Digital Transformation in Retail Supply Chain

digital transformation in retail supply chain

No one saw the pandemic coming. Retail business never forecasted what it could mean to their supply chain operations. The past year put a lot of pressure on supply chains, exposing several loopholes and serious shortcomings. Most retailers thought they had ample time on hand to fix the challenges while preparing their shift to eCommerce. As per McKinsey research, the pandemic forced 10 years of growth in just 3 months. 

As we reel through the pandemic and the trends how the way consumers shop is changing, it’s highly evident that supply chain operations can be a big differentiator for retail businesses. It highly helps in creating value for business and their customers. However, retail business needs to digitally-enable their supply chain to meet today’s customer expectations and lower overall costs. 

Consumers compare various available shipping options before making a purchase. They look for a better available deal. According to Salesforce, nearly 60% consumers are willing to switch to a competitor with offers quicker, convenient and cheaper shipping. 

The sale does not complete only at the checkout page of an ecommerce site. Retailers need to deliver the product to the consumer’s doorstep as per the timeline promised. A negative shipping experience comprising of time delay or the way the shipping was handled has an irreparable damage. According to Shipstation, 83% of consumers are less likely to purchase again from a retailer after a bad delivery or shipping experience. Even worse, unsatisfied consumers will leave a negative review or post on their social media accounts about their ill experience that can have a serious dent on the brand image.

Most retailers still struggle meeting consumer’s expectations for delivering products as promised at the time of sale. 95% of companies have experienced delays or hinderances in their order fulfillment process. About 45% faced issues with order picking and handling, while 37% struggled with effective inventory management.

Digital Transformation Benefits for Retail Supply Chain

Warehouse operators are gearing up to tackle the order fulfillment and delivery challenges. They are investing in new technologies and digitalizing their processes to modernize their supply chains that can meet up with the ecommerce demand hike. Just like any digital transformation process, it needs a new mindset rather than just implementing a few fancy systems. It’s more about adopting the technology that works in tandem and harmony with people and existing processes. Apart from implementing or upgrading order fulfillment technology and software applications, enhancing inventory management and delivery management process capabilities along with upskilling staff needs to be addressed.

When done right, here are the main benefits of a digitally transformed supply chain that can differentiate the brand: 

Same-day and Next-day Delivery

Consumers do not prefer to wait longer to receive the product that they have purchased or are looking forward to purchase. They look for options that delivers products faster and at a cheaper rate. Consumer’s expectations are increasingly rising on faster shipping times. Previously, 4-5 days or even 10-15 days for a few select products was acceptable. Now it is about receiving the delivery the very same day, the next day or a two-day free shipping. These stringent delivery expectations are creating one of the biggest impacts in the ecommerce industry. According to My Total Retail, when a company does not offer same-day delivery, nearly one-third of consumers feel frustrated. 74% consumers are more likely to re-purchase from the retailer if they receive same-day delivery. To make the same-day or next-day delivery happen, retailers need digitally automated workflows and strategic inventory management. A tight and well synchronized integration between your eCommerce platform and order management systems to sync new orders in time to your warehouse to pick and pack for next-day delivery.

Omnichannel Fulfilment 

In order to make the deliveries faster, retailers also offer their consumers different shipping options like Buy Online, Pick Up Instore (BOPIS), curb-side delivery or a nearest pick up location. 

According to Business Insider, 68% of consumers have made multiple purchases with BOPIS. The benefits of BOPIS include shipping cost savings, speedy delivery and convenience. BOPIS can be successfully implemented by integrating eCommerce operations with brick-and-mortar operations. This helps in giving customers a smooth shopping experience.

Visibility into Real-time Inventory

Seamless and integrated supply chain operations require a single, global view of inventory and orders across multiple sales points. These may also comprise of any external agencies acting as sales partners. A holistic view provides a comprehensive picture of the accurate inventory levels at any given moment. Thus, the correct information of product availability across multiple sale channels can help lead to increased purchases. 

Real-time inventory visibility also provides an opportunity to retailers to strategically move inventory within their warehouses and fulfillment centers. The efficient inventory management helps avoid stock-outs before they happen as well stock-up sufficient inventory in stores that have a high demand. This optimizes the overall costs and helps in boosting revenue.

Lower Costs by Improving Shipping Services

As all selling happens through ecommerce channels, retailers are required to pay higher costs for transportation, warehousing, inventory storage, and packaging and material expenses. 

Retailers are investing in advanced technologies to lower these costs.

  • Order fulfillment centers are automatically assigned by calculating the delivery location and associated costs.
  • Automatic order routing to the most efficient supplier
  • Reduce or eliminate late or wrong shipments so they need not be processed again
  • Based on the availability of products to be shipped, automated splitting of orders to multiple fulfillment centers
  • Accurate demand forecast to keep the right amount of inventory on-hand

Build Resilience in Supply Chain 

Unexpected challenges can always cause heavy disruptions in the supply chain. We all witnessed the recent pandemic bringing in a massive disruption. Other such unseen challenges can include political reasons, natural disasters, transportation failures, new competitor causing price limitations, or even attackers from the cyber world. 

The early adoption of the right technology, people and processes can help a business prepared for the future. Retailers need to build resilience to keep prepared for any challenges that future brings.

Digital transformation is not an overnight process. Every business, its operations, and supply chains are unique. There is no shortcut or a defined way to success. Retailers need professional help to navigate the complex maze of digital transformation.

TransForm Solutions help build efficient business operations to drive growth and innovation. Reducing operational costs through process optimization and automation so that you can focus on strategic functions that matter most to your bottom line.

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