Preparing for tomorrow's supply chain - are you living up to expectations?
24 July 2017
There are so many new technologies and innovations emerging in the market, and it’s easy to get swept up in the excitement of the promise offered by things like unmanned robots, warehouse drones and automated deliveries. It’s because of these new innovations we know that the supply chain of tomorrow will be much more streamlined and quicker, but also more automated than ever before too.
It all sounds fantastic, but in the here and now, how do brands get prepared? How do they keep up? And, how can they really harness these innovations for the benefit of their customers? This blog looks to explore the key instigators and barriers to change, and outlines some key considerations before any strategy overhaul can take place.
So, what’s stopping you?
Adoption to new technologies has been cautious so far, and the reason for this is because, as with any strategy transformation, there are a number of barriers brands may need to face up to before change can happen.
End to end (E2E) transformations for instance are often viewed as being hugely expensive and taking up an enormous amount of time. Many businesses also lack the expertise in-house to see a way forward, while some companies don’t believe they’ve found a reliable system they can trust yet. The aspect of outsourcing can also appear risky, as it requires an element of ‘relinquishing control’.
In reality however, very few brands can manage their entire logistics solution themselves, due to the growing complexities brought on by growing consumer needs. An outsourcing option after all allows more potential to innovate, add value and save costs because of the specialist expertise and capability that it can offer to a business, and flexibly. This support extends way past the realms of just technology innovation, which we know many brands can also struggle to keep up with. It’s also about innovating the processes, business models and integration of systems where an outsourced provider can also add value.
What about disruptive tech?
We can thank Amazon’s innovation department for the massive excitement around the use of drones and also the new favourite – self driving trucks. It’s true, drones could allow companies to bypass many challenges involved in the final mile, which can sometimes be the most expensive and inefficient part of deliveries. Yet in reality, the wider application of these are a long way off.
Instead these brands, particularly those in e-commerce, need to assess how else they can efficiently cut delivery times and associated costs. This may be achieved by utilising the benefits of Big Data which can not only quicken the final mile - by automating and optimising many of the last stages of delivery - but also bringing greater transparency across the whole supply chain process.
The need to tread carefully
While there is still a massive focus on meeting customer demand, it can be risky for brands to just implement changes squarely focused on the needs of a customer without consideration for other aspects of the supply chain. We have, for instance, seen that at times a customer-focused approach can be at the expense of the margin - quite clearly a counter intuitive approach in the long-term.
Brands must therefore address their customer demands sensibly, adding value where they can but importantly within the realms of profitability. There is also likely to be times, where customer expectation is not realistic and this is where a mind-set change may also need to occur. Those that take a knee-jerk approach, jumping on the band wagon and opting for the latest disruptive technology may unfortunately not be the best approach. As we’ve seen before, it might not be until the early adopters have established and proven the value of technologies like drones that we’ll really know their true worth.
Other key considerations
Another key consideration when it comes to supply chains of the future however, is that the front-end supply chain can sometimes be massively overlooked.
While delivery / returns options and the whole final mile piece is undoubtedly a key factor in a customer’s loyalty to a brand and their likelihood to buy in the first place, a larger proportion of the supply chain is made up of the front end price, availability and assortment which cannot be forgotten. This means supply chains of the future will not only need variable final mile options, but to also really put integrated systems at the heart of their logistics solutions, allowing them that visibility and efficiency of processes that also impact on a customers’ experience.
When it does come to the final mile side of things however, (and contrary to popular belief) ‘click and collect’ (CC) is no longer a truly ‘sophisticated’ final mile strategy. CC is now an expected fact. Customers not only want the flexibility, but they want up to date information in key milestones, particularly during times like a sale or promotion. The role of the store therefore plays a vital part of this process, and emphasises the criticality of a fully flexible and joined up logistics solution. It’s no longer enough for customers to be able to pick up their goods in-store, they also want to return them there, even if they had originally had it delivered somewhere else.
With all that said, preparations do need to be made, and those that don’t face the supply chain of the future now, will easily get left behind. Increasing consumer demand – after all – is not showing any sign of slowing down.
The important thing however will be to focus on the right technologies and on the right enhancements. Compliance is also a critical part of that process.
With little regulation surrounding new technologies and with the incoming GDPR legislation, the real priority issue for brands to address will be to first get a true line of sight across the supply chain, so enhancements can be made, and to ensure the security of their own data and that of their outsourced logistics providers too.