The buzz on supply chains

by | Aug 5, 2015

To observe the advantages of using the latest technologies, supply chains are a great place to look. I attended Gartner’s Supply Chain conference in Phoenix to see what industry analysts were saying about advancements in supply chains and future trends for the industry. I learned about several ways supply chains could make vast improvements to both retailers‘ and suppliers‘ connections with the digital consumer, efficiency of operations and overall profitability.

Here are some of the high level ideas I picked up while I was there:

1. The Internet of Things is real, now

Digital strategy is no longer just about what we can do with social media and the Web. The Internet of Things (IoT) will have a major impact on supply chains, particularly on the retail industry. IoT wearable devices, like FitBit, the Pebble Steel, Apple Watch and VR headsets, will be among the 30 billion smart connected devices that Gartner anticipates the world will see by 2020. The entire supply chain landscape will change as a result of this massive proliferation of devices. Retailers will have a much more intimate connection to the digital consumer, and plenty of data to analyze.

One implication will be on the consumer’s in-store experience. For example, Burberry stores in Europe use smart tags in their garments to track in-store inventory. With smart tags, retailers can see actual product movement, including important data on consumer in-store behavior. Such data is instrumental in helping store managers optimize merchandise placement, store convenience and profitability. Eventually, smart devices could help retailers tailor a custom shopping experience for each consumer. Smart mirrors are another example of how retailers, such as Neiman Marcus and Nordstrom, are using IoT to revolutionize the in-store shopping experience.

The big takeaway is the IoT isn’t the next big thing. It’s already a reality. Retailers that don’t take advantage of it will end up falling further behind.

2. The importance of end-to-end visibility across the supply chain

According to Gartner, there are few supply chain players in the world that get end-to-end visibility right, and it’s still a challenge for most. They only have visibility to part of the chain.

It’s not as easy as you might think. For one thing, the industry is moving away from the concept of a “chain” and embracing the concept of networks. This implies that visibility needs to cover inventory at all stages (raw to finished) and at all locations. It also implies full understanding of demand, segment by segment, including inventory levels and the supplier’s ability to fulfill demand. This is important because it impacts retailers’ responsiveness to digital consumers and their ability to respond profitably.

To develop such clear visibility, supply chain executives are improving inventory agility using technologies such as RFID and smart connected devices. Enabling supplier collaboration through technologies that leverage centralized data stores enables end-to-end visibility.

3. Use of analytics in supply chains maturing significantly

From driving operational efficiencies and savings, to optimizing the consumer experience and driving growth, predictive and even prescriptive analytics are now used more often in retail supply chains. The following are a few examples:

  • Monitoring and predicting disruptions in operations, as well as potential inventory availability risks. This type of analytics provides retailers with the ability to take strategic, proactive actions and prevent disruptive supply shortages that cost precious consumer goodwill.
  • Suggesting complimentary products through demand shaping. This is already taking online sales by storm, directing consumers to other products based on their purchases. This type of analytics is used by the “You May Also Like” feature.
  • Incorporating social media into forecasts where consumers are sharing sentiments. This pulls those sentiments into the forecast, and it predicts the success or failure of a product.

If you’d like to learn more about the future of supply chains, please contact SPS Commerce and one of our representatives can share with you how IoT, inventory agility and end-to-end supply chain visibility are possible by the SPS Commerce Retail Network.

Wael Mohammed

Director of Product Management – Assortment, Sourcing, & Community at SPS Commerce
As director of product management for SPS Commerce, Wael Mohammed oversees the vision, strategy, and product development of SPS’s Sourcing and Assortment products. Before joining SPS Commerce, Mohammed served in various product management roles at Field Nation, NativeX, and Kroll Ontrack. Other than his startup experience, Wael also consulted at large corporations including Target, Datacard Group and Reliastar Financial. He started his career as a Software Design Engineer at IBM. Mohammed holds an MBA from the University of Minnesota’s Carlson School and is currently a Masters’ of Data Science student at the University of Chicago.
Wael Mohammed

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