LEVERAGING THE DIGITAL SUPPLY CHAIN TO WIN CUSTOMERS
“Hey Dad, do you use drones to deliver your products?”
Above and beyond the bemused answer that “Dad” might give to his son, this kind of question will, increasingly, make the Supply-Chain Manager of tomorrow cringe. Indeed, there is a real disconnect between the daily headlines about the pure players and the reality of business.
This gap began to appear at the turn of this century, with the development by web pure players of digital tools and services for customers. The home computer has long since surpassed its office counterpart when it comes to performance and the company mobile phone has been supplanted by the personal smartphone. The latest studies reveal that the French, as individuals, are among the most digitally savvy consumers in Europe, while French businesses lag rather behind in the digital race.
Today’s developments go to the very heart of the Supply Chain: delivery by drones, convoys of driverless trucks, predictive deliveries, half-hour delivery windows, information updates throughout the delivery process – in the face of this constant barrage of headlines, the Supply Chain Manager has to take a stand.
The web’s pure players have redefined Supply Chain standards by offering consumers a higher level of service quality: ordering made easy, delivery times stated in advance and adhered to, information updates throughout the shipping and delivery process, easy payment,…
For these same pure players, digitizing the Supply Chain is as much about staying in the game as it is about winning customer loyalty.
“Hiku – shopping from the comfort of home”
Let’s look at one example of innovation: Hiku, a personal connected mini-scanning device that a French drive distributor decided to test. It allows consumers to shop by scanning product barcodes from home or even by just saying which products they want to add to their list because it has voice recognition capability.
The value for the customer is obvious: the retail distributor makes it easier to draw up a shopping list. And the feedback from the first tests is very positive: 70% want to keep it – “my kids add items to the shopping list themselves.”…
This tool also offers new possibilities :
– Since the list is linked to the retailer’s app, it is easier for the customer to click on order than to try and compare and order on another website.
– The retailer can recommend a similar item.
– The retailer can push recipe ideas for the week when the shopping list is being finalized (and thus sell the push to its industrial suppliers) and automatically fill up the customer’s shopping cart.
Solutions of this type also have a number of positive direct benefits for the Supply Chain:
– The retailer can know the shopping list before the customer orders and thus improve its performance by calling on predictive tools
– The retailer can also push the recommendation to delivery based on its own optimization needs and consumer preferences: would you like that delivered in the next two hours?
This tool gets as close as possible to the actual list-making…It’s the 90s vision of the Supply Chain: “the clients of my clients to the suppliers of my suppliers.”
Beyond this example, a number of other developments in the digital revolution are of interest to Supply Chains: real time, sensors, the connectivity of objects – a whole battery of tools has been developed, requiring massive investments, to address the B to C market.
Today, it is entirely possible to leverage these investments and use these tools to improve operations. For example, you want more efficient shipping performance? Use Waze to see what the traffic is like in real time and improve the reliability of travel times and ETAs. Today, it is hard to find any solution that beats the performance of this free app.
Beyond innovations, the key stakes in the digital revolution are organizational
Depending on the maturity of organizations, some Supply Chain developments are already in the cards thanks to the digital revolution:
– Steering exhaustively the entire Supply Chain, at an item-per-item level: the new tools can be used to define rules to manage each item, which actually means, getting rid of the 80/20 rules and of the myopia of the average.
– Interacting with customers in the Supply Chain: Supply Chains can develop new ways of interacting with customers, by integrating new tools (smartphones, sensors, connected objects, etc.).
– Setting predictive logistics: The tipping point between forecast-driven flows and those driven by orders can be redefined. By pushing forecasts as far down the supply chain as possible, in delaying insofar as possible the placement of the order, it is possible to improve operational performance and add value for customers.
The key challenges that lie behind these changes are really organizational: these tools enable changes in the way organizations operate and the success of projects entail the adoption of these tools by employees as well as the integration of existing supply chain processes into the new mix.
To conclude, and this is one of the advantages of the digital revolution, it is not necessary to undertake a huge project involving major IT deployment. The tools of the digital revolution go hand in hand with the implementation of standards of communication, of APIs for data exchanges with existing systems, etc. In the end, this means it is possible to launch small-scale experiments to validate contributions, determine the stakes, and make rapid headway.