The customer-centric supply chain – Coming of age in 2023 and beyond
By Will Lovatt, General Manager and Vice President, Deposco Europe
Ecommerce companies the world over are turning their attentions onto how best to navigate the downturn. The landscape today continues to look challenging. According to a recent outlook report from the OECD, global GDP growth in 2023 is projected to be 2.7%, the lowest annual rate since the global financial crisis, with the exception of the 2020 pandemic period. Globally, price pressures remain high as the war in Ukraine continues to keep energy and food prices elevated.
Organisations are increasingly challenged by inflationary pressures, be that for raw materials and products they are buying in, or the supply chain costs of moving inventory into their business and final mile delivery. All of that is a cost challenge. So, there is certainly a cost containment agenda that senior executives are concerned about as they look to the future.
Second, they increasingly need to be thinking about sustainability. Any ecommerce business needs to think seriously about issues with packaging; waste, and the environmental costs of delivery, for instance.
Third, there are challenges around employees. In a minimum salary role, where competition is often physically adjacent, it is difficult to attract and retain skilled staff. That means that there is typically a great deal of concern today at board level around how firms can best onboard and keep a workforce to sustain and grow the business.
That’s important because organisations across the ecommerce space continue to be very aware that there are growth opportunities running alongside these economic challenges – around everything from omnichannel to direct-to-consumer – and they want to stay on top of that growth curve to keep pace with the competition.
All these themes are key but perhaps most important in its implications for the ecommerce sector is the fact that we are living in the age of the empowered consumer, where customers increasingly prize reliability above delivery speed. Consumers today know what they want, when they want it and how they want it delivered, and ecommerce firms must meet their needs reliably every time if they don’t want to lose their business.
Finding a way forward
So how can ecommerce firms square the circle here? How can they build a customer-centric supply chain that meets the needs of consumers, while also addressing all the challenges they face?
From the outset, they have to optimise efficiency, of course. They need to find ever-more effective ways of dealing with existing business but also growing the business over time. They could look to do that through strategic process optimisation, and address the tactical level task orientation i.e. ensuring workers are prioritising the right task, for example. Additionally, they can improve performance through a more effective use of technology, including automation and robotics.
Such measures could position these organisations well to take advantage of growth opportunities. Typically, such opportunities present themselves in a variety of ways. They might, for example, need to grow an established channels. That could mean either more volume, or more categories of product. Even simple changes, however, introduce operational challenges which need to be managed, A retailer expanding from bedding to beds would effectively be moving from simple single items like pillowcases or duvet covers that can be readily packaged and shipped into complex items made of multiple parts that have to be brought together to satisfy the customer order. The differing warehouse flows of these seemingly adjacent categories brings with it more complex processes which existing systems may be unable to address.
Whatever the precise scenario though, in the modern ecommerce world, executing on it well has to also involve effectively communicating with the consumer. If the company website is set up to rigidly provide a single delivery offer, whether the customer actually wants this or not, then it is unlikely to be sufficient. The empowered customer wants choice and flexibility and so the ecommerce business needs to find a mechanism to offer them that optionality, and potentially consider multiple carrier options to move a product from point A to point B in order to most efficiently fulfil the order.
Fortunately, the sustainability and profit agendas are closely aligned. There are huge cost saving opportunities on offer for businesses who offer this kind of optionality to their customers. For example, if the customer just wants to have the product in three days’ time and they don’t care about it arriving sooner, then the supplier can plan and optimise delivery routes, achieving significant savings while still meeting the customer’s requirements. Increasingly customers are looking for reliable methods such as pick-up at entertainment venues, airports or train stations, for example – places they already regularly visit.
So, by better understanding the customer and being flexible enough to provide options to meet their needs, the ecommerce business builds customer loyalty and can save money into the bargain.
To take advantage of the flexibility and efficiency of a joined-up fulfilment network, they need an awareness of the broader supply chain. It is no longer sufficient to have a simple warehouse, at one location and one delivery mechanism. Ecommerce businesses need to have a broader understanding of where the inventory is across a wider network, and use that to inform how they communicate with the customer and best fulfil their order
In some respects, the e-commerce firm is joining up the dots across a fulfilment network versus a traditional supply chain. A traditional supply chain assumed for one particular demand location; it had an associated upstream supply location. In a modern fulfilment network, suppliers consider all sorts of different options about how to fulfil that demand. It is a very much more real-time and joined-up model
In line with this, technology needs to be joined up and aware of where all those potential sources of inventory are – and it has to be able to execute on that in real time. The customer won’t, after all, want to be waiting for the business to get back to them, when they know that a competitor website is only a click away. And from a supplier perspective the same product may be offered for sale simultaneously through multiple possible routes to market.
Ecommerce businesses today need to be delivering that kind of consumer-centric service by communicating with customers more effectively and by executing on their needs over multiple channels both in-store and online, in an Omnichannel or full Unified Commerce model. On one level, it’s about having a conversation with them, developing a relationship, which includes taking on board their preferences, and delivering personalised service. On another level it’s about having the right technology in place that supports the delivery of customer-centric services and turns the vision of the consumer focussed supply chain into a practical reality.