Blog / Mar. 08

The distribution revolution: succeeding with your supply chain

Scott Slinn

In today’s connected world, consumers are more demanding than ever. The digital age has seen the demise of 9-5 siloes and the introduction of a 24/7 landscape. This is true for browsing and purchasing and especially true for deliveries. A customer now expects to receive orders to their home, their work or a convenient location, within hours. This need for immediacy was never there before and it’s now up to retailers to look ahead to keep up with demand. However, the supply chain comes with multiple and complex links: how can businesses maintain control over all aspects when moving at the lightning speed required?

1. Micro-manage

Deliveries and returns involve many third parties, yet the retailer’s brand is omnipresent in the entire customer journey, from the point of purchase to the parcel being placed into the consumer’s hands. The key to a successful supply system is effective communication between each element so that the chain links together seamlessly. Retailers must hone in on each section individually to increase efficiently while minimising the scope for error.

2. Focus on the final mile

The idea that the retailer’s job ends at the point of purchase is a myth. For the customer, the experience is only over once the product is in their hands and it is this distance between the checkout and the consumer (wherever they may be) that makes the supply chain especially tricky. The final stretch from the warehouse requires external parties and is subject to circumstance so the retailer must do as much as possible to bring the control back to them. It is the retailer after all who will be to blame if anything goes wrong in the delivery period. Stores with a physical presence can regain control over this sticky part of the journey by offering Click and Collect, taking advantage of their in-store presence and offering a convenient option for the busy customer. Pure plays have a more difficult task but we are starting to see solutions: setting up mutually beneficial partnerships to create delivery lockers (as seen by Amazon and Barclays) or potentially even drive-through collection points.

3. Manage the supply chain centrally

We all recognise that customer expectations have accelerated. Today and in the future, with delivery prices under scrutiny, retailers must have visibility and control over their supply chain. This is particularly true of stock management. The key is to invest in order systems that provide a single, real-time view of orders across multiple channels, from in-store to e-commerce to mail order and marketplaces. For example, Phase Eight’s OneStock solution means orders can be processed via the same system to create a more accurate view of store inventory. The main advantage of this is that it mitigates stock errors and allows for greater efficiency across various channels.

4. Clamp down on returns

Returns: the bane of online retail, based on the cost of delivering items back and forth and the consumer’s habit of over-ordering and sending products back at no extra charge. To eliminate these inevitable losses, retailers must deploy recent technology to improve the information being given online. For example, digital size guides, virtual changing rooms and other augmented reality tools all allow the customer to see products superimposed on themselves. These can then be shared with contacts and via social media, creating greater engagement between ecommerce shoppers. Decisions are more informed and therefore more final. Another strategy is to drive returns in-store which has the additional advantage of increasing footfall. In fact, (according to Econsultancy), 62% of shoppers are more likely to purchase online if they can return the item in-store.

5. Build bridges between online and in-store

The average shopper uses five connected devices each, from online to smartphones to wearables, yet 90% of purchases are still being made in-store. It’s crucial for retailers to eschew physical/online siloes and instead present a seamless, omnichannel experience. By pushing collection and returns in-store, businesses stand to increase footfall and regain much-needed control over their supply chain. Amazon has paved the way for pure plays in 2016 and will likely continue to do so this year. However, without a physical location, retailers do stand to miss out not just in terms of delivery options and footfall but also in terms of stock management (a physical store offers another place to hold it all). 2016 saw the introduction of retailers teaming up with other businesses, and this is certainly a viable option for online stores to bridge the divide with the physical world.

The history of CityLink and its journey into administration provides a thought-provoking insight into why the traditional supply chain is in desperate need of updating. The dramatic rise in demand for quick, cheap deliveries requires easily-scalable infrastructures and the constant changes in delivery times and preferences can only be accommodated with efficient communication between all parties. It is therefore crucial for retailers to understand the importance of nurturing strong relations between each link in the chain. Creating an excellent delivery framework via a centrally-managed system is the place to start in order to be able to offer a competitive, yet sustainable service.

Click here to download the whitepaper The Distribution Revolution: Why the supply chain must evolve to succeed and discover more.