UPS and The Golden rules of retail
Failing fast, deploying minimum viable products and pivoting when necessary are what most entrepreneurs consider standard protocol these days. Much of this lean startup methodology has crept its way into the corporate world. We see the effects of this mindset in companies’ logistics strategies across multiple industries, with many e-commerce giants racing to provide more goods to more people — and faster.
With delivery speeds increasing and new technologies on the horizon, consumers’ expectations for same-day deliveries and custom delivery experiences will only continue to rise. As a result, millions of small- and medium-sized retailers feel left behind. Current trends raise a significant question for these businesses: Are retailers rushing too quickly into possible solutions — some of which are tied to technology — instead of thinking first about their customers’ needs?
For many, the answer is yes. To compete with their established online counterparts, many retailers are latching on to new technologies that may be quick fixes but aren’t good for their customers in the long run. Failing to understand customers’ needs is one of the biggest contributors to product and service failure. Fortunately, there are ways to compete in today’s rapidly changing environment while embracing trends in final-mile delivery.
As the manager of the UPS Access Point Network during the program’s beta test, I talked to business owners and consumers every day. I quickly learned that both groups are struggling in today’s retail environment. To thrive in an ever-changing world dominated by the Internet of Things, business owners should focus on the following three friction points found in most retail business models.
Make Delivery Convenient for Your Customers
Demand for package delivery away from the home is strong. Each day, UPS delivers tens of thousands of packages to UPS Access Point locations, and consumer surveys show that 35 percent of people buying products online prefer delivery to a location other than their home. Many of these people live in apartments or high-rise buildings in urban areas and aren’t home during weekday business hours. However, it’s not just being away from home during delivery that’s driving the shift to alternative locations.
Regardless, consumers want specific purchases delivered to specific locations. What if Robin wants a dozen pink scarfs delivered to a Susan G. Komen fundraiser at a park across town or Tristan wants a present delivered to a local pub for a birthday party? Both of these buying experiences require alternative delivery locations but for different reasons. But neither of the customers would choose the retailers’ brick and mortar stores (or their homes, even via courier) as their preferred delivery location for these specific purchases if other options were available to them.
Failing to understand customers’ needs is one of the biggest contributors to product and service failure.
Don’t Outthink the Process
As more people look to alternative delivery locations and same-day delivery, most retailers still don’t fully understand why customers are straying from the normal delivery process and how their needs may change from one purchase experience to the next. Technology is enabling new solutions before the customer need has been fully defined.
As a small business owner, it’s imperative to fully understand the buying experiences across various customer segments and how to be included in the consideration set every time. Don’t overwhelm your customers by trying to force selfies, social media apps, or the latest payment trend into the buying experience — focus instead on your customers’ needs and the best way to meet those needs.
Don’t Jump at Every Chance to Change the Customer Journey — Consider Selective Changes
When drones are eventually approved for commercial use, it’s doubtful they will help most small retailers. But with so many people now using wearables, such as a Fitbit or an Apple Watch, there may be new opportunities. Retailers may work with a logistics company to combine data from these devices with geo-location capabilities, developing a flexible delivery service, and when combined with near-field communication, retailers can enhance their customers’ omni-channel shopping experience.
Speak with your customers that own a wearable device and learn how they use them. In addition, consider investing in a wearable device and see if there are new ways you can help your customers.
The retail space is changing at a rapid pace, and small businesses face an uphill battle when competing in a market dominated by big data. Small business owners should embrace their customers’ needs and the unique experience they can provide — both in store and within the delivery experience — to delight customers. In today’s hyper-competitive retail environment, failing fast may be the mantra of most companies, and for the most part, that mindset is typically appropriate. However, retailers must not lose sight of their customers’ needs when experimenting with the customer journey.
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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.”