talking trade: supply chain digitization
Why supply chain digitization will pay for itself
Retailers see the value in supply chain digitization; however, they’re oſten reluctant to invest in it. Gravity Supply Chain Solutions CEO Graham Parker unpacks the company’s latest research findings and explains why the time to digitize the supply chain is now.
F
rom extreme weather to international trade regulations, and changing consumer demands, supply chain
operations have never been without their challenges. While each of these examples is as significant to supply chains as they’ve ever been, there remains a distinct lack of action when it comes to updating supply chain management processes. Only 14 percent of retail businesses in the
U.K. and 15 percent in the U.S., have completed supply chain digitization projects, according to new research from Gravity Supply Chain Solutions, despite the fact that more than half (54 percent) of both nation’s retailers agree that greater customer experience is the main benefit of supply chain digitization. These findings reveal that the vast majority
of U.S. and U.K. retailers are reliant on manual supply chain management processes. Manually entering data into spreadsheets, and communicating with supply chain partners via email and telephone, still appears to be the most common method of managing the supply chain, even with the development, and immediate availability of digitized supply chain management platforms. Digitized solutions have been developed
to directly address the pain points of manual supply chain management which are mainly the inability to provide real time data in a timely fashion. These solutions make retail businesses more efficient and productive and increase revenue margins by providing greater visibility, automation of manual processes, and faster speed to market. There are distinct advantages to investing
in digitized solutions, and overcoming the challenges that manual management processes cannot. It is surprising then, to find that retailers are reluctant to invest in digitizing their supply chains.
Investment misconceptions threaten retail’s transformation The research indicates that the main obstacle to supply chain digitization is cost, with 49 percent of U.K. and U.S. retailers citing this to be the most significant influence for not doing digitizing. Even within the small
April 2019
number of retailers that have invested in supply chain digitization, more than half (52 percent) referenced cost as the main factor that slowed down the process. The evident reluctance to invest in digitization could come down to a misconception that digitized supply chain management solutions aren't easy to justify to the C-suite, and this is likely because the initial investment gets perceived as being high without consideration of the significant return on investment (ROI) that digitization provides. The substantial gains made possible due to digitization include a reduction in markdown, and the freeing up of working capital, both of which improve revenue margins. One other potential reason is that retailers
operate with a set budget within the financial year, and subsequently are unlikely to have sufficient allocation within that budget to spend on a digitization project. However, digitization does not have to take place in one go! It can take place in phases-over two, to three, financial years, with incremental additions over time, thereby making the cost manageable. As retailers strive to engage consumers with immersive in-store experiences, they are investing in customer-facing technologies such as smart kiosks, Augmented Reality (AR) experiences, and targeted ads based on in- store browsing activity. It is clear that while retailers seem reluctant to invest in supply chain digitization, they appear to have little trouble justifying the cost of customer-facing technologies in to which they are investing.
The substantial benefits of supply chain digitization A greater understanding of supply chain digitization’s impact on the bottom line can help to overcome misconceptions around ROI. By pulling real time data from various touchpoints across the supply chain network, a digitized supply chain management platform provides real time decision making. In doing so, it enables predictability and mitigates risk, safeguarding the bottom line, and enhancing the customer experience. Additionally, supply chain digitization helps
retailers get a better return from those customer- facing, in-store technologies in to which
Graham Parker, GSC CEO
they have invested. It does this by providing 360-degree improvements, ensuring they have the products customers want, where customers want them, at the right point in time. Without achieving this, investment in those customer- facing technologies won’t provide a full return, because customers won’t be satisfied. Retailers need to align front-end innovations such as those customer-facing technologies, and back- end operational innovations such as supply chain management, to engage customers fully and leave them satisfied. Supply chain digitization can take place swiftly and efficiently, meaning retailers can quickly improve speed to market, enable just-in-time- production, reduce markdowns, and react to upcoming trends quicker than their competitors. The retail space is becoming increasingly competitive, with retailers like Amazon that were once digital-only, now branching out into the offline retail space. Amazon’s online success can be attributed to
its focus on speeding up, and digitizing its supply chain, and perfecting last mile delivery in the form of Amazon Prime. They did this alongside investing in the customer-facing element of its online marketplace. Had Amazon focused solely on improving the online shopping experience without focusing on getting the right products, to the right people, at the right time, it would not be leading in the retail space.
An adjustment of mindset Retail executives striving to secure investment from the C-suite, should adjust their mindsets by linking investment to progress, instead of to budgets. By releasing a portion of funds to undergo some degree of digitization, companies can begin to appreciate the benefits that even small levels of investment bring to the business. These returns will likely support the justification that more investment needs to be released to enable necessary digitization to take place. There are, without any doubt, plenty of compelling arguments for investing in supply chain digitization. Those companies that do so now will gain an edge over lagging rival businesses, winning a more extensive market share of this increasingly competitive industry.
www.innovativeelectricalretailing.co.uk | 15
Page 1 |
Page 2 |
Page 3 |
Page 4 |
Page 5 |
Page 6 |
Page 7 |
Page 8 |
Page 9 |
Page 10 |
Page 11 |
Page 12 |
Page 13 |
Page 14 |
Page 15 |
Page 16 |
Page 17 |
Page 18 |
Page 19 |
Page 20 |
Page 21 |
Page 22 |
Page 23 |
Page 24 |
Page 25 |
Page 26 |
Page 27 |
Page 28 |
Page 29 |
Page 30 |
Page 31 |
Page 32
