The New Supply Chain: From Demand to the Doorstep
Before the rise of e-commerce, the intricacies of a complex global supply chain were mostly hidden from the consumer. Products appeared on store shelves and in the pages of catalogs seemingly by magic; the very appearance of a mail-order package on a doorstep was considered impressive in and of itself.
Not so today. With each passing year, the competition for online sales gets stiffer and the curtain slips a little more. Consumers can comparison shop from their iPhones, evaluating options based on assortment, customer experience and delivery times — not to mention price. Any breakdown in the supply chain is obvious and visible because it impacts these key decision-making metrics. Product out of stock? It’s right there on your competitor’s site. Alternate color not available? They’ll find it somewhere else. Estimated delivery time more than two days out? You’re out of the running.
With the battle for customer eyeballs and competitive edge heating up on so many fronts, from hyperlocal marketing techniques to the surge of IoT in retail, there’s no room for error. The next generation of shopping is creating another level of complexity, and the deluge of new capabilities is spurring a frenzy of expectations. Many times shoppers don’t know what they want until they don’t have it, therefore every link in your supply chain must be rock solid.
In this high-pressure environment, every retailer is working hard to bring processes and results up to par. Here are some areas we’re seeing big payoffs — and one where time-intensive efforts aren’t leading to returns.
DO: Network Effects
There’s no need to go it alone. By connecting to new suppliers and intelligently adding products to your assortment, you can expand your customer base and meet shopper demands without increased risk or capital investment.
Furtermore, your supplier network expands your market intelligence. Check with your key suppliers regarding recently added categories and brands. They may know something you don’t, and that information can help you sell more of the products they offer. It’s a win-win.
DO: Fast and Smart
We’re headed into a world of self-driving cars, virtual reality and artificial intelligence. Over the coming years, consumers’ lives will be undergoing massive change as science fiction-esque technologies finally hit the market. Retail will need to evolve in step with those larger trends as shoppers’ behaviors shift and their expectations for smooth, responsive experiences with every company and product grow.
Technology isn’t always the answer, but it certainly is when it comes to order and inventory management systems. Today, you can get an integrated, comprehensive view of your e-commerce business through a centralized platform. Gone are the days of fragmented systems; everything can now work together in harmony.
For example, you can map your geographic inventory locations against delivery addresses to create a graph of overall fulfillment capability, and then distribute product inventory throughout North America to overcome deficiencies and shorten fulfillment times. You can intelligently route orders to warehouses, drop-ship suppliers and partners, not to mention systematically adjust shipping service levels based on delivery window, inventory location, expected ship date and customer destination. Your customers — and your CFO — will thank you.
DON’T: Eliminate Physical Presence
Recent conventional wisdom is all about minimizing physical footprint. However, if you’re focused on eliminating brick-and-mortar locations rather than integrating them into an efficient omnichannel strategy, you’re wasting your time and money. Physical locations aren’t dying off in the age of e-commerce — they’re evolving.
Today, physical locations aren’t always the endpoint in your supply chain. For instance, if stores and staff are configured to facilitate pick-and-pack in a way that minimizes disruption to in-store shoppers, they can serve as adjunct distribution centers, holding inventory that can reach e-commerce customers quickly. Brick-and-mortar stores are also a core marketing channel. A lot has been written about the negatives of the evolution of physical locations into “showrooms,” but a smart retailer knows how to use this shift to its advantage. The personal touch of a brick-and-mortar store can help you build brand loyalty and offer key customer amenities like returns and concierge services.
There’s no question that tomorrow’s supply chain will look drastically different from today’s. However, as your back-end operations evolve, it’s critical to maintain consistency as a company. Ultimately, your relationship with your customers — the most valuable relationship you’ve cultivated — is more about the way you’ve engaged with them over time than your products themselves. As you grow and update your business in the areas described above, evaluate every decision by asking yourself how it will impact your customer and what it says about your brand, from its history to its current identity to its vision for the future.
Eric Best is the chief strategy officer of CommerceHub, a provider of hosted integration, drop-ship fulfillment and product content management.
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Eric Best is a serial entrepreneur, CEO, executive leader and 20-year commerce visionary with strategic exits to Amazon.com, Liberty Interactive and the public markets (NASDAQ). He was previously CSO at CommerceHub through its IPO, CEO and founder at Mercent and Morse Best Innovation, and cofounder at Impresys, Emercis, and MindCorps.
Eric is a husband, dad, swimmer, urban gardener and aspiring DJ.