With the upcoming holiday shopping season’s just around the corner, retailers and brands are bracing for unexpected supply chain and fulfillment hiccups that may occur. This is due to back-end logistics that have become more complex as e-commerce has grown. Meanwhile, the demands for faster delivery can further strain operations and expose weaknesses.
Here, Ronojoy Guha, vice president of retail, consumer goods and manufacturing at Mindtree, which seeks to utilize technology to provide back-end logistical solutions, shares insights into some of the challenges retailers and brands face this season. Guha starts by weighing in on peer-to-peer delivery services, which is a sharing economy model where consumers use mobile apps to deliver packages to other consumers.
WWD: Why is there distrust for peer-to-peer delivery services?
Ronojoy Guha: Peer-to-peer delivery does not extend the promise of stability that the retailer holds to its customers. It is typically the first point of failure during peak spending. Additionally, it is not regulated by contracts, consequently focusing on the immediate profitability by transaction. This often results in last-minute cancellations by the delivery service, inconveniencing customers.
R.G.: E-commerce spending is going to continue to grow substantially with more brands offering Black Friday deals far earlier. Toys, home accessories, subscriptions and gift cards, gaming and visualization, are some of the categories that will see an uptick. Fashion will continue to trend upward within the e-commerce juncture. The surprising category that is going to put immense pressure on end-to-end fulfillment will be fresh grocery delivery.
E-commerce promotions and campaigns are highly data-driven. By analyzing carts and shopping trends, and delivering personalized offers based on the consumer life cycle, retailers can help consumers locate the products that they are looking for. We, therefore, anticipate a lot of advance holiday season shopping through this channel, especially on categories that are not price sensitive.
WWD: Where does Mindtree fit into the equation in improving back-end logistics?
R.G.: Mindtree partners with clients to provide technology-enabled process improvements to drive more efficient back-end logistics solutions. These solutions use artificial intelligence and machine learning for routing and route optimizations, as well as Internet of things [IoT] and trigger through robotics process automation for track and trace.
Additionally, we continue to work with our retail clients on reimagining the core business functions of order management, supply chain, warehousing, distribution, transport and contact centers. We enable our clients to be more flexible and nimble in reacting to the changing expectations of the consumer; enhancing the consumer experience and ensuring that we help them keep the promise made by the brand.
WWD: With the impending surges in online shopping activity through Black Friday and Cyber Monday, what is your best advice to retailers wishing to prepare?
R.G.: Retailers must implement a holiday preparedness program that touches the entire value chain. Planning should begin in July, including running performance testing right through the gambit of technology, stress testing processes and fail-safes, bulking up the resource and staff management processes, as well as driving better forecasts and ongoing transparent communication through the logistics and transportation partners. Creating clear communication processes for the contact center will help them anticipate inbound inquiries from customers.
WWD: How can inventory and warehouse management processes be better optimized?
R.G.: Next-generation technology, such as AI, machine learning, deep learning and IoT for inventory and warehouse management, can improve forecasting, track and trace and visibility across the supply chain. With continuous information flow, workers can report and monitor in real-time, helping companies understand the end-to-end value chain of inventory and build fail-safes, triggers and safety stock along the life cycle.
Additionally, enhanced processes can help companies identify and classify value-added services within the warehouse and segregate waves to deal with the exceptions versus the rules.
WWD: What is the clear competitive advantage in capturing consumer loyalty?
R.G.: The advantage is not in capturing consumer loyalty, it is in utilizing it. Consumer loyalty can be used to improve user journey and experience, further motivating your loyal customers to become influencers and brand ambassadors.
WWD: How do you see Amazon putting pressure on other retailers?
R.G.: Amazon has challenged traditional retail models, because it has brought to bear depth and width of assortment, at extremely competitive price points with the ability to deliver product within a few hours. Amazon has also led the industry in terms of technology innovations, continually making improvements to make the entire buying process easy and quick, creating an extremely efficient and nimble supply chain.
Furthermore, two specific initiatives that herald the significance of Amazon in the retail industry is the acquisition of Whole Foods, which has given them the physical presence that they lacked to date. It allows them to create the neighborhood marketing experience that retailers are continually striving to achieve. As well as, Amazon’s new Go store, which demonstrates the new age of brick-and-mortar retail, painting the vision of how technology will revolutionize the shopping experience.
Amazon not only puts pressure on traditional retail models and margins, but it is also challenging retailers to create a new identity for themselves. The answer in competing with Amazon is not to emulate them but to differentiate oneself from them and create a unique identity.
WWD: What strategies do you recommend for improving delivery speed and quality?
R.G.: Creating smaller and more mobile distribution centers that can independently and continually replenish themselves is one way to improve speed and quality of delivery. The other strategy I would suggest is to use stores as fulfillment centers to drive speed to delivery. This means rethinking the forecasting and supply chain process but enables tremendous flexibility and brings inventory closer to the point of consumption. This also allows store staff to run deliveries, enabling the last mile. Strengthening your core functional capabilities will also allow you to ramp up quickly and be more flexible when it comes to dealing with changing demand patterns.
WWD: Does it make sense for a smaller retailer to consider updating point-of-sale systems during this holiday season?
R.G.: We would strongly recommend against doing this during a holiday season. Point-of-sale systems are large, intricate systems and making changes to them just prior to or during a peak is a potential disaster in the making as it stops your conversion. We’d recommend prepping these systems well in advance of the holiday season.