Preparing for 2020? Check Your Supply Chain
As retailers contemplate 2020 and what it will bring in terms of trends, technology and customer demands, the overall supply chain requires further examination to better align it to the new normal for the next decade.
The supply chain remains retailers’ best means of driving customer satisfaction and loyalty, not to mention efficiency and profitability. Yet despite the critical nature of the supply chain, it's often mismanaged. As we look at the coming year and decade, retailers must pay attention to their supply chains like never before.
According to the 2020 Third Party Logistics Study from Infosys Consulting and others, the “Amazon Effect,” e-commerce growth, economic uncertainty, and disruptive technologies will be among top challenges in the modern supply chain.
Amazon and Analytics
While there are many ways to define the “Amazon Effect,” the presence of Amazon.com and the overall growth of the omnichannel phenomenon clearly disrupted supply chains, creating a common expectation of free next-day delivery from all retailers. E-commerce transactions require increased flexibility, and supply chain partners are examining their order management processes to ensure they can deliver products on time and at a low, predictable cost. Likewise, brick-and-mortar retailers must better adapt their supply chain practices to respond to the continually increasing number of customer needs and demands, often blurring the line between traditional in-store purchases and online shopping.
In this more dynamic environment, improved data-driven decision making will be essential to the future success of supply chain activities and retail processes, requiring better use of analytics in all aspects of daily operations. These include order management, inventory management, price management, labor management, etc. Without a laser focus on data and analytics, shippers risk missing key metrics like on-time, in-full overall shipment visibility; freight costs per shipment; transit time; cost to serve; and order-to-delivery cycle time.
Predictive analytics use historical data and real-time data sets like weather to establish patterns and make predictions for future sales, and will continue to be critical for retailers. A key example of this are the eerily insightful ads on your Google homepage.
Supply Chain as an Ecosystem
In addition to capturing clean data, retailers also need to know how to more effectively apply all that rich information to actual supply chain decisions. With the overall digitization of the supply chain, which includes the Internet of Things and blockchain, today’s retail operations represent a convergence of both physical and digital flows. According to the 2020 Third Party Logistics Study, a concept views supply chains as “evolving and changing ecosystems” instead of linear systems or processes. Essentially, supply chains continue to evolve into complex international networks that include interlinked companies that collaborate with each other to ultimately create value for their end-user customers or consumers. In several situations, some supply chain partners will never physically touch or own product, making the resulting data and decisions that much more important to current and future operating models.
Global Trade Management
As supply chain ecosystems evolve and expand, retailers will need to bolster their supply chain to manage greater global turmoil. Through two decades of increasing globalization, the supply chain now represents a physical and virtual path to market for retailers, an instrumental part of how companies build, scale and manage their global operations. However, instabilities from geopolitical strife, global trade wars and economic disruption impact all organizations, and retailers must be prepared.
The global political environment shows no signs of resolving the instability that affects many retailers’ operating decisions, creating a new normal for those with global supply chains. Turning to logistics and supply chain teams can provide direction and input to help maintain business as usual amid this new norm of global trade upheaval.
Those retailers willing to actively invest in more advanced supply chain capabilities can turn these operations into tomorrow’s secret weapon. From creating a differentiating customer experience and innovative partnerships to managing global trade, today’s supply chain serves as a critical center of business operations, growth and profits. In 2020 and beyond, successful retailers must optimize these ecosystems of product and service partners to realize their powerful impact in driving differentiation, efficiency and profitable growth.
Shanton Wilcox is partner and manufacturing practice head at Infosys Consulting, a leading business and technology consultancy.