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Reshaping the supply chain to meet modern customer demands

Capgemini
2020-01-21

Advances in commerce have caused today’s consumers to raise their baseline expectations. The rise of next, same-day, and few-hours delivery has created a standard of demand that puts a new kind of pressure on businesses. Because of this increase in expectations on the demand side, the entire supply chain is rapidly evolving from having a functional orientation to a global and interconnected network of data and processes. Here are several new and emerging disruptors that can transform supply chains to meet modern customer demands.

Self-learning demand sensing

In today’s ever-competitive shopping landscape, it’s not enough for retailers to act quickly to consumer demands, they need to pre-empt them. In order to successfully stay ahead of the game, businesses must leverage AI, machine learning and cognitive analytics to produce guided intelligence on consumers and help accelerate the digitization of the supply chain.

The most successful retailers are leaving forecast-led supply chains behind, instead using self-learning algorithm-based demand sensing that uses real-time demand signals. Instead of relying on historical shipments and biased input from sales, by embedding real-time signals into demand prediction, forecasts become synchronized with the latest market conditions. This often results in short-term forecast error being cut by around 20–30%.

Deploying blockchain

Consumers are growing increasingly conscious around the ethical journeys behind the products they are choosing between, pushing retailers to become as environmentally compliant as possible. However, networked supply chain ecosystems are vastly complex, often hindering visibility.

Essentially, blockchain is a way of distributing the process of verification for anything from financial transactions to logging shipping information. This is an invaluable asset in the supply chain because it elevates the level of trust for recording every interaction that a product or shipment might have by requiring that everyone on the “chain” verify the data being input, and ensuring that this data cannot be changed once it is committed to the digital ledger.

What businesses then have is a permanent record of a product’s journey along the supply chain that provides everything from location to the time of arrival, and even all environmental conditions throughout the journey.

Delivery automation

Demand for goods has far outpaced the capacity for many businesses to deliver. The majority of retailers now offer same-day delivery, however customers still expect these products at the same cost. The “last mile” is becoming a growing problem, especially in urban areas, as customers are demanding fast and flexible deliveries.

In order to balance rising expectations with lower overhead costs, businesses must embed automation into some of their last-mile delivery systems.

Adopting AI

Artificial Intelligence can also play an important role in modern supply chain optimization. In warehousing goods, for example, AI and location intelligence can help retailers maintain a competitive edge for their product delivery and supply chain operations. Multi-faceted big data from specific geographic locations blended with online interactions can show buying patterns based on certain times, events, and conditions within detailed customer segments.

A retailer can therefore use AI to predict which products are more cost-efficient to stock in a certain warehouse based on its proximity to certain areas. The demographics as well as other behavioral information in that location determines how and what will be stocked, and this information can be changed depending on shifts in behavior or external factors.

Augmented reality is truly transforming the retail shop floor

The vast majority of customers expect new technologies to transform their buying experience, and a whopping 84% state that the buying experience is as important as the product itself, more specifically, 71% would shop at a retailer more often if they are being offered augmented reality (AR)! With that in mind, it is no wonder that retailers have turned to AR to enhance customer experience and capture resulting benefits. On top of the experience come efficiency potentials by better leverage of the shop floor and lower on-site stock levels.

From Ikea and Wayfair leveraging AR to help you virtually place your furniture of choice at home, to Footlocker and Walmart creating scavenger hunt and gaming experiences, the application scope of AR is already allowing retailers to deepen their customer engagement. The benefits are already showing, providing a healthy blend of increased conversion rates impacting the top line and decreased return volumes lowering costs.

While mobile apps are the most common interface, some retailers are also deploying new engagement vectors, such as in-store smart mirrors. Combining AI and AR, these mirrors allow you to virtually try clothes on, saving you precious time spent lining up for the fitting room.

The race for agility

In today’s volatile commercial environment, where customer expectations are at an all-time high, supply chain flexibility has become paramount for any business looking to edge ahead. Recognized as the key enabler of any truly adjustable supply chain, this race for agility can be met by adopting emerging technologies. By deploying blockchain and big data analytics, to produce insights and create predictive models, retailers can remain relevant.

This article was originally published by Modern Retail, and is republished here with kind permission.

To learn more about how Capgemini’s Digital Supply Chain Practice  can help your organization implement a resilient blockchain program that tackles your key supply chain challenges, contact: joerg.junghanns@capgemini.com

Read Capgemini Research Institute’s “Does blockchain hold the key to a new age of supply chain transparency and trust? report to learn more about how organizations have moved from blockchain hype to reality.

Jörg Junghanns  leverages innovation and a strategic and service mindset to help clients transform their supply chain operations into a growth enabler.