How Retailers Can Modernize Fulfillment

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Let’s face it, the supply chain as we once knew it has been forever changed. Just in the last few weeks, we’ve read about furniture deliveries and new iPhone sales being delayed due to Covid-19 outbreaks in China and Vietnam. Labor shortages have threatened holiday deliveries for many major retailers, and a shortage of shipping containers continues to delay the delivery of raw materials to manufacturers.

This crisis isn’t entirely new, but it certainly feels urgent. According to a 2020 Infosys Consulting Survey on the impact of the pandemic, 85 percent of supply chain executives saw a reduction in operations amidst the pandemic, while only 10 percent “felt prepared” to manage new challenges accompanying the global shutdown. To change this problematic course of increased supply chain inefficiencies as the retail industry continues to struggle, retailers will need to reevaluate their options and invest in digitizing the supply chain.

While initial and immediate investment will likely focus on ecommerce platforms and last-mile fulfillment, a more holistic approach is needed for long-term success and scalable growth. This approach must prioritize the first 10,000 miles of the supply chain as well. Retailers should start by determining next steps for product innovation, supply chain visibility and omnichannel capabilities.

Innovate On Processes Related to Product Development and Assortment

During Covid-19, we witnessed a massive shift in consumer behavior. Suddenly, comfortable clothes and home furnishing categories were top of mind for consumers newly stuck at home. This disruption challenged retailers to reimagine their assortments despite typical seasonal trends. While we certainly hope that the level of chaos, we felt in 2020 doesn’t repeat itself, retailers must position themselves to be better prepared in the future.

Brands should strive to form a multi-enterprise platform to connect with all manufacturing, delivery and sales partners for consistent and simultaneous collaboration. With this technology, brands can pivot assortments and create differentiated products without long wait times that cause brands to lag behind the curve as consumer preferences change. A multi-enterprise platform cuts time from the sampling and product development cycles and positions retailers to get product into distribution centers and stores earlier.

A multi-enterprise platform reduces what is known as the bullwhip effect. The phrase describes the phenomenon that occurs when there is a delay at any point in the product lifecycle, whether it be during product design, development, production, or distribution: slight delays and costs incurred at the start only increase the further you move downstream. To mitigate the bullwhip effect, retailers must stay agile to market changes to increase efficiency and meet customer demands.

Pursue Full Visibility into the Supply Chain

The next priority for supply chain resilience involves increasing visibility. Opening channels of communication helps retailers and their partners react swiftly to a variety of potential supply chain issues. Retailers need access to valuable third-party data streams, including tariff updates, order status, production and labor capacity, and materials cost and availability to accurately forecast the logistical and financial impacts of their supply chain.

By digitizing this process, supply chain leaders can reduce manual data input and tracking in spreadsheets and leverage automated, real-time data. With this up-to-date information readily available via a well-connected supply chain, partners and retailers will be equipped with the agility and resilience they need to effectively manage operational disruption, maintain profit margins, and achieve continuous and immediate supplier collaboration.

Bring Commerce Closer to the Consumer Through Omnichannel Retail

A connected supply chain also creates a better customer experience. With full knowledge of the capabilities of partners paired with visibility into all operations, retailers can find new opportunities. For instance, during the height of the pandemic, some retailers utilized dark stores as shipping centers to increase their fulfillment potential. Opportunities like this, or opting into a closer, more efficient, or more cost-effective manufacturing center, can improve delivery times and improve customer satisfaction.

Additionally, as customer preferences change and demand shifts, reliance on past sales data for assortment planning trends becomes increasingly unreliable. Assortment management should be dynamic, fluid, and based on the buying behaviors of the moment rather than an outdated version of the truth. With a digitized supply chain, production lead times can be cut and key decisions like target market, selling channel (ecommerce versus in-store), and product design (sizes, colors, etc.) can be made closer to production so that retailers can leverage real-time market demand data and increase sales.

Finally, a digitized supply chain provides incremental details that retailers can use to improve communication with their customers. If retailers have enhanced tracking capabilities or an open line of communication to their suppliers in case of disruption, this information can be relayed to customers, so they are never left wondering when they’ll get a product. This improves customer relations and can lead to increased brand loyalty and better referrals.

A Well-Connected Enterprise Will Be Better Positioned to Deal with Disruptions in the Supply Chain

It all comes down to how well your enterprise incorporates modern technology and partner relationships. Disruption can appear at any time, and it is the retailers that know how to adapt that will succeed. We hope that it won’t be too long before supply chain operations return to normal, but even when that happens, a multi-enterprise, interconnected and digitized supply chain will turn what has traditionally been an operational cost center into a huge strategic advantage. Let’s take a positive view of today’s disrupted world! Treat it as a stimulus and an opportunity for supply chain leaders and business executives to reimagine the first 10,000 miles of the supply chain.

For more information, listen and learn from supply chain experts who have insights and advice about how to navigate today’s challenges in the first of a Series of Videos on The Four Pillars of Change

Note: Columbus Consulting is a Robin Report Collaborative Partner

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