Imagine being able to get automated orders from customers’ refrigerators or be able to determine with greater certainty whether suppliers have adhered to the set requirements of quality control as a retail brand. A future like that is already upon us. Come explore the future of supply chain management in the retail sector with us on this blog, which covers topics including supply chain risk management, omnichannel, blockchain, IoT, and sustainability.
Innovations Driven by Technology
Machine learning (ML) and artificial intelligence (AI)
The newest buzz in applied technology is artificial intelligence (AI) and machine learning (ML), whether it is used to our daily lives, government management and service delivery, or company operations and process execution. Having a broad grasp of how AI and ML are specifically assisting us is as crucial, though. The goal of artificial intelligence (AI) is to build computers or programs that can employ reasoning, learn from their surroundings, and react appropriately—all without the need for human interaction, with the exception of certain basic situations. ML is the process of utilizing algorithms to make a machine or program “learn” to become “intelligent.”
AI and ML are assisting in the development of more sophisticated systems in the context of retail supply chains. They are also improving the capabilities of current tools and techniques used in predictive analytics, enabling demand projection, process automation, and faster and less expensive communication possible. A counter-question can be: How do AI and ML improve upon the tools and approaches we already use with sophisticated software applications? The solution is improved robotics capabilities.
AI is now widely used by big retail companies to monitor the flow of product from sourcing facilities to retail locations. Here, artificial intelligence (AI) is used to mimic human labor and enhance systems through self-learning and adaptation. AI also enhances computers’ and software’s innate capacity to manage enormous amounts of data.
The Internet of Things
The Internet of Things (IoT) is a technology that enables sensors, programs, and network connectivity to enhance the use of electrical and electronic machinery and devices, including remote device management. Most people’s conceptions of the Internet of Things are limited to commonplace items like refrigerators, lighting, toothbrushes, and home security systems. Nonetheless, corporate applications have also discovered the importance of IoT. A major factor in the faster adoption of IoT was the decreasing size and cost of processors and other hardware.
IoT is becoming more and more important in supply chain management and retail nowadays. Systems for monitoring cold chains are a good example. IoT sensors installed in warehouses and logistic boats enable businesses to monitor a number of storage characteristics that are crucial to preserving the quality of goods while they are being transported or stored. Although the behavior is not new, real-time access to a variety of data, including location, has made it easier thanks to IoT. One of the largest winners here are businesses in the perishable food sector.
Blockchain Technology
Imagine blockchain as a very resilient database and communication system that is impervious to censorship or manipulation. In supply chains, it provides improved security, transparency, and monitoring capabilities. Timelier information exchange regarding inventory movement is made possible by decentralization of information. Accountability and responsibility are also enhanced by blockchain. The signature or mark of the person or entity that completed the transaction is present on every transaction.
It is practically hard to alter data once it is registered in a blockchain. For instance, after entering the source of supply information into a blockchain-based supply chain management tool, it may be retrieved at a later time to confirm a product’s origins and other details to confirm its legitimacy. Because of this, a large number of diamond companies are among the top users of blockchain technology. It assists them in determining the diamonds’ origins. This aids them in determining the sustainability, accountability, and ethical standards upheld since sourcing. Increased consumer loyalty, greater brand reputation, and the removal of tainted or counterfeit goods are the business advantages of this.
Retailing across channels
Smooth Client Experience
Providing a smooth shopping experience for customers as they go across a number of online and offline touchpoints is one of the fundamental criteria of omnichannel retailing. Businesses now have to combine the greatest aspects of online and physical shopping into a single, seamless experience for customers as the usage of digital technologies becomes more significant for both parties. Retail supply chains have been affected in a number of ways by this. Transparency is one such inference. Customers now anticipate being able to view or get real-time order progress updates, from the point of origin to the point of final delivery. If this is not the case, doubt and confusion may cast a shadow over their buying experience. Supply chains must integrate retail and supply chains and have the appropriate tools and technologies to provide such transparency and prompt communications. The level of openness that customers demand or that is intended to be provided to them cannot be impeded by location and logistics limitations.
Optimisation of Inventory
Offering goods through all online and physical channels is another aspect of omnichannel retailing. This is significant because omnichannel requires that there be no differentiation between online and offline capabilities. Customers must be able to purchase through any channel. This calls for careful inventory allocation or distribution, sometimes referred to as inventory optimization. Although demand forecasts are never entirely accurate, effective inventory management helps avoid overstock and stockout scenarios in sales channels. Here, companies with both online and offline sales channels and fashion labels are excellent examples. These businesses must react fast to the shifting demands of the market. Saying “quickly” is not that simple. Adding a new collection could be one way to respond, which might require weeks of preparation and supply chain modifications. These businesses accomplish this, in part, by cultivating solid relationships with suppliers and manufacturers and the way they operate. Additionally, these suppliers and manufacturers operate by the same tenet as their colleagues. This whole “adjusting” mentality is mostly pre-existing.
