There's nothing more important than an ethical or conscious supply chain.
There's nothing more important than an ethical or conscious supply chain.
“Supply Chain” isn’t exactly a phrase that screams creativity. We think of sterile warehouses, unwieldy shipping freight, and supply routes that are slow to adapt. But the end goal of supply has evolved far beyond just inventory. Technology is sharing the load with human employees and helping us find ways to deliver products and services that are far more intelligent, delightful, and timely.
If you can get items to shelf in the right quantities at the right time with the right degree of freshness, satisfying the right customers while treating the source with respect and sustainability, you hold a distinct competitive advantage:
“When it comes to delighting consumers, all roads lead through Supply Chain. Thriving retailers and brands are transforming their supply chains from centers of cost to centers of advantage by taking this perspective. It’s time to challenge the role of supply chain in an industry anchored in consumerism and instead work to build a Delight Chain.” — Nivi Chakravorty, Director, North America Distribution Marketing, IBM
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Delight Them
at Front of House
Delight Them
at Front of House
Supply Chain isn’t just the line cook, it’s the Maître d'. Why? Because customer fulfillment, while engineered at every point in the chain, is experienced at the front of house.
What are the telltale signs of customer preference and need? They’re broadly ranging, but data can give us a very sharp picture of specific use cases. A hyperlocal understanding of elements like weather, traffic, events, and cultural traditions goes a long way in the customer-centric experience.
A leading grocer, for example, built a creative supply chain model that optimized for a very specific use case:
“They recognized that on college game days they were selling out of two items: bananas and Gatorade. They couldn’t put it together. Why college game days? Using analytics, they found that of course, the number one hangover cure for people in college was bananas and Gatorade. So what does the grocer start to do? They started brick loading and palletizing bananas and Gatorade on the same pallet. So a branch would get, say, 20,000 bottles of Gatorade and maybe 50,000 bananas all dropped into one store. That effectively cuts down efficiency costs as well as freight time.” — Saif Rivers, Digital Supply Chain & Retail Ops Lead, IBM
This kind of preparedness isn’t necessarily something a brand would want to advertise in-store, but the end result is undoubtedly customer delight. There can be tremendous value in bundling products as part of a holistic solution to a consumer problem.
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Be Transparent
At Every Point
Be Transparent
At Every Point
Is there a competitive advantage to a transparent process? Yes, absolutely! In decades past, people knew where their milk was coming from, because it was hand-delivered to their door from a local farm. As Rivers understands it, this kind of control is being re-engineered to provide value for both brand and customer:
“With a transparent, end-to-end trail of farming certifications, factory records, product identifiers and other data, retailers and service providers can ‘open their books’ with a clear conscience. They can tell customers with conviction that they get it.”
The byproduct? Customers can make purchases that align with their values and beliefs. And, for that matter, they can rest assured that grocery and food purchases have been vetted for safety.
Last summer, a major QSR player collaborated with Golden State Foods and IBM to pilot an automated system that easily equips grillmasters to know what’s fresh. Through the synergy of RFID tags and IoT monitoring, the company could see where their shipments had gone, the temperature at which they’d been maintained, and their shelf life, as well as plan and forecast for peaks and troughs in their supply chain. A 30-day frozen supply chain became a 5-day fresh supply chain, from the point from where the cattle comes into the production facility all the way to the cook station.
Rivers sees “Patagonia as a brand that has done huge amounts of work in ethical, conscious trading. This includes a commitment to things like recycled fleece, but more than that, they've gone so far as to buy huge swaths of land in order to protect it for the masses, if you will.” It’s an approach that is deeply sensitive to global markets and resources.
A key player in accountability is blockchain technology, which gives all parties more control and visibility within the supply chain. IBM’s Food Trust employs blockchain to ensure that producers, suppliers, manufacturers, distributors, and retailers have a permissioned, permanent and shared record of food system data.
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Rethink Your
Stores & Warehouses
Rethink Your
Stores & Warehouses
By cutting back on forecast errors by up to 50%, AI and machine learning are likely to transform warehouse and store inventory entirely. And with the data provided, points in the supply chain that are offering the highest quality and consistency of product can be used as models for other locations.
Could certain sections of a store mirror data-based trends, employing a more modular approach to space usage that trials inventory by supply chain forecasts?
“Fast fulfillment” is an area where beauty retailers are already experimenting with trial inventory in existing retail spaces. By turning square footage into fast fulfillment centers, these retailers allow customers to buy online, pickup in-store, and even return directly to the store as necessary. It erases the need for stores to carry vast amounts of SKUs onsite, a truly cost-effective tactic.
And then, of course, there’s the new Amazon model of paying employees $10,000 to start their own delivery business, which effectively transforms the warehouse into a roving, hyperlocal entity.
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Learn From Asset-Light
& Recycled Inventory
Learn From Asset-Light
& Recycled Inventory
Where do Rent-the-Runway, AirBnB, and other “asset-light” models fit in? While supply chain has historically been seen as having a final destination, what if your resources are basically circular?
In fact, these companies can be seen as a rich testing ground for more traditional brick-and-mortar. They behave like real-time showrooms and trial experiences for customers who might later buy inventory. Take the woman who rents a dress for her 21st birthday—might she be more inclined to buy that same dress or something similar when she gets a job out of school and her income changes?
The data gathered from items that aren’t ultimately purchased but instead recycled within the same marketplace can be just as valuable as that from commercial sales. It’s the Sharing Economy, and it’s changing the way companies think about asset ownership, inventory management, and responsiveness.
If you think about Biodiesel from discarded restaurant oils and compost, for example, it has value beyond its immediate purpose that can be transferred elsewhere. It has a certain life in restaurant or grocery operations but is then repurposed in another form (engine fuel). In short, Intelligent Supply can also extend or renew the chain.
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Conclusion: Intelligent Supply Is A Signpost For Your Brand
Conclusion: Intelligent Supply Is A Signpost For Your Brand
Sustainability. Reflection of local needs and tastes. A democratized process that’s responsive to evolving customer desires and market shifts. These practices are changing the general perception of supply chain from dinosauric warehouses to a direct relationship between source and consumer.
To Rivers’s mind, “There's nothing more important than an ethical or conscious supply chain. How do you source product? How do you bring AI into your supply chain in a way that allows it to make repeatable, measured decisions? With this kind of openness, brands not only win the hearts and minds of customers, but they also share the stage with the many unknown people who make their products and grow their food.”
Equally important as the “what happened,” with descriptive analytics is getting to the root reason—or “why it happened.” These questions come to mind:
What needs to happen to make these supply chain innovations a reality? It starts with cloud technology, which begs some key upfront questions:
- What do you want your business to look like next year? In five years?
- Which applications and capabilities will help you get there? Where are those apps best run (on-premise, in-cloud, etc.)?
- Where are you wasting resources (money and manpower) on applications that are not driving business results?
- What savings will you realize from this shift and how can you redeploy those resources into innovation and modernization?
- What common business functions within your applications could be converted to microservices, so they can be updated consistently and easily without interrupting other processes?
cloud, download the playbook here.
Next steps
Deliver Delight
Use this playbook to strategize, move, build and manage your delight chain transformation