Marginal Gains Add up

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While organisations clearly recognise the need to uncover every possible efficiency within the supply chain in order to remain competitive, many feel constrained by legacy systems and complex ERP, WMS and POS implementations.

Rather than embark upon a massive supply chain overhaul that will take too long to deliver innovative customer services, organisations need to consider the intelligent use of integrated solutions that can deliver significant marginal gains.

The concept of marginal gains boils down to making small changes to processes, which once added together, have a significant impact on the overall execution.

From the use of real time information that enables a shift from reactive to proactive supply chain management, to the mix-and-match use of warehouse technology to reflect different sales models, which could include orders from hypermarkets, convenience stores or individuals online, it is smart integration that can deliver essential supply chain agility.

According to Sébastien Sliski, General Manager Supply Chain Solutions at Zetes, fast marginal gains throughout the supply chain will be a major differentiator.

Managing change

From the Internet of Things to Artificial Intelligence, and Pick to Light to wearable devices and RFID, the ways in which organisations can harness technology to transform the speed and efficiency of the supply chain appear unlimited. The question has to be asked, therefore, why so many omni-channel retailers are still struggling to come close to meeting customer expectations?

Of course the pace of change is unprecedented. Just as a retailer manages to cobble together a solution for next-day delivery, same-day becomes the norm. When click-and-collect in store is put in place, customers suddenly expect a broad range of options, such as ‘Deliver to Me’ or lockers.

In the rush to meet customer expectations, organisations are finding existing IT systems and IT processes are simply too slow and cumbersome.

Add in global supply chain volatility and the result is not only a retail model that is sub-par but, even worse, huge operational costs are incurred to operate these new customer options. With online returns running at over 30% for some retailers, the cost of returns processing is eradicating any profit.

Gaining value

Profitable retailing appears to require dramatic transformation across the supply chain, from manufacturing through distribution, delivery and in-store systems. However, in the face of demands for a better, more agile supply chain, far too many organisations feel fundamentally constrained by the underpinning ERP, WMS or legacy deployments.

It appears simply too difficult to embrace the innovative technologies and working practices required to meet customer demands, or certainly to achieve any improvement within a viable timeframe. Expensive, complex and long, high risk IT projects are not tenable given the extraordinary change in customer expectations. Why spend millions delivering a customer service that is obsolete by the time it has been enabled?

Yet while technology frustrations may be understandable, it is not necessarily justified. It is possible to enhance and extend existing ERP and WMS solutions to gain value with the right approach. And the key is to start small and focus on process, not technology, first.

The underlying objective has to be to improve visibility. Today organisations are operating blind, with no way to determine the location of a customer order within the supply chain until it arrives at its final destination. Therefore, there is no way of providing the customer with accurate delivery information and no way of mitigating any problems that arise throughout the process that may affect the customer experience.

It is this lack of visibility that fundamentally constrains a retailer to be able to cost effectively deliver service innovation.

A tenable timeframe

Information is the key; by identifying critical processes and immediately capturing transactional events within the business, organisations can enable fast collaboration and immediate decision-making. This intelligent process enhancement, focused on specific areas of business pain, followed by the application for relevant technologies – from mobilising tasks to capturing data – can deliver significant improvements, including enhanced inventory visibility and better customer engagement.

For example, providing the store associate with real time visibility of not only what is in the stock room but also the warehouse and other stores, transforms customer service and boosts sales.

Similarly, the real time provision of a text regarding a late-leaving supplier delivery can enable immediate mitigation of the potential customer impact. Having the functionality to inform the customer that an order will be delivered within the next hour can drive up first time delivery rates and reduce calls to customer service or customers sharing their grievances on social media; cutting costs and improving the overall customer experience.

Within the warehouse, for example, one of the major challenges today is the need to pick a huge diversity of order types, from the single item direct customer order to the 20 line, 30 boxes per line store order. One size does not fit all in this environment, and organisations that adopt the best process-technology mix for each order type gain significant improvements in accuracy and productivity.

Conclusion

Fast, effective response to customer demand is becoming a retail essential. But large scale, capital IT projects cannot deliver supply chain agility within a tenable timeframe. A different approach is required. It is the combination of process review and the integration of the collaborative supply chain technology that can deliver marginal gains and enable the cost effective provision of essential customer service innovation.

Zetes, www.zetes.co.za

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