How Retailers Can Use this Holiday Season to Inform Future Supply Chain Strategies
The 2019 holiday season is here, and consumers are already mapping out their online and in-store shopping strategies for Black Friday and Cyber Monday to find the best deals. On the other hand, retailers have been gearing up their supply chains to support peak ordering and sales for months.
Today’s technological innovations offer retailers tools to streamline business processes with more insight than ever into consumer data and customer loyalty. Despite that, the industry as a whole is still in the early stages of fully implementing advanced capabilities, such as artificial intelligence (AI), machine learning and automation technology.
As retailers and their supply chains face increasing pressures from rising consumer expectations, they must better leverage software solutions and the data it captures to achieve an integrated network and true smart warehouse ecosystem.
Smart Solutions to Meet Growing Pressures of Online Sales
Record growth in e-commerce sales and rising consumer expectations mean retailers must work smarter and more efficiently to predict what consumers want, when they want it and the speed and channel by which they want their order fulfilled. In fact, the U.S. Department of Commerce found that 2019 2nd quarter e-commerce sales grew by 13% year over year. Further, a survey by the National Retail Federation revealed 40% of consumers now expect free two-day shipping on orders and, according to a recent BRP study, 77% of consumers are more likely to shop at a store if it offers same-day delivery.
At no time of the year do retailers feed the fulfillment pressure than during the holidays. Average consumer spending is expected to rise 5% to $1,500 per household during the 2019 holiday season, according to the 2019 Deloitte Holiday Survey. Retailers are in a heated competition to offer the best selection, promotional prices and faster and faster shipping.
To continue to meet changing consumer expectations, the retail industry is increasingly looking at advanced technologies. In fact, most distribution centers now use some form of AI-driven processes, robotics technologies and automated picking solutions to increase the speed and efficiency of fulfillment.
Yet, many retailers still have siloed operations that limit their smart warehouse potential, and communication is one area where the lack of integration can lead to significant inefficiencies, impacting the bottom line of retailers during peak seasons.
For example, a merchandising team that executes a promotion without preparing its distribution centers with adequate guidance may see deliver failures during peak order activity – which can impact customer satisfaction and loyalty. Without tight integration, the disconnect between data and processes will leave a significant efficiency gap between merchandising strategies and order fulfillment.
2019: Retailers’ Blueprint for 2020 Peak Season Planning
If there’s one silver lining, it’s that peak holiday production offers a compelling data set for retailers to learn more about supply chain performance at high pressure, helping to identify best practices as well as areas of opportunity and operational improvement.
Retailers and supply chain executives must take a holistic view of their systems and prioritize software solutions integration as much as hardware investments. While new hardware enables retailers to implement some smart applications, the level of “smart capabilities” depends on software and the availability of data.
Data is the key to a smart warehouse ecosystem, so retailers must fully capture and analyze it to its full potential. This is only possible with an integrated software solution that offers retailers an end-to-end view of their entire supply chain. With the power of connected data, retailers can make more effective decisions based on consumer data and shopping behaviors to plan supply chain strategies, inventory needs, mitigate risks and prevent downtime.
The bottom line: retailers should strive to capture as much data as possible during the 2019 holiday season. Data should include not only basic sales metrics but also information about pain points, how issues are resolved, downtime prevention and mitigation, and any additional best practices or areas of weakness discovered. Supply chain executives can then use this data to inform logistics strategies for the 2020 holiday season, setting themselves up for success when promotion and inventory decisions are occurring months before Black Friday and Cyber Monday.
Connecting the Ecosystem
Retailers can no longer afford to leave merchandising disconnected from the rest of the supply chain ecosystem, and there must be a shift in mindset when it comes to software. Software solutions and integration that fosters visibility across all departments, facilities and machines should be a top consideration as retailers evaluate their investment options.
Data can fuel performance in a retail environment. Software provides that fuel, allowing retailers to capitalize on e-commerce growth, meet customer expectations for rapid order fulfillment and plan for the next holiday season strategically
About the Author
Kim Baudry is a Market Development Director at Dematic, an intralogistics company that designs, builds and supports intelligent, automated solutions for manufacturing, warehouse and distribution environments.