to experiment with on demand delivery and explore new ways to compress the delivery timeframe for both direct-to-customer and click-and-collect.
However, as Alex MacPherson, Solution Consultant Manager, Manhattan Associates insists, in the race to deliver ever faster service to the customer, it is essential to do so, whilst retaining control over the customer’s entire shopping experience.
Speed versus the Customer Promise
The speed with which retailers can fulfil orders continues to compress – with an increasing number of high street and online retailers already offering near real-time click-and-collect options. While drone-based delivery is currently more hype than reality in the UK, it continues to tantalise retailer and consumer alike. In the meantime, though, we are already seeing on-demand delivery apps from the likes of John Lewis and parcelpal, as well as the launch of new fulfilment innovations such as Asdatoyou, which allows Asda’s retail partner customers to receive goods faster – via collection in a nearby Asda store.
For many, these innovations are considered a necessary investment, not least due to the combination of increasingly high consumer expectations and the need to impress in order to win share of consumer spend. However, they bring a degree of risk, with the majority of retailers struggling to create a slick and seamless customer experience – and it is in the last mile of the delivery process where far too often the entire process falls down. A fantastic online experience and a great click-and-collect offer – with text and email notification when the order is ready –are great, but what happens when the customer arrives in store to collect the order? With wait times as long as 30 minutes, this is where customer satisfaction often falls off a cliff.
Innovative fulfilment approaches are a source of competitive differentiation and can help drive loyalty, revenue and profitability. However, without the ability to successfully execute on every aspect of the order fulfilment process, retailers are opening themselves up to potentially significant brand reputational damage.
Placing In-Store at the Centre of a Successful Fulfilment Strategy
One option to improve the challenge of “the last mile” would be to embrace beacon technology in the store. With customer permission to connect to his or her mobile phone, the retailer will know the exact moment the individual enters the store and can automatically initiate the ‘move goods to customer service desk’ process. By the time the customer arrives to collect the order, it has either arrived at the desk or is well on its way – and the last few yards of the fulfilment process are as slick and transparent to the customer as the rest of the journey.
Grocery retailers will also need to consider new fulfilment methods as they experiment with ever-shorter order-to-delivery options. The use of mini warehouses to fulfil online orders across a multi-store region is simply not going to support sub-two or even sub-one hour delivery windows. Retailers will have to find an efficient way of using in-store fulfilment without negatively impacting the customer shopping experience.
Likewise, for fashion retailers, especially high end, the move towards same day fulfilment of online orders will also require the use of store stock. While offering a chance to win additional customers, this type of on-demand service will also require careful management of store inventory as well as the retailer’s in-store service capabilities.
To ensure a high quality in-store experience at the same time as getting good into the hands of consumers quicker, retailers in general will need to evolve the skills of their store associates so they can fulfil multiple roles not only as brand ambassador, sales convertor and advice giver but also as inventory seeker, stock picker, fulfilment organiser and checkout facilitator. The key is equipping them with the right tools and technology so they can execute seamlessly on all these tasks.
With an Enterprise Order Management solution, store staff can gain access to a real-time picture of available stock from across the network along with available fulfilment options, so a customer want never goes unfulfilled, a sales opportunity is never missed and customers receive their goods quickly and via the fulfilment option most convenient to them. With a complementary Clientelling Solution, store associates can look up wish-lists, preferences, and purchase history to serve up pertinent recommendations for cross-selling and up-selling. And an integrated Point of Sale solution can accelerate the check-out process by allowing a shopper to complete multiple transactions –including an item being returned, an in-store purchase, an item being delivered from a nearby store to the customer’s home later that day, and after applying a voucher or discount code–all with a single swipe of the credit card.
Given the continued lack of control over many of the logistics processes associated with offering innovative and ever-shorter fulfilment services, it is clear that many retailers are still in an experimental phase - but that is no excuse for risking any aspect of the customer experience. Compressing delivery times yet further is an inevitable strategy retailers will continue to pursue during 2017, but the real winners will be those that can deliver fulfilment innovation at the same time as ensuring a consistently great shopping experience at every point in the consumer’s buying journey– including the last mile.
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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.”