Order Completion
Order fulfilment procedures and retail inventory control techniques have become more sophisticated as a result of omnichannel. Multiple channels of orders must be managed by retailers. Customers may then be presented with a variety of fulfilment options, such as in-store shopping, in-house versus 3PL home delivery, and store pickup. For management purposes, completing orders for in-person clients is also technically considered order fulfilment. Inventory management needs to be on point throughout all fulfilment routes in order to fulfil orders on time. The management of order fulfilment is made more difficult by customer expectations of faster delivery and refunds; in addition to being correct with purchases and storage, you now have to deal with the standard of maintaining competitive fulfilling dates.
By providing the option of online buying as well as in-store trial and pickup, many beauty and personal care brands and enterprises streamline their order fulfilment and turn obstacles into opportunities. By using this tactic, they may increase foot traffic to their stores, give customers product validation, and lessen the strain of internet delivery. Even if this isn’t 3600 omnichannel, it does the job.
Ethics and Sustainability in Sourcing
Ecological Methods
Supply chains have been affected as a result of the increased public awareness of sustainability and conservation. Because consumers are increasingly choosing businesses and goods that follow sustainable and ethical standards and practices, sustainability has become a strong value proposition. A growing number of retail brands and companies are now realigning their supply chains and implementing the necessary measures to fulfil the sustainability goals, from raw material procurement and production/processing to packaging and distribution. This has had an impact on the supplier selection criterion, among other things. Businesses now search for vendors who adhere to ethical sourcing guidelines. Factory labour conditions are a key component of ethical sourcing. Many businesses have begun to perform periodic audits in addition to searching for certificate-based validation in order to monitor compliance with the set sustainability and ethics requirements. Supply chains now need to be more transparent as a result of the growing interest in sustainability. Additionally, local procurement is becoming more and more important. In local marketplaces, it provides businesses and retail brands with the much-needed sense of belonging. Prioritizing varied procurement is a related development. The emphasis on sustainability has increased the prevalence of this business model, even though it is not new. Other highly desired suitable goals and practices include:
- Decreased carbon emissions
- Utilizing natural resources
- Simple packaging
- Packaging that is compostable
- Reusability and recycling
- Energy-efficient and intelligent lighting
- Utilizing sustainable energy sources
- Management of scientific waste
- Providing reconditioned goods
- Programs that raise consumer awareness
- More digital and less paper
Transparency and Traceability
Two essential components of sustainable supply chain management are transparency and traceability. Businesses must ensure verifiable visibility in supply chains in addition to checking what is directly under their observation when implementing sustainability. Such traceability and transparency are made feasible by technologies such as blockchain. Blockchain makes it easier to track the origin of products and confirm that sustainability guidelines are being followed. Blockchain is frequently used in the high-end luxury retail industry. High-end luxury goods are distinguished by their superior quality. When it comes to quality, retail firms who deal in these products cannot afford to take any chances. Products are likely to be returned and replaced if they don’t live up to the promised standards. Expensive things are always expensive to return or replace. Businesses can drastically reduce the rates of return and replacement by proactively working to ensure higher-quality inputs in supply chains. Investing in the appropriate technology always has a cost, but when done well, the returns are substantial and long-lasting.
Retail Supply Chain Resilience
Controlling Risk
Supply chains are prone to improvisations and changes due to a variety of internal and external events, including technology, business partnerships, trade agreements, market diversification, and geopolitics. The global business world has seen numerous advancements since 2020 that have affected its supply networks either directly or indirectly. It is more crucial for companies to make their supply chain management more resilient and agile. In order to increase supply chains’ resistance and resilience to disruptive changes, it is crucial to manage risks in a planned and measured way. Among the sensible tactics and procedures in supply chain risk control are:
- Supplier, logistical, and warehousing diversification
- creation of emergency plans that are periodically revised and tested
- Non-core function outsourcing
- A well-thought-out and sufficient insurance policy
- Strong collaboration with supply chain partners for improved information exchange and prompt modifications
Many large corporations that operate on a global scale have adopted these tactics and techniques in accordance with their needs, ranging from furniture to automobiles. Risk assessments and solution-finding have become significantly more effective and efficient with the usage of cutting-edge technologies like AI and ML. AI-powered cameras at warehouses, for instance, may identify irregularities in inventory movement and promptly alert managers so that necessary fixes and adjustments can be made.
