How has Technology Boosted the Retail Supply Chain?

In today’s world of digital marketing, technology is growing in importance for retail businesses. But how has it affected the supply chain specifically? Read on as we explore how technology has transformed and helped businesses maximize their supply chain efficiency, including making deliveries speedier and keeping up with fluctuating consumer demands.

The rise of demanding customers

Customers in general are becoming more demanding, and this poses new challenges for businesses.

Many consumers expect convenience from all angles now that they know it’s possible. When they’ve received one service from a business, the bar is raised, and they expect that all their other favorite brands will do the same.

When it comes to delivery, customers expect the option of next-day delivery, with the presumption that they can track their parcel before it arrives. For businesses, this means that an efficient supply chain with a well-managed inventory tracking system is essential. And, when it comes to getting in touch with the business, customers expect instant contact through the channels they’re most used to, such as Twitter, Facebook and instant messaging platforms.

What’s happening at the start of the chain?

Before a product can get on its way to the customer, it must be created. In the Digital Age, more products are being tailored to the buyer due to their love for personalized purchases. But, as they still expect a speedy delivery, manufacturing must also be efficient. How has technology created more of an efficient supply chain?

First, the developments in cloud storage allow data to be stored wirelessly, so that machines can be automatically uploaded and information backed up. This prevents delays involving computer crashes and data loss.

3D printing has played its part in developing the supply chain, and is referred to as a form of ‘additive manufacturing’.  This is where there are no wasted raw materials. Through this technique, this type of printing is able to create products with time and material efficiency.

The development of robots and machinery that can run 24 hours per day means that the manufacturing process is also quicker. When it comes to tailored products, this means that they can be created on demand, providing an efficient creation and delivery service.

Advancing the supply chain with artificial intelligence

To meet the rising demand of customers, retail businesses have begun to reassess their supply chains and

artificial intelligence (AI) has started to play a big part in this.

According to 2017 findings by McKinsey & Company, taking an AI approach to the supply chain could reduce forecasting errors by up to 50% and overall inventory reductions of between 20% and 50%. This sort of technology can think and learn like humans, reacting to stimuli often without human input, too. In the supply chain, AI is able to assist with packaging, research and development, and inventory management which can help make the whole process more efficient.  

Sangeet Paul Choudary, founder and chief executive of C-level advisory firm Platform Thinking Labs, explains why certain businesses should strive for an efficient supply chain:

“This is especially important in the case of industries like fast fashion, where user tastes change very quickly, and supply chains are usually slower to react. In such scenarios, having a direct link between the actual data being gathered from users about their tastes and what they’re interested in — and conveying that back up the supply chain — means that designers and developers in the business can come back with the right products, in much shorter lead times.”

AI helps with this, as it can predict which products will be popular through gathering customer insights and forecasting data. Machines with AI abilities can also gather information on location so that warehouses in certain areas can stock more of a product that’s popular in that area. This goes on to improve delivery times and customer satisfaction.

In some cases, human error is the cause of mistakes within the supply chain. AI can eliminate this by keeping track of stock digitally and reporting back to a data handler. This process removes the potential error of miscounting inventory or recording inaccurate information, which could then go lead to the wrong amount of stock being replenished.

Clothing retailer, QUIZ, which has recently branched out with its QUIZMAN brand to sell popular pieces such as men’s blazers, has invested heavily in its supply chain and seen results. The brand says that its 180,000 sq. ft distribution center in Glasgow, Scotland, provides “a strong platform to support future growth”. The company also uses insights and live data on product performance to allow “informed key buying decisions to be made quickly”. QUIZ also implements a test and repeat approach to its supply chain so that it can “introduce new products to stores and websites within weeks of identifying trends and reorder successful products quickly.”

It won’t be long before all fast-fashion brands are following suit.

Are employees affected by the changes?

With all this talk around technology making the process more efficient, it’s important to consider workers — are their jobs at risk?

In some cases, the use of algorithms and software has replaced the need for human employees. At Amazon, for example, employees who were once in charge of securing multimillion-dollar deals with brands have been replaced with software that can predict exactly what shoppers want and how much should be charged.

But, there is another side to it. The huge warehouses that store products require people to manage them. For example, when John Lewis opened two new distribution centers in Milton Keynes, England, in 2016, 500 new jobs were created as a result.

It all depends on what sector the employee is working in and what they bring to the business. Computers can’t offer compassion or understand clients’ needs in the way that humans can, for example. And people are still required for product delivery, as well as for offering after-sales services.

Looking ahead

To meet the needs of the new consumer, it’s likely that other retailers will begin to reconsider their supply chains. When it comes to AI, any platform that has access to customer insights and data has the ability to connect directly to manufacturers to integrate and better inform the process.

To meet the demand of quicker delivery times, it’s likely that investments in warehouses will be a priority for more retailers. As more people want the same amount of choice at a higher speed, this means that warehouses must stock a wide range of sizes, colors and styles at each of their locations — in close enough proximity to anyone who orders. In fact, there are already massive distribution centers, equal to the size of a town, with logistical networks that pick products from the shelves and send them on their way to customers.

There is also the potential for more intelligent infrastructure within the supply chain. This could be autonomous electric vehicles that operate through the night, and intelligent algorithms that can predict the most efficient routes for customer delivery.