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What will the supply chains of the future look like?

What will the supply chains of the future look like?

Transparency and sustainability in supply chains are becoming increasingly important to stakeholders. Speakers at the Inside Retail Academy said that data and technology can help us to get there.

The fact that the supply chain was selected as the topic of Inside Retail’s 2019 Retail Academy shows that its transformation from a back-office function to an integral part of the customer experience is high on the agenda of retailers today. As Dean Jones, Co-founder of GlamCorner, said “fulfilment is the key customer point with an online business.”

It is therefore critical that retailers get their fulfilment and delivery services right. Arabella Clare, Head of Digital & Customer Care at Australian Geographic | The Co-op, said that 53% of delivery costs are incurred in the last mile. More importantly, “51% of shoppers won’t shop with a retailer again if they have a bad delivery experience,” she added.

The impressive line-up of supply chain experts at the Academy discussed three key aspects of the supply chain – transparency, sustainability and data/costs.

Blending profit with purpose

A common thread through the early sessions was the importance of transparency. Arabella Clare said customers really appreciate transparency about delivery costs and timing, plus it alleviates calls to the customer service centre. 

Likewise, The Iconic believes transparency is the true measure of accountability. Its Head of Sustainability and Ethical Sourcing, Jaana Quaintance-James, explained that The Iconic’s transparent supply chain enables customers to make decisions based on the things that are important to them.

Sustainability was also a theme during a panel discussion of BCorp-accredited businesses – Koskela, Sendle and Retail Oasis. BCorp businesses blend profit with purpose, believing doing the right thing makes good business sense. 

For example, Pippa Kulmar, Co-Director, RetailOasis, said removing waste and duplication from the supply chain reduces retailers’ cost of doing business and their carbon footprint. It therefore doesn’t cost any more to be environmentally responsible, and moreover, customers increasingly factor sustainability into their purchasing preferences.

Technology and data help too

The sessions after morning tea had more of a technology slant. James Allt-Graham, Partner at GRA Supply Chain Consultants, said the proliferation of data, combined with machine learning and artificial intelligence, enables logistics providers “to have a greater level of insight and be much more surgical, and therefore efficient in their supply chain operations”. In turn, this will help retailers to meet or exceed customer expectations around timing and choice while keeping distribution costs as low as possible.

Following this theme, John Laing, McKinsey & Co’s Senior Expert and ANZ Manufacturing & Supply Chain Leader, said automation and robotics will improve demand forecasting. “Through algorithms we can better pre-position inventory,” he said, adding that having inventory closer to the customer makes delivery within the hour feasible.

Keeping pace with expectations

Shoppers’ expectations around delivery have shifted, said Matt Newell, The General Store’s CEO and Head of Strategy. “Now customers want to collect their products in-store, in lockers, from their doorstep, or even from the boot of their own car. They want it done fast, without impacting the planet and they don’t want to pay for it. “It feels like an impossible task, but retailers are looking for competitive advantage within these rising customer expectations.

The themes canvassed at the Retail Academy neatly set the scene for the ninth edition of CommBank’s Retail Insights report, scheduled for release this month. It examines how existing online delivery services stack up against consumer preferences and finds that consumers value control over deliveries more highly than speed.

Jerry Macey is the National Leader, Retail Industry Business and Private Banking for the Commonwealth Bank of Australia

Things you should know: As this information has been prepared without considering your objectives, financial situation or needs, you should, before acting on this information, consider its appropriateness to your circumstances, if necessary seek professional advice. Any projections and forecasts are based on a number of assumptions and estimates and are subject to contingences and uncertainties. Different assumptions and estimates could result in materially different results. Commonwealth Bank of Australia ABN 48123123 124