Visibility of the Supply Chain
Effective risk management is a prerequisite for creating robust supply networks, and real-time supply chain visibility is crucial to this process. When anomalies or deviations are found in later stages of supply chains, this real-time visibility aids in making the required adjustments. In essence, it enables businesses to optimize their supply chain processes. This real-time supply chain visibility is accomplished by utilizing IoT technology in addition to already-existing tools and capabilities. Imagine planning to buy something, only to be informed that it is currently unavailable. You have time now to alter where you want to make your purchase. You would have wasted resources if the update hadn’t been available. Such data and updates are essential for companies to attain cost-effective supply chain management. IoT sensors, RFID tags, GPS, blockchain, data analytics, sophisticated retail supply chain management software, and control centers are some of the technologies used for updated tracking and supply chain optimization in the retail industry.
Important Takeaways
When it comes to predicting how supply chain management will develop in the retail sector, technology is at the forefront. Supply chains will see a greater and more significant role for the expanding capabilities of AI and ML technology. AI and ML give technology a whole new level of sophistication with their capacity for self-learning and auto-adaptation. IoT is another technical advancement to be aware of. By building a network of utilities and devices with remote monitoring and management capabilities, IoT is assisting businesses in overcoming numerous physical obstacles. Blockchain technology, which helps supply networks achieve higher levels of security and transparency, comes in third on the list.
The next big thing that is changing supply chains now and will do so in the near future is omnichannel retailing. Retail brands and enterprises will need to adapt to the demands of omnichannel on all fronts, including supply chain management, as more and more of them embrace it. For instance, supply chains need to be more visible to customers since omnichannel demands a smooth customer experience.
Sustainability and ethical sourcing rank third on the list. From a wider standpoint, sustainability is urgently needed. Businesses that priorities sustainability can also utilize it to increase brand recognition and perhaps even as a unique selling proposition. However, there are other simple ways to incorporate sustainability, such as focusing on group order fulfilment, using paper bags, reducing packaging, managing waste properly, using solar energy during daylight hours, etc. Traceability and transparency are two crucial components made possible by the use of technologies like IoT and blockchain to better monitor the adherence to the requirements of sustainability and ethical sourcing.
An other developing trend is the increased focus and initiatives to make supply chains more resilient and agile. Companies are placing a strong emphasis on outsourcing, strategic insurance coverage, supply line diversity, and tight collaboration with supply chain partners in order to enhance risk management. Supply chain visibility’s dependability and quality will be crucial to this endeavor.
Concerning TRS:
TRS is a retail and eCommerce consulting firm that specializes in management, growth, transformation, and startups. With a growing global presence and more than ten years of proven experience, TRS has a 95% success rate working with more than 500 clients across more than 25 industries.
FAQs
How should retailers go about implementing or changing technologies to enhance the efficiency of their supply chains?
In order to improve their business performance in all areas, not only the supply chain, retailers should prioritise adopting new technology or updating their existing ones. Second, every company needs to properly evaluate its needs and difficulties. You must specify exactly what business solutions you are looking for from technology.For instance, start thinking about SaaS-based web solutions if you wish to digitise your order administration. IoT and AI technologies are impressive solutions for larger businesses, but you must first determine how they can support your business case. Appropriate financial and commercial planning is the third prerequisite for putting a selected set of solutions into practice. Planning for implementation is the fourth prerequisite. Adopting new technology must be flawless. It may also interfere with regular corporate activities if adoption is not well planned.
How can retailers get ready for supply chain management in the future?
The primary focus should be on strengthening supply chains’ resilience. You have to think about a number of things when you do that. You need to be well-versed in the ever-evolving demands of the market. Since consumers are growing more used to the characteristics of seamless experiences and cross-channel shopping trips, omnichannel is an excellent illustration in this case. Another significant effect of improving supply chains’ resilience is sustainability.Retail brands and companies must integrate the appropriate sustainability measures in their supply chains, which include procurement, manufacturing/processing, packaging, storing, delivering, and returns/exchange, in light of the mounting concerns of consumers and other significant stakeholders, such as governments, regarding climate and planet conservation. In this case, technology is more than just a helping hand; it also assists businesses with analytics-driven decision-making, process automation, real-time monitoring, improved supply chain associate cooperation, increased supply chain transparency and traceability, and improved risk management.