Retail Supply Chains Need to Focus on Brands
Analyst Insight: Evolution is as much a part of businesses and industries as it was a part of Charles Darwin’s observations in the Galapagos Islands. Retail in particular is undergoing fundamental changes that are having repercussions up and down the supply chain. How retailers approach these changes will determine the winners and losers within the retail industry. – Guy Courtin, VP, Industry and Solutions, GT Nexus
Tell me if you have heard this recently – we are undergoing a major digital transformation! I realize this is not a news bulletin, but one industry that is seeing the greatest impact from the digital revolution is retail. Why? Because digital is having the greatest impact at the consumer level. Retailers have already experienced the impacts of digital transformation. Just think of mobile commerce and e-commerce and how these have changed their businesses. So how can retail supply chains take advantage of these changes?
The constantly changing consumer. The biggest driver of disruption in retail supply chain is the consumer. As consumers continue to grow with regard to their influence and ability to dictate how retailers service their needs, supply chains, which are foundational, will have to keep pace. We are going beyond omnicommerce and into ambient commerce. Commerce that is not only always-on but not constrained to a separate practice. Look at efforts by social giants such as Facebook or cloud leaders such as Salesforce who are looking to bring more transactional capabilities to social interactions. Players such as Apple, Samsung, PayPal, Square and others are lowering the transactional barrier to commerce. Making mobile payments as easy as a wave of a mobile device. These are all adding to a more empowered and expectant consumer. Retailers must keep pace.
Create a clear and detailed picture of your network. Based on the above point, this network starts with the consumer and must extend as far and wide as the retailer’s ecosystem. Retailers must constantly strive to pull information from — and provide decision-making capabilities to — the edges of this network. It must go far and wide. The network extends into suppliers, distributors, logistics nodes, manufacturers, store associates and points of sale. These nodes might also be in constant evolution and change. Retailers’ networks and supporting systems must keep pace.
Your brand relies on your supply chain’s success. A retailer’s supply chain is the supporting material for the brand name. Brands such as the Gap, H&M, Kohl’s, Home Depot, Macy’s, Amazon, etc., are only as good as the supply chain that supports their business. Retailers are no longer afforded the luxury of viewing their supply chains as cost centers, nor as afterthoughts. They must be regarded strategically and with an eye to competitive advantage. All one has to do is look at situations such as the Hanjin bankruptcy to see how a disruption in the supply chain could have long-term consequences for the brands that were relying on the South Korean shipper to get their products to market.
The consumer is at the crux of these changes. They have been given the voice, reach and power. Savvy retailers must constantly retool their supply chains to ensure they keep pace with demands and needs.
Retail has moved beyond omnichannel and closer to a world of ambient retail, where commerce is not only always-on but part of consumers’ continual activities. While this might be exciting for the consumer, it places a tremendous amount of strain on supply chains. Retailers who have dynamic and network-oriented supply chains will be able to succeed in this environment.