Delivering Supply Chain Change

Supply chain service providers have already realized the impact of consumer demands and especially lifestyle changes in the delivery services and also the impact of these changes on the entire supply chain and retail fulfillment model.  Much of this change is also driven in large part by demands on fulfillment capabilities and volumes from Amazon and online retailers.  This has probably been the largest driving force in retail supply chain change and the service providers have been impacted not only by increased volume but also by consumer delivery challenges related to changes in consumer lifestyles.  The large legacy brick and mortar retailers were driven to provide the new services, however these retailers simply included the delivery services without fully integrating with the service provider or extending the services into the omni market for full integration.

Retailers have been focused on consumer shopping and purchasing demands and how others in the industry are meeting those demands.  These large retailers have followed their standard operating procedures; let others develop the services and capabilities and then copy to match the services.  The omni market does not allow time for analysis and decisions though and this sense of urgency is driving change across all participants in the omni market.  You can see these changes in the supply chain service providers through additional consumer friendly services that were previously not a priority.  You can also see these changes in additional services offered by Amazon to provide delivery pick-up centers and also an increased importance on multi-family dwelling homeowner centers for package delivery.  

Retailers are following the lead of these omni market and supply chain leaders and service providers, however the velocity and impact of the changes are increasing and this means there is less time to react to the changes.  This means that the large retailers must change their culture and practices to identify the changes in a manner that allows them to react and adjust more quickly.  The only way to increase the flexibility and velocity which retailers can react is to increase collaboration across all service providers and partners across the entire omni market environment.  Retailers must also increase engagement with consumers and all service providers and supply chain partners.  The dual combination of increased engagement and collaboration across the omni market will allow retailers to deliver supply chain change in a manner that meets the demands of consumers and the marketplace.  This, however, is one of the most difficult challenges for retailers because of the level of change required and also the velocity of this change.  Retailers must take action to remain a factor in the omni market.  

And now for the audience participation portion of the show…

ECommerce will have wide ranging impacts on both the retail and manufacturing sectors.  How can you focus these abilities to improve the consumer's experience?  Improving the consumer’s experience will require a re-evaluation of the sales channels, the manufacturing channels and practices and the supply chain channels and practices from the raw materials to the consumers’ homes.  In order to ensure and maintain success in this new reality you must harness the tools and capabilities in many new areas.  How can you support these continuously changing requirements?

Future Supply Chain Execution

Supply chain execution is moving into a collaborative execution model supported by both the internal and external partners across the business model and not just on the extended supply chain partner capabilities.  Just as the retail market is being rebuilt by consumer to retailer collaboration, the future supply chain is also in the process of redefinition in order to support the retail market changes.  The future supply must focus on collaborative execution not just to meet the changing demands of the market and the consumer but also to gain insight to the the future changes through a robust and flexible collaborative framework that supports cross market partner collaboration and eliminates the historical and cultural silos.

The future supply chain will depend on collaboration, flexibility and engagement to meet the changing current demands and most importantly prepare for the changing future demands that are coming.  The supply chain has entered a time of extreme change and disruption that, in my opinion, is driven by changes to the retail omni market consumer demands.  The changes to the market are driven by collaboration and engagement of consumers across the spectrum and the supply chain must respond with a similar commitment to collaboration and engagement to react and meet the demands.  

The supply chain has realized the changes driven into the market are only the beginning and in reaction have focused on embracing the change to understand and and react to the demands.  Most large supply chain organizations have in fact embraced and incorporated the changes.  These large supply chain providers have in fact taken the change driven by the omni market as a call to arms and have taken this opportunity to redefine the supply chain, processes and objectives to meet not only the new omni market demands but also drive change to the future. Supply chain service providers are no longer ‘box kickers’, they are technology companies that are driving change into the market to support consumers and provide new services to support the omni market.

This change in the omni market is putting the large legacy retailers in a bind and pinching from two directions.  These retailers know they must change and the challenge is how to effect the change while fighting for survival.  This is the basic dilemma for the large retailers that are already struggling with razor thin margins.  This environment really only has one opportunity for survival and that is for the retailers to focus on engagement and collaboration with all participants in the market to allow them to understand and meet the demands of the market.  Consumers realized this a long time ago and supply chain service providers have also realized this and have focused on their foundation and strategy.  It is now time for retailers to realize and embrace the change.

And now for the audience participation portion of the show…

ECommerce will have wide ranging impacts on both the retail and manufacturing sectors.  How can you focus these abilities to improve the consumer's experience?  Improving the consumer’s experience will require a re-evaluation of the sales channels, the manufacturing channels and practices and the supply chain channels and practices from the raw materials to the consumers’ homes.  In order to ensure and maintain success in this new reality you must harness the tools and capabilities in many new areas.  How can you support these continuously changing requirements?

Building Future Supply Chain

Frequently a discussion on the future of the supply chain focuses on technology, especially the integration and utilization of technology to build the future supply chain.  While this is all very necessary in executing the plan to get from here to there, the future supply chain requires a more directional and objective definition that focuses on the ‘what’ before focusing on the tools to define the ‘how’.  The definition of the ‘what’ will define a direction and a focus in which the organization supply chain should move.  The tools that will take you there, while important, should not be the focus of definition and the direction. The definition of the future should focus on the ‘what’ and the ‘why’ and then the organization must define the ‘how’ based on a flexible framework that will support the changing tools that will come along.

In the current retail omni market the large retailers have been focused on the ‘how’ because the ‘what’ was already defined by others in the market such as Amazon, market demands materialized and even consumer use of social networks and mobile apps.  This is generally a cultural practice with retailers in which the large retailers were never considered, nor wanted, to be on the leading edge..  While this is all well and good for these large retailers to use these tactics to catch up to the market, these retailers must recognize that they can no longer wait for the feature demand in the market and must take control of these developments and this requires a change in the culture.  Unless and until retailers take the effort to change their culture to develop their omni market strategy they will be playing catch up continuously and simply waiting for the end.  

This is the key challenge to the future of the legacy retailers and unfortunately the most difficult.  In many ways these large retailers have been able to control the market due to their size and market coverage.  There have always been smaller, niche, retailers that have traditionally lead the way in market and feature development, in many ways acting as an incubator for new development that, if successful, would be accepted and spread by the large retailers.  The change that has disrupted the market is the entry and growth of Amazon.  Amazon started as a nimble and agile retailer whose strength is the willingness to experiment to deliver new features in addition to their focus on the customer experience and collaboration with the customer.  You could say that Amazon reshaped the retail omni market into an image that meets their culture and their willingness to experiment, and most importantly to fail in the experiment, helps them to continuously reshape and redefine their relationship with consumers and their ability to meet consumer demands.  

This is the disruption in the omni market; the willingness to experiment and the speed of change, that requires the large retailers to change or die.  The current strategy to meet market demands through acquisition will allow the smart retailers to buy time to change their culture, essentially reinventing themselves into a new entity based on collaboration and quick delivery.  The next few years will be interesting as the omni market defines retail and the retailers in the market, there will be more failures as the large retailers struggle with the reinvention.

And now for the audience participation portion of the show…

ECommerce will have wide ranging impacts on both the retail and manufacturing sectors.  How can you focus these abilities to improve the consumer's experience?  Improving the consumer’s experience will require a re-evaluation of the sales channels, the manufacturing channels and practices and the supply chain channels and practices from the raw materials to the consumers’ homes.  In order to ensure and maintain success in this new reality you must harness the tools and capabilities in many new areas.  How can you support these continuously changing requirements?