By Alex Sampera, VP Product Management at Descartes
In the wake of COVID-19, retailers have had to navigate a tidal wave of logistical and operational challenges. While Statistics Canada reported that Canadian retail sales increased 23.7% in June ($53 billion) to pre-pandemic levels—a hopeful turn for the industry—reduced in-store traffic (for some brands) and a jump in online shopping further underscores the need for stronger ecommerce operations moving forward. In fact, a COVID-19-focused Deloitte study found that more than half (52%) of the Canadian consumers surveyed said they’re more likely to buy online, and Statista has previously forecasted that Canadian consumers will increasingly rely on the internet to place orders, with nearly 24 million users expected to shop online by 2021.
Successful brands today are investing in either pure online or holistic omnichannel strategies. Without a vaccine in place and therefore no definitive “end” to the pandemic, retailers that have yet to adapt will face greater issues in the year ahead and even further down the line. For those focused on omnichannel success, reimagining sustainable business models that grow revenue and keep costs down requires a blend of traditional retail and ecommerce strategies, tactics and technologies, including in the supply chain where major roadblocks can prove detrimental and costly.
One way to address the supply chain challenge is through a simple, yet often complex resource: data.
Siloed Supply Chain Data is a Barrier to Success
Since retail and ecommerce teams often function independently from each other, the data these teams use to measure and optimize business success is also inherently compartmentalized. Take, for instance, data on transportation performance across modes. The rise in ecommerce fulfillment volumes has left some retailers spending drastically more on transportation as a percentage of sales. Ecommerce shipping modes are significantly more expensive than their brick and mortar equivalents, which leaves retailers absorbing much more cost to maintain revenues. As a result, understanding this cost is an obvious imperative for retailers. Layer in omnichannel transportation modes to replenish stores, store fulfillment, BOPIS, etc., and this becomes a difficult task. With disparate sources of transportation data that typically require significant manual manipulation to generate a meaningful level of supply chain visibility and insight, it’s almost impossible to calculate the actual cost to serve customers in different channels.
As retailers continue to adapt, they need to be much more strategic in leveraging technology to support multimodal transportation strategies and evaluate mode choices. For example, to create more agile, low-cost store distribution operations, retailers must rely more heavily on transportation and 3PL-centric services to move inventory from distribution center (DC) to store. Now, parcel and pool distribution might be better options for cost and service. Pool distribution technology leverages economies of scale through multiple retailers using the same transportation services to make deliveries to the same location. Some retailers even leverage their pool providers for ecommerce fulfillment to again improve capacity and responsiveness, but also to minimize store inