Atheon Analytics: The data asset
The grocery retail supply chain is fascinating, incredibly complex and increasingly important. Yes, traditionally retailers have focused all their energies on analysing shopping basket data to better understand consumer behaviour, but times are changing. Retailers are rapidly realising that whenever we walk into a store, we come face to face with the proficiency, or lack thereof, of their supply chain. Grocery retail supply chains are personal for all of us.
As consumers, we’re increasingly choosing food options we see as fresher and healthier than traditional packaged foods, placing pressure on the critical perishable categories. Added to growing concerns over food wastage, potential market disruption around Brexit and global trade wars, and retailers are coming under mounting pressure to address their grocery supply challenges.
Understanding the grocery ‘flow-of-goods’ is key to driving quicker and better decisions, minimising cost and maximising availability. It is something most retailers rely on their suppliers to carry out, however, they are often expected to do so without a consistent, usable set of trusted data - let alone actionable insights.
The positive news is that supply chains are rich in good-quality data and that applying modern analytics to that data offers immediate insight, leading to high-value benefits that can be quickly achieved.
Data analytics key to digital transformation
“Analytics is the discovery, interpretation and communication of meaningful patterns in data, and the process of applying those patterns towards effective decision making.”
Despite the current hype cycle around machine learning and AI, analytics is available in many different forms. Within the grocery supply chain, one of its most important functions is to make it easier for retailers and suppliers to collaborate. It should provide a platform that enables better communication between suppliers and retailer teams - across buying, merchandising and supply chain - to share intelligence, learn from past issues and improve purchasing accuracy.
For the majority of organisations, visual analytics is an effective starting point for putting their data into a visible form that highlights important features, including commonalities and discrepancies.
The question then is: what data?
The data asset
All analytics rely on well-organised, good-quality data. Retailers measure performance at each step in a product’s journey up to the point of sale:
Supplier service level into depots, and stock levels therein;
Depot service level to store, and stock levels at store;
Availability, sales, markdown and waste.
They make this raw information available to suppliers in varying shapes and sizes through proprietary data portals. Suppliers are expected to download, interpret and then action the raw information from each retailer’s portal in order to understand their flow-of-goods, improve their product performance and increase sales.
The problem is that this data is poorly organised and therefore difficult to use. In today’s “data economy”, this is fundamentally flawed behaviour.
Treated as a business asset, like property, equipment or cash, we can manage data to provide unprecedented levels of insight, but only if that asset can be used to create value. If we want to drive better, more efficient, less wasteful supply chains we need to deliver the information that suppliers need, in a manner that they can use. It needs to be accurate, consistent, frequently updated, and accessible. It also needs to be quick and easy for suppliers to embed within their decision-making processes, especially if we use this information to measure performance.
Family-run Thatcher’s Cider has embraced data as a business asset. In 2018, the supplier started working with Atheon Analytics’ SKUtrak and has transformed its relationship with key retailers including the Co-op.
Chris Milton, Off-Trade & Export Sales Director, Thatchers, explains: “With SKUtrak, we can track in real-time what’s happening from the point the stock leaves the factory, to the point it’s sold off the shelf to the consumer. It’s enabling us to make collaborative, meaningful business decisions with the Co-op, using the exact same information. Because it allows us to talk to the Co-op across all the various disciplines, we have been able to make our supplier relationship slicker, more efficient, and ready to deliver the right stock to the right place at the right time.”
Optimisation is a noble goal that can never be reached…
The search for truth has dominated the lives of Eastern and Western philosophers over the past few millennia, and most have concluded that it’s a psychological illusion. In modern-day business, the same applies: operationally and technologically, given its ever-changing nature, how can a ‘Single Version of the Truth’ (SVotT) exist even minute to minute?
Recognising that SVotT is unattainable in practice, it remains a valuable guiding principle to the data-driven business. The principle reflects that:
Anything optimal at any point in time will need re-tuning as conditions change;
Continuous improvements head towards optimal through successive, directed changes;
Decisions based on insight and made with certainty can only be judged as right or wrong after their effects are fully clear.
The best-functioning supply chains will evolve in a business environment where senior managers adopt and encourage a ‘test and learn’ cycle, allowing decisions made with certainty to be proven right or wrong without judgement on the decision maker. In this way, it becomes easy and culturally acceptable to reverse decisions based on further evidence.
These principles, employed broadly and managed effectively across the grocery retail supply chain, enable retailers and suppliers to better, faster, and more thoroughly understand their mutual challenges and opportunities, rather than follow traditions. It is through a data-driven approach that supply chains can be truly transformed.
Upgrading RFID and Automated Track and Trace Solutions
During the COVID-19 pandemic, global supply chains faced the challenge of rapidly adjusting their business priorities to new customer preferences. Local supplier backlogs, winter storms, and the Suez Canal backup in March underscored the need for efficiency and visibility across the supply chain.
According to Christof Backhaus, Digital Lead Product Supply and Smart Label Project Lead at Bayer, companies must now place critical importance on tracking and tracing their products. “All large enterprises in the world dealing with finished goods,” he said, “seek functional and technical solutions to real-time channel inventory.”
