The supply chain in retail and technology’s effect

12th October 2018 - Business & Marketing
The supply chain in retail and technology’s effect

For retail companies, there’s little more important or influential than technology. But how has technology affected the supply chain specifically? We explore how technology has transformed and helped businesses maximise their supply chain efficiency, including making deliveries speedier and keeping up with fluctuating consumer demands.

Consumers and their changing demands

Customers are getting increasingly demanding, which can be a concern for businesses. 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.

Order to delivery tracking is essential for many customers in 2018, as is being able to select next-day delivery. 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.

The start of the supply chain

Is technology actually changing how our items are produced? In the Digital Age, more products are being tailored to the buyer due to their love for personalised purchases. But, as they still expect a speedy delivery, manufacturing and delivery must be efficient. How has technology created more of an efficient supply chain?

First, the developments in cloud storage allow data to be stored wirelessly, so that machines can be automatically uploaded and information backed up. As a common error used to be crashes and vital information loss, such technology is a godsend.

And how would retail operate without 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 is able to create products with time and material efficiency.

Robotic helps has also revolutionised production lines. When it comes to tailored products, this means that they can be created on demand, providing an efficient creation and delivery service.

Artificial Intelligence and its effect on the supply chain in retail

Artificial intelligence, AI, is currently in-demand for many retail owners. 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 is able to assist with packaging, research and development, and inventory management to make processes more efficient.

Chief executive of C-level advisory firm, Platform Thinking Labs, Sangeet Paul Choudary, believes: “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. In such scenarios, having a direct link between the actual data being gathered 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 can assist with collecting essential data to notice trends and learn more about customer behaviour. 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, which is essential for courier companies like Ask Absolutely.

AI may also eradiate human errors 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 lead to the wrong amount of stock being replenished.

Going-out dresses retailer, QUIZ, has a 180,000 square-foot distribution centre in Glasgow that 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.”

Will others emulate this brand’s success?

The impact of tech on employees

From robotic assistance to make the production of men’s shirts quicker and more efficient, to AI help with noticing key trends before competitors, technology is clearly useful. But does this mean human jobs are at risk?

Computers and data have taken over in places. 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 exactly what shoppers want and how much should be charged.

On the other hand, large warehouses need people to manage and monitor them. When John Lewis opened two new distribution centres in Milton Keynes in 2016, 500 new jobs were created as a result.

The commercial sector and specific job role both play large parts in how likely or not it is that an employee’s job will be taken over by technology. Computers can’t offer compassion or understand clients’ needs in the way that humans can, for example. Plus, people are still required for after-sales services.

What to expect

Re-evaluating a supply chain is a shrewd tactic for retail brands looking to become more digitally efficient. When it comes to AI, any platform that has access to customer insights and data has the ability to connect directly to manufacturers to integrate and better inform the process.

As we mentioned, people want to have their items delivered as quickly as possible. 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.

Is your retail brand’s infrastructure as digitally intelligent as it could be? Why not look to implement autonomous electric vehicles that operate through the night, and intelligent algorithms that can predict the most efficient routes for customer delivery.



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