Remaking The Retail Supply Chain

While the retail marketplace is remaking itself through the collaboration and cooperation of all partners involved, the retail supply chain is also in the midst of a tumultuous reimaging of the supply chain services and interactions of the supply chain partners.  The challenge with the supply chain is helping their supply chain partners in the retail market to catch up with the supply chain capabilities in not only service offering but most importantly in their collaboration practices and capabilities. The retail supply chain as a whole is really far ahead of the curve of collaborative networking to support the demands of the market and the retail supply chain must help their partners in the retail market to build a robust network to support the demands.  This extension of the retail supply chain network will drive a remaking of the entire retail supply chain to extend services and capabilities seamlessly across all partners.

The supply chain has been embracing the technology and practices of technology capabilities and services for a long time as a means to support the demands of supply chain partners and most importantly to as a means to address cost and transparency pressures from the supply chain market.  The supply chain and supply chain partners are now in a position where they can guide and support their retail market partners in their initiatives to develop and support a similar collaborative network. This would include a maintenance program that incorporates a robust continuous improvement program that reviews and analyzes the demands and the capabilities to address the demands of the marketplace efficiently and quickly.

The retail supply chain has been continuously building out the collaborative network foundation and the capabilities to communicate transparently across the supply chain for a long long time.  This supply chain has developed and embraced a process of continuous change that has supported the pressures and demands for improvements in efficiencies and transparency for years. This foundation now will be used to extend the supply chain capabilities and services across a wider spectrum of partners and outlets.  The supply chain foundation of services and technology will first help their extended retail partners to quickly plug in and take advantage of the services and technology and then to follow on with support and guidance in developing and supporting new services and capabilities.

This is how the retail supply chain will remake the network, not a rebuild but a continuation of the collaborative and continuous improvement practices across a wider network.  The retail supply chain has reached a level of capabilities and practices where they can spread the benefits deeper into the retail marketplace. The retail supply chain brings the benefits of technology and a continuous improvement process to the table to help incorporate these processes that embrace the change process rather than ingnore or fight the change process.  This is where the change will occur in the retail supply chain, and extension of the network deeper across the partners.

The supply chain will be encouraged to take a leadership role in the growth and remaking of the retail marketplace from the perspective of implementing and growing the collaborative network that can support a continuous improvement process from end to end of the network. This will require perseverance and patience in the supply chain partners to continue to push and it will require the retail marketplace to change themselves in both culture and practice to embrace and encourage change.

Retail Supply Chain Disruptors

The retail supply chain is certainly going through a disruption period now for a while from a few factors including the Internet of Things and changes to consumer delivery practices.  There are many other results of this period of disruption and it certainly seems at this point that we are entering into a period of continuous disruption in the supply chain. There are many factors driving these changes and is see the latest ones as coming from Amazon and third party logistics providers and the collaborative network.  Amazon is a continuing disruptor that has developed a culture of disruption in the retail market that people have been chasing since it entered the marketplace. Third party logistics providers and the collaborative network are the new players in the continuing disruption and it will be interesting to see how this plays out in the future.

Third party logistics providers have been around and developed a strong catalog of services and capabilities to support the retail market that have allowed retailers to outsource their needs effectively and quickly.  The 3PL market enables their partners to quickly achieve capabilities that would have cost a great deal of time and effort to develop on their own. The 3PL provides the service and takes on the risk of fulfillment for product types and demands and the retailers can take advantage of the service for a fee.  This type of fulfillment model is ideal for this disruptive retail market to provide the services to retailers based on their demands at the time. The benefits to the retailer are speed to market and reduced risk. This is delivered by the 3PL through their network of locations and services that the 3PL has been developing for many years.  This model was an early precursor to the collaborative network and essentially proved the concept and the benefits of the collaborative network.

This brings me to the collaborative network and the growing and potential benefits of the network to support and drive the continued disruption of the retail market.  Similar to the third party logistics partners, the collaborative network provides the foundation and the framework for the partners in the network to collaborate to develop new services and also supports the extension and growth of niche service providers to flourish and quickly support the changing demands of the retail market.  These services and demands are the result of both market demands and the experimentation of partners in new services to support the retail market, very similar to the 3PL providers. This collaborative network provides the benefits of the services and capabilities from partners in the network without the efforts and time to develop the services themselves.  This network provides the environment that encourages and supports experimentation while sharing the cost and the risk across a broad spectrum of partners.

The combination of 3PL partners and the collaborative network provides the basis for a continuous disruption pattern and delivery across the retail market.  In the past this type of disruption was driven by large players such as Amazon and they were very successful for a long time. Now though the collaborative network partnerships present this same ability and potential that Amazon developed internally for the partners in the network.  This is no small feet and the potential and relative risk to the partners in the network negligible as it relates to the potential rewards.

Crowdsourcing Retail Solutions

The collaborative network provides an opportunity to leverage the network partners to build and roll out solutions which should not be overlooked as a benefit of the network relationships.  The collaborative network allows the partners to effectively crowdsource solutions and and new features in a manner that allows these new features to be delivered more quickly and cost efficient and most importantly more robust than if the individual partner were to release on their own.  In a world of change at a high velocity that regularly disrupts the market the speed to delivery and flexibility are critical factors to meeting the demands. We have reached a point in the market where services and capabilities are delivered at an overall breakneck pace across the market and it can be very difficult to maintain the pace of change without continuously reviewing and changing with the market.  

The concept of competitive advantage takes on a new meaning though in the collaborative network model because the solutions are partnered and the collaborative network benefits from them as well.  This is not a bad thing because as a result of the collaborative network the partners should never fall behind the curve of change, requiring massive investment and delays in completing. In effect, the collaborative network becomes the market competitive advantage.  This is a very important concept and one that will carry the partners in the collaborative network to the next level in the retail marketplace.

The power of collaboration will deliver on the crowdsourcing promise to produce higher quality solutions faster within the collaborative network.  The network provides the connectivity and the means to support niche solutions that bring value to the network and the market that would require an unreasonable amount of research and development if any one retailer attempted to deliver.  There is no secret in the fact that retailers as a matter of course now will follow the leader and then use the solution in their offerings and this collaborative network provides the technical framework and the partner relationships to deliver on these specialty solutions more efficiently and quickly.

If you were to compare the actions taken by retailers over the last three or four years you would see that retailers have spent a great deal of time, effort and capital to acquire the eCommerce solutions offered by specialty providers.  Based on the common practice for these retailers to acquire the capabilities through acquisition or licensing you can see that the collaborative network partnerships could eliminate a great deal of the current activities and dramatically speed the solution delivery.  This, in a nutshell, is probably the greatest value to be achieved through the collaborative network partnerships.

The retail marketplace now is going through dramatic changes at an amazing velocity, driven by thought leaders and market disruptors such as Amazon.  In order for retailers to survive they must also increase both the velocity and capacity of change. The market disruptors have left a series of failed retailers in their wake as a result of either incapacity to maintain the change, or the market changes making them unnecessary.  It only makes sense now for retailers to take the next step to developing a collaborative network that will allow them to navigate the changes and disruptions successfully.