Will 2020 be the year retailers digitally transform their supply chain ops?

Photo: Ocado Technology
Nov 27, 2019

Satisfying customers is a tricky business. In 2019, retailers paid special attention to digitizing the shopping experience and removing friction in the selling process. In 2020, I expect retailers to move their focus to digitizing back-end supply chain operations to grow long-term loyalty and market share.

Here’s what trending in omnichannel fulfillment and delivery:

CSCO is directly accountable to customers

Consumers will increasingly select retailers based on the quality of their delivery, returns and after-the-order service. Chief Supply Chain Officers (CSCO) will upgrade the people, processes and technology needed to flawlessly execute. Retailers will improve transparency, efficiency and satisfaction by implementing a strategic supply chain based on integrated ordering and inventory management, augmenting their supply chain suites with new technologies like AI, IoT, blockchain, robotics, drones.

After-purchase processes are front-and-center

It’s easier to keep customers than acquire new ones, right? Smart retailers will cultivate loyalty by fulfilling their brand promise — and do so without breaking the bank. Look for more chains to invest in systems that provide universal inventory visibility, intelligence, rules and order processing automation to optimize the flow of goods and associated costs.

On-demand fulfillment 

Retailers will apply new criteria when forming third-party fulfillment and delivery partnerships. Retailers will form flexible new fulfillment venues and relationships and will no longer completely entrust the last mile relationship solely to a third-party partner. Universal visibility will extend beyond retailers to suppliers, carriers and manufacturers as well as to delivery partners and customers. Predictive fulfillment becomes a possibility when visibility and transparency are in place across the extended supply chain.

Free & fast forever

Retailers must figure out how to fulfill on-demand without eating up profits. A complex and expensive process, the last mile even keeps Jeff Bezos up at night. Suppliers will step-up drop-shipment capabilities. Some retailers will invest in vertical supply chains and other automation, transparency or innovative value propositions for customers to happily accept more cost-effective delivery options.

Standing out from the crowd is more than a fun front-end. Retailers will win long-term loyalty and profitability based on what happens after an order is placed. The ability to fulfill on-demand — in accordance with one’s brand promise — is the ultimate brand experience. 

DISCUSSION QUESTIONS: What supply chain advancements do you expect the retail industry to make in 2020? Which of the areas listed in the article do you think will have the biggest effect?

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8 Comments on "Will 2020 be the year retailers digitally transform their supply chain ops?"

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Michael La Kier

Price is important, but consumers will ALWAYS select retailers based on the quality of their delivery, returns, and after-the-order service. Blockchain and predictive analytics fueled by AI will likely be the biggest transformational technologies for supply chains. The ability to always understand where items are and where they need to be can separate the leaders from the laggards.

Bob Amster

First and foremost, shortening the manufacture-to-market cycle. Improving the accuracy of on-hand, available-for-sale inventory will continue to be the quest of most retailers. After-purchase processes will have the biggest effect on customer relations.

Brandon Rael

The single most impactful way retailers could mitigate the last mile of the supply chain is to leverage their physical stores as fulfillment centers. Leveraging the BOPIS value proposition is a key competitive advantage for brick-and-mortar retailers, as they truly become customer-centric across all channels. BOPIS requires a lighter capital investment, yet provides the immediate satisfaction customers are seeking without the significant shipping costs.

From a longer-term supply chain transformation perspective, retailers should evolve into more data-centric organizations where they could be more prescriptive, proactively forecast demands and optimize their supply chains. There are advanced technologies such as AI and blockchain which could enhance company insights and help to drive down supply chain costs.

With that said, a crawl/walk/run approach is critical for any supply chain transformation.

Suresh Chaganti
Suresh Chaganti
Consulting Partner, TCS
2 years 10 months ago

Omnichannel fulfillment capabilities will become more mainstream. Even digital-native stores can replicate the strategy of Amazon/Kohl’s, partnering with retail storefronts to expand omnichannel capabilities.

David Naumann
David Naumann
Marketing Strategy Lead - Retail, Travel & Distribution, Verizon
2 years 10 months ago

With compressed delivery time frames driven by elevated consumer expectations to get products the same day and sometimes within two hours, supply chain agility is a retail differentiator. The last mile is the biggest issue, as making the execution profitable is challenging.

Beyond the last mile, we are seeing a huge uptick in dropship, as it is a great way for retailers to significantly expand their product offerings without increasing their investment in inventory carrying costs. It also reduces total shipping costs, as products are shipped one less time.

From a warehouse efficiency perspective, robotics are becoming a cost effective way to move products within the warehouse and even in back rooms of large stores.

Sterling Hawkins

Fast/free delivery and customer service have to be at the top of the list. Whether that’s delivered via third parties, with a CSCO or anything else is secondary as it delivers on a great customer experience. This isn’t a 2020 phenomenon though — it’s a new normal in the future of commerce.

Ralph Jacobson

Great read, Patricia! I think there will be more movement toward these technologies, however I don’t see mass adoption in 2020, an election year. I do see the hockey stick curve happening in two years.

Oliver Guy
Oliver Guy
Global Industry Architect, Microsoft Retail
2 years 9 months ago

I have dreamed of the autonomous supply chain since 1994 and we are closer than ever but there is still a long way to go. Given advances in terms of predictive analytics, AI and real-time response it feels like it should be really close but the biggest barrier I continue to see is the inability to connect together the multiple data silos that exist across the extended supply chain.

The same barrier exists with the concept of “supply chain control towers.”

"Even digital-native stores can replicate the strategy of Amazon/Kohl’s, partnering with retail storefronts to expand omnichannel capabilities."

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