Before Amazon, the route to the end-consumer went via physical stores. Shoppers assumed the responsibility of selecting items they wanted, placing them in their basket and taking the purchase home.
With new delivery and pickup options, the modern shopping journey is far more complex. Between the ways shoppers can order products, to the ways those orders are fulfilled and the places from which they are sourced, there are now over 2,800 possible routes to consumers.
Significantly, most of these are more convenient for the consumer, but increase burdens on retailers and suppliers. They also increase costs when sales and margins are already under pressure. As paths to purchase change, supply chain capabilities must also transform, enabling legacy retailer and supplier infrastructure to support shoppers in accessing products however, whenever and wherever they want them.
A more agile supply chain is required to meet demand
Most leading retailers are operating multiple fulfilment models designed to reach different shoppers groups, but all aim to provide the quickest, most convenient and flexible options for consumers. Distribution to these various fulfilment models demands highly agile supply chains.
With distributed across supply chains via multiple fulfilment models, retailers are investing in inventory visibility to manage complexity, while limiting stock requirements. Excess inventory held in warehouses adds cost that significantly impacts retailer profitability.
Suppliers able to reliably and successfully forecast demand, and match manufacturing and stock levels to that demand, will enhance end-to-end supply chain efficiency and build better partnerships with retail clients. Both preparing for peak purchasing periods and being responsive to demand in real time as fulfilment promises become even faster are key to ensure on-time delivery of orders to end-consumers.
Legacy supply chain systems, policies and processes that underpinned last-generation retail growth are those now impairing the agility required to succeed in the new digital era. Suppliers’ internal organisational structures must be optimised to engage supply chain experts across teams. They must also boost engagement with retailer customer supply chain teams. This calls for the breaking down of internal and external silos and the further development of supply chain talent and expertise.
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- Implementing supply chain automation will help accelerate seamless transport of products through the chain and enable faster deliver to the consumer. Although demanding high initial cost, automation should be viewed as a long-term investment that will improve responsiveness and reliability and ultimately drive down costs.
- Explore partnerships and collaborations that leverage external expertise and infrastructure to accelerate progression of new supply chain capabilities. Expertise in data analytics, forecasting and demand planning are especially important.
- Align internal organisational structures to supply chain processes and goals. The supply chain affects nearly all aspects of the business, making communication between supply chain teams and other functions key.
- With more fulfilment routes than ever, it is important to align products and packaging to point of purchase (mobile, web or physical shelf); to how the product is being picked (packaging compliant with automated warehousing); to transport method, and to the end-consumer (frustration-free packaging for unboxing online orders).