The digital transformation of retail supply chains

If there is one thing that retail supply chain success demands in 2019 it’s this: A relentless focus on the end customer amid pressure from competitive forces that are fundamentally changing how the brick and mortar store operates forever.

Retailers, brands and manufacturers recognise that they need to match customers’ expectations, which are increasingly set by the leading e-commerce brands.

Traditional supply chain systems that are not reactive to customer demands are no longer viable. Consumers demand same-day delivery (or less) – if you can’t deliver this then you will lose out to the competition.

Your supply chain must evolve into a demand chain that delivers unrivalled flexibility, visibility and transparency for your customers.

With the in mind eft share their latest report:  The State of Retail Supply Chain

 

Customer-centricity

The report, which surveys supply chain industry executives globally, highlights that greater end-customer focus is resulting in retailers looking more closely at how they can speed up their operations, integrate e-commerce and bricks and mortar more closely to improve communications with customers.

Specifically, greater customer focus means retailers invest in speeding up their operations to integrate e-commerce and bricks and mortar: The percentage of retailers reporting that they are using combined distribution for retail, wholesale and e-commerce operations increased from 57.3% to 74.4%.

There can be no doubt that the retail environment is evolving into a hybrid of physical and digital. Just over a quarter of retailer, brand and manufacturer sales are currently coming from online sources, however, within the next five years they expect this balance to change substantially to just below 40%, a nearly 15-point swing. This will generate huge pressure on supply chains to shift

In an increasingly e-commerce-based environment, customer experience should remain front of mind and needs to be incorporated into the mindset of those involved in shipping goods as well as those dealing directly with the customers.

The so-called ‘Amazon-effect’ demonstrates that convenience, shipping cost and speed are critical to consumers choice of online shopping alongside pure price-point considerations. Brands therefore need to ask themselves about how they can compete in this environment and hopefully differentiate themselves to a degree.

 

The role of the store

The role of the store evolves in the face of e-commerce growth. Specifically, stores are key to-commerce returns, with returns rates up from 24.2% to 35.5%, and as a place to ship from, increasing from 25.8% to 30.3%

The recognition of e-commerce as a dominant and transformative force and the need to match up to the best players within the space means that retailers, brands and manufacturers are working harder than ever to improve the speed with which inventory can be moved and brought into play, with consequences for resources across the supply chain.

Indicative of this is the falling time retailers are taking to get returns back into their stock. 44.2% of retail respondents report that their average time to restock returns is three days or less, marking a clear focus on agility of inventory that can accommodate a more e-commerce-centric environment and a higher returns volume.

Further marking out this move to a more agile distribution network that can work better and faster around customer needs is the growing integration of the distribution cycle. Increasingly retailers and manufacturers look to build distribution capabilities into more and more facilities and the sharing of inventory and fulfilment engines.

 

Conclusion

Operators in the retail space continue to struggle with improving visibility and putting in place the technology they feel is really necessary to support improvements to the customer experience. Their supply chains will therefore require enhancements to stay relevant and the results we have gathered suggests that this outlay needs to be accelerated rather than put off for another year. For insight on where retailers and manufacturers are investing to digitise their supply chains, you can access the full report here

 

 

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