Indeed, RFID’s real-time tracking data allows executives to make quick, well-informed decisions in moments of supply chain crisis - and rather than unfolding across days or weeks, it only takes a matter of minutes.
Why does RFID remain relevant despite digital disruption?
Essentially, RFID uses radio frequency waves to transfer data wirelessly between a scanner and a tag. In contrast to barcode technology, which requires a stationary scanner, RFID tags can be pinged from anywhere in the world, allowing companies to track real-time movement through the supply chain. RFID tags can also scan unique SKU numbers and distinguish between varying product sizes, colours, and styles: a critical feature for increasingly personalised end-user products.
Though the first patent for RFID tags appeared in 1973, higher accuracy rates, lower costs, and advances in sensor and data technology have made it newly accessible to a wide range of companies. Today, the technology is used in logistics networks, manufacturing and delivery networks in the pharmaceutical industry, and any business where efficiently tracking and monitoring product location is critical: raw materials, consumer products, cars, electronics, retail, and agriculture.
What are the key benefits?
Overall, automated track and trace solutions keep labour costs low, optimise operating costs, mitigate security risks, use capital effectively, and assist companies in adhering to regulatory requirements.
Below are three in-depth dives into how RFID benefits major industries:
- Pharmaceuticals: RFID tags help manufacturers safeguard sensitive products such as vaccines, tracking where they are and when they will arrive in real-time. Sensors closely monitor temperatures to ensure regulatory compliance. If anyone tampers with a shipment, the sensors alert the company.
- Logistics: RFID identifies process gaps and frequent anomalies by monitoring a product’s lifecycle from shipment to delivery. This data helps decision-makers predict the most efficient routes and therefore optimise their distribution schedules.
- Retail: Sensors help guard shipments against theft and provide critical intelligence when shipments go missing. Before adopting RFID technology in 2203, UK retailer Marks and Spencer relied on barcodes to scan inventory. When they made the switch, their productivity increased from a maximum of 400-600 items scanned per hour to up to 15,000 items scanned per hour. Building on their initial success, the retailer expanded the use of the technology and is still using it today.
Regardless of the industry, RFID promotes accuracy, immediacy, and efficiency. Companies reduce human error by automatically scanning products, keep track of inventory even in geographic locations with poor connectivity, and help streamline warehouse operations by identifying exact product locations.
Which recent innovations have changed the game?
With recent developments in cloud technology and IoT, a multitude of cloud-based alternatives have emerged to challenge traditional RFID technology. One of these cutting-edge solutions is Sony’s Smart Label - an intelligent shipping label that runs on AT&T’s global cellular network.
As with any good innovation, Sony’s proprietary technology started with a customer need ready to be solved: the Bayer Crop Science Division lacked an international IoT solution that could track seed products from start to finish throughout its distribution channel. Millions of dollars of revenue stood at stake, so Bayer turned to Sony to develop a smart label that would set the organisation up to manage its supply chain with end-to-end visibility.
Sony’s printable and disposable adhesive label allows companies to track the condition and location of their products worldwide and act upon the vast amounts of data it collects. The process is simple: the label activates when attached to the package, connects to AT&T’s secure LTE-M network, and sends data to the Smart Label Cloud in real time.
In sharp contrast to other smart label solutions that place trust in a patchwork combination of Wi-Fi, radio-frequency identification, and other limited coverage connections, the Sony Smart Label connects solely through a secure and universally-available cellular network. “Working with Sony,” says Robert Boyanovsky, the vice president of Mobility, IoT and 5G at AT&T, “we provide full visibility of every item shipped.”
Most importantly for companies on the edge, the Smart Label integrates with existing enterprise systems to achieve full visibility, thus adding value without disrupting supply chain process flow.
Why is this important now?
Companies that previously delayed introducing RFID and other automated track-and-trace technologies can capitalise on recent developments that lower costs, improve accuracy, and supercharge traceability.
Clearly the technology has value in today’s uncertain global marketplace, and can help decrease the costs of tracking goods. To quote Christof Backhaus, the Project Lead at Bayer, “the Smart Label indicates how much product is in the market, from the packaging line to the end customer.” Companies no longer have to spend a small fortune to take advantage of recent IoT developments. “Due to the technical composition [of the label],” Backhaus explains, “we don’t require additional infrastructure, manual scanning, or other expensive tools.”
Over the decades since RFID was first introduced, support for introducing it to company supply chains has also improved. AT&T’s IoT Professional Services Organisation, for example, supports companies through the end-to-end design and integration process--from installation to deployment and project management.
Companies that invest in traceable and visible supply chain solutions stand the best chance of survival, adjusting in real-time to natural disasters, shipping backups, and slowed-down supplier turnarounds as a result of the global pandemic. “Smart Label promises to help businesses like Bayer realise the full potential of the IoT,” says AT&T’s Boyanovsky. “[We can] deliver improvements in revenue and cost savings and make supply chains more efficient.”
Certainly, company executives will be hard-pressed to ignore recent innovations. In an age of uncertainty, RFID and its challengers herald a welcome sense of supply chain security. The next step? “Our sales team,” Boyanovsky adds, “is prepared to engage with prospective customers now.”