How Quantum Computing Improves Retail Operations Optimization

COVID-19 has accelerated the transformation from in-store to e-commerce shopping, creating significant retail logistics challenges. Even before the pandemic, retailers battled against heavyweights that were able to offer seamless purchasing and rapid order processing. However, despite pressure from consumers, a recent Accenture survey showed that fewer than half of retailers are meeting customer expectations for order fulfilment.

It's no small feat, considering the supply chain management (SCM) challenges that have been exacerbated by the pandemic. Previously, shoppers typically filled a small number of baskets with a large number of items to avoid repeat visits to the store. Now, retailers heavily cater to online shoppers who tend to order anything they want when they want it. This results in a high number of checkouts with a low volume of items in each basket, creating fulfillment challenges. Additionally, 80 percent of shoppers consider same-day shipping a key decision factor regarding which retailer or brand they purchase from. In fact, 61 percent want their packages even faster — within one hour to three hours of placing an order.

Increasingly fast delivery has become a must for merchants that want to compete. More than a third of online shoppers (36 percent) have ordered online for same-day delivery from a web-only merchant within the last six months, according to a February 2021 Digital Commerce 360/Bizrate Insights survey.

It’s never been more critical for retailers to optimize logistics and SCM. According to Capgemini Research Institute’s Supply Chain Survey 2020, 70 percent of companies are prioritizing inbound and outbound logistics as part of their post-pandemic supply chain sustainability efforts.

Meeting the Demands of Modern Logistics

To meet these demands, retailers must balance and optimize myriad factors and data to build an effective logistics system.

The changes in shopping behaviors and prevalence of e-commerce create more data that retailers need to analyze to meet shopper expectations and deliver products on time. Furthermore, ensuring next- or same-day delivery with no errors or delays demands end-to-end optimization from the warehouse all the way to the customer’s door. This is a significant problem: essentially, retailers have less time than ever to get it right, and doing so requires accurate answers to extraordinarily complex optimization problems that involve massive data sets and tight, ever-changing constraints. The amount of data pushes the limits of current problem solving capabilities.

In many cases, classical computers are pressed to provide accurate, high-quality answers for large data sets and complex optimization problems. As data increases, the computational time increases, which slows down operations. Plus, a single correct answer might not be the true best solution in a dynamic business environment.

Quantum Problem Solving

Quantum computing can offer a solution to retail’s dilemma. These systems leverage the properties of quantum states, such as superposition, interference and entanglement, to perform computation. Quantum computers use these states to actually simulate real-world scenarios in an n-dimensional space. This means retailers can predict the impact of different scenarios on their business operations. This problem-solving method is ideal for the complex challenges facing today’s retail logistics managers.

A classical computer only returns a single answer — and when the problem is exceedingly complex and the variables are constantly changing, that single option isn’t always the best one. A quantum computer instead provides a diversity of results that all fit the requirements, meeting the dynamic constraints and objectives of the business. For example, the mathematical difference between five options may be infinitesimal, yet the third option might be much more relevant for a retailer to implement than the first.

Benefits of Quantum for Retailers

Applying quantum computing to retail optimization allows decision makers to uncover ideal solutions to optimize all retail functions. This gives retailers more accurate and diverse options for rapidly optimizing inbound supply chain and outbound logistics and delivery.

The ability to make customer-focused delivery operations a reality will ultimately drive customer loyalty and result in revenue growth for retailers. This new way of solving retail problems will help businesses meet shifting consumer preferences for fast and seamless services.

Conclusion

Quantum computing is a new technology that isn’t quite ready for full production use yet, but that doesn’t mean businesses cannot start exploring it today. While programming quantum computers using today’s software development kits (SDKs) requires extremely advanced training and expertise, alternative solutions are available that remove the need to invest in this quantum expertise. Some include quantum-ready methods that work on today’s classical computers, which can help in the near term while quantum computers continue to evolve and scale. Early exploration and use of this technology can help businesses get started applying quantum computing to their business operations.

Investing in quantum is an exciting and promising method for optimizing retail operations, ultimately fueling competitive advantage, customer retention, and revenue growth.

Robert Liscouski is CEO of Quantum Computing Inc. (QCI), a classical and quantum software vendor, offering ready-to-run software for complex optimization computations.