May 17, 2020

Retail trends transforming the supply chain

Supply Chain
Kees Jacobs, Vice President, G...
4 min
Consumer and social demands are having a dramatic impact on the retail supply chain, driving companies toward a more transparent supply chain – one ro...

Consumer and social demands are having a dramatic impact on the retail supply chain, driving companies toward a more transparent supply chain – one rooted in social ethical and environmental concerns – while also requiring them to deliver more personalized and customized experiences.

Companies need their supply chains to be more connected, scalable and transparent in order to respond to these emerging consumer trends and demands.

Ahead of the festive season, we spoke to almost 7,000 consumers across the US, UK, France, Germany and Spain to understand their expectations of retailers. From the results it’s clear supply chain transformation will be essential to meeting consumer expectations.

Not surprisingly, the month before the festive holidays is peak shopping time for consumers, with 30% of shoppers typically starting their shopping from that point, while just 7% will leave it to one week ahead of the big day.

For retailers battling it out for sales this year, the basics of supply and demand are still winning factors. Consumers still consider variety/range of stock available (34%) and convenience of an outlet’s location (21%) as the primary factors for choosing to shop with one retailer over another (when price is not a factor).

 

Sustainable supply

Sustainability has been high on the agenda this year across all sectors. The supply chain has huge potential to improve the environmental rating of products and retailers.

This trend is being driven by consumer-awareness, and when asked in our research where they would most like to see retailers invest this season, products/packaging which more environmentally friendly was the second most popular choice (behind reducing cost), with 21% of all respondents and 24% of those aged 18-24 selecting this option.

Across all countries, respondents in the UK were the most focused on sustainable packaging (29%), followed by Germany (21%), France (19%), the US and Spain (14% each).

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Covering all channels

As consumers diversify where they shop, it’s increasingly important that retailers can adapt their supply chains to supply all these channels. Physical stores are still set to receive a significant amount of festive spending, with 39% of consumers planning to spend most of their money in-store during the holiday season. Online retailers, which offer access to multiple different brands, will receive the sizable shares - with 32% planning to spend most of their money on these websites.

Gearing your supply chain to meet these diverse expectations is essential, from how you manage deliveries in-store to being ready to distribute orders no matter what channel they arrive via.

 

From delivery to door

Giving retail and consumer product customers a superior delivery experience without impacting profitability is key for retailers this year. Ensuring the final leg of the journey is now more significant than ever. These last mile delivery expectations are driving the final element of supply chain transformation, but our research found that quality of experience is more important than just time. While some online retailers continue to offer faster delivery options such as overnight and same day, consumers generally expect delivery/collection within three working days to be the norm (33%).

Retailers with an eye on the future also need to look at the delivery expectations of younger generations (18 – 24-year olds), who, our research found, said that new types of delivery would improve their shopping experience. For example, 17% of 18 – 24-year olds said this would improve their experience (compared to 10% on average), while collection lockers (27% compared to 16%) and same day home delivery (33% to 27%) were also particularly popular with younger shoppers.

Retailers need to adapt their supply chain processes to ensure that they don’t fail during the last mile of delivery, making sure products get to collection points or straight to the door in a cost-effective way.

 

The supply chain is the essential piece of the festive puzzle

The festive season is key to retail success, as the most important quarter for retail sales. It could even be make-or-break for some retailers.

The supply chain is going to be essential to meeting shopper expectations and ensuring that all the hard work retailers put in from buying decisions to the in-store experience is realized. Even in today’s incredibly complex retail environment, where consumers value variety of products, environmental sustainability and want to shop any time and any place, retailers need to be supplying the right product at the right time at the right price.

By Kees Jacobs, Vice President, Global Consumer Products and Retail Sector at Capgemini

 

For more information on all topics for Procurement, Supply Chain & Logistics - please take a look at the latest edition of Supply Chain Digital magazine.

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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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