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IRUK Top500 The Customer Report: 2018

IRUK Top500 The Customer Report: 2018

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GUEST COMMENT How technology has provided the retail supply chain with a boost

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How has technology created more of an efficient supply chain?
How has technology created more of an efficient supply chain?

The importance of technology for retail businesses continues to increase, due to the world of digital marketing becoming larger and both on and offline competition becoming fiercer. In this article, we are going to focus on how technology has both changed and aided businesses when it comes to maximising their supply chain efficiency…


How customers have become more demanding


One challenge businesses must face up to is how customers, in general, have become more demanding. Many consumers expect convenience from all angles now that they know it’s possible. When they’ve received one service from a business, the bar is raised, and they expect that all their other favourite brands will do the same.


Next-day delivery has become the expected norm for many customers regarding delivery options — if not sooner, along with the presumption that they can track their parcel before it arrives. For businesses, this means that an efficient supply chain with a well-managed inventory tracking system is essential. And, when it comes to getting in touch with the business, customers expect instant contact through the channels that they’re most used to — Twitter, Facebook and instant messaging platforms.


A spotlight on the beginning of the supply chain


Of course, a product must be created before it can start to make its way to the customer. In the Digital Age, more products are being tailored to the buyer due to their love for personalised purchases. But, as they still expect speedy delivery, manufacturing and delivery must be efficient. How has technology created more of an efficient supply chain?


Fortunately, cloud storage advancements mean that data can be stored wirelessly. As a result, machines can be automatically uploaded, and information backed up. This prevents delays involving computer crashes and data loss.


The retail supply chain has also been improved with the advancement of 3D printing. The process of 3D printing is what people are referring to as a form of ‘additive manufacturing’. This is where there are no wasted raw materials. Through this technique, this type of printing can create products with time and material efficiency.


The manufacturing process is much more rapid now too, as a result of robots and machinery which are capable of running 24 hours per day. When it comes to tailored products, this means that they can be created on demand, providing an efficient creation and delivery service.


The role that artificial intelligence (AI) can play in the retail supply chain


Retail businesses have already started to reassess their supply chains to meet the increasing demand from their customers. Artificial intelligence (AI) has started to play a big part in the supply chain of retailers in particular. In fact, according to 2017 findings by McKinsey & Company, taking an AI approach to the supply chain could reduce forecasting errors by up to 50% and overall inventory reductions of between 20% and 50%. This sort of technology can think and learn like humans, reacting to stimuli often without human input, too. In the supply chain, AI can assist with packaging, research and development, and inventory management which can help make the process more efficient.


“This is especially important in the case of industries like fast fashion, where user tastes change very quickly, and supply chains are usually slower to react,” explained Sangeet Paul Choudary, the founder and chief executive of C-level advisory firm Platform Thinking Labs when offering his thoughts on why certain businesses should strive for an efficient supply chain. “In such scenarios, having a direct link between the actual data being gathered from users about their tastes and what they’re interested in — and conveying that back up the supply chain — means that designers and developers in the business can come back with the right products, in much shorter lead times.”
AI is certainly assisting here. This is because the technology can predict which products will be popular through gathering customer insights and forecasting data. Machines with AI abilities can also gather information on location so that warehouses in certain areas can stock more of a product that’s popular in the area. This goes on to improve delivery times and customer satisfaction.


Human error is sometimes identified as the reason why mistakes are made in the supply chain. AI can eliminate this by keeping track of stock digitally and reporting back to a data handler. This process removes the potential error of miscounting inventory or recording inaccurate information, which could then go onto the lead to the wrong amount of stock being replenished.


Maxi dresses retailer QUIZ has invested heavily in its supply chain, with the results clear to see. The brand says that its 180,000 sq. ft distribution centre in Glasgow provides “a strong platform to support future growth”. The company also uses insights and live data on product performance to allow “informed key buying decisions to be made quickly”. QUIZ also implements a test and repeat approach to its supply chain so that it can “introduce new products to stores and websites within weeks of identifying trends and reorder successful products quickly.” How long until other fast-fashion brands are adopting similar strategies?


The effect of supply chain changes on employees


There may be questions raised about whether employees need to worry about their jobs when there’s a discussion about technology making processes more efficient.


Algorithms and software certainly have replaced the need to have human employees in some situations. At Amazon, for example, employees who were once in charge of securing multimillion-dollar deals with brands have been replaced with software that can predict precisely what shoppers want and how much should be charged.


However, there is another side to the argument. The huge warehouses that store products require people to manage them. For example, when John Lewis opened two new distribution centres in Milton Keynes in 2016, 500 new jobs were created as a result. In short, it all depends on what sector the employee is working in and what they bring to the business. Computers can’t offer compassion or understand clients’ needs in the way that humans can, for example. And people are still required for product delivery, as well as for offering after-sales services.


What’s to come?


More retailers are likely to review their supply chains in the months and years to come to ensure they continue to meet the needs of a new generation of consumer. When it comes to AI, any platform that has access to customer insights and data can connect directly to manufacturers to integrate and better inform the process.


It also stands to reason that an increased number of retailers will see investments in warehouses being a priority, to meet the demand by consumers for quicker delivery times. As more people want the same amount of choice at a higher speed, this means that warehouses must stock a wide range of sizes, colours and styles at each of their locations — in close enough proximity to anyone who orders. In fact, there are already massive distribution centres, equal to the size of a town, which logistical networks that pick products from the shelves and send them on their way to customers.


Don’t be surprised to see an increase in intelligent infrastructure within the supply chain either. This could be autonomous electric vehicles that operate through the night, and smart algorithms that can predict the most efficient routes for customer delivery.


Author: Louise Richardson, copywriter of Mediaworks.

Image credit: Fotolia

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