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Flexible fulfillment: adapting your supply chain to meet demand

Flexible fulfillment: adapting your supply chain to meet demand
Wednesday August 6 2014

Anil Gandharve examines the changes required of the retail supply chain to better answer customer demands for flexible fulfilment

At a recent dinner party, an acquaintance of retail technology specialist Anil Gandharve issued something of a challenge, saying that online shopping hadn’t changed commerce all that much and that people still buy things. “They just buy them differently or from difference places. The rest is just details,” concluded the acquaintance.

“Obviously, I had to disagree”, explains Gandharve, who is general manager of retail, CPG and manufacturing at technology service provider Mindtree.

“I noted how there has been a tremendous shift in power (hardly a “detail”) from retailers to consumers, who don’t just demand quality products at the best prices, but also want them to be available right at the point of purchase, even when they don’t make the purchase at a physical store!”

Pressure to be flexible

Gandharve offered the example of Argos, that is partnering with eBay and 80,000 independent eBay sellers to offer click-and-collect at Argos locations. “It’s an innovative alliance between extended business partners and a clever way to get consumers into Argos stores; but the main point is that while eBay is finding ways to offer click-and-collect, it’s obvious that retailers are under extreme pressure to create agility and flexibility in their supply chains. Buy-here-collect-there-and-return-somewhere-else is becoming expected around the world.”

So how can the High Street adapt to meet customer demands of flexible fulfillment? What are the changes to the supply chain that need to happen? Unfortunately there’s no one-size-fits-all approach, according to Gandharve who says that he’s noticed three common best practices in his daily work that will serve retailers well no matter who, or where, their customers are.

1 - Build speed, agility and rhythm into your supply chain
“Some companies have branched out their supply chains so that part of it can focus on speed while another part can focus on capacity and cost efficiency,” says Gandharve. “For instance, Gap sources its Old Navy brand in China for cost efficiencies, its trend-conscious Gap line in Central America to ensure speed and flexibility, and its higher-end Banana Republic brand in Italy to focus on quality.”

He notes that meanwhile, Zara has become one of Europe's most profitable brands by building agility into both ends of their supply chain. “Their philosophy imagines the supply chain within a gigantic outstretched pair of arms, with designers on one end and multiple layers of suppliers on the other, and they do everything possible to let one hand help the other.”

2 - Build an end-to-end communication loop tied to data
“Considering the huge amount of structured and unstructured data available through both traditional and new age channels like social media, an integrated data store of both hard data and anecdotal information can be a game changer for retailers, by allowing real-time communication of information from shoppers to designers to production staff and beyond,” explains Gandharve.

He mentions that this can establish more efficient systems to track orders and inventory information, but it will also help retailers innovate by helping them better understand their customers. 

7-Eleven Japan has become extremely agile by using real-time IT systems to detect changes in customer preferences while tracking sales and customer data at every store,” he explains. “This allows for 'no brainer' innovations like real-time inventory updates, but has also led to unexpected changes that drive growth. For instance, they now reconfigure store shelves three times daily in order to cater to different customer groups.”

3- Build last mile connectivity 

“Innovations up and down the supply chain are great, but always remember the golden rule: Don't take your eyes off the product until it’s sold!,” warns Gandharve, who cautions that retailers would do well to have a network of regional or central hubs that can respond to demand fluctuation and avoid out-of-stock or excess inventory situations. 

“This is becoming more crucial as innovations in click-and-collect models continue with rapid-fire fulfillment at the last mile of the supply chain, and online orders can start to overwhelm local stores. 

“The bottom line is this: At a time when the customer experience is paramount, you are only as good as your supply chain. And these days simply being fast is not good enough; the newest challenge is flexibility.”

Tagged as: supply chain | fulfilment | Argos | eBay | high street | Gap | Old Navy | Banana Republic | Zara | 7-Eleven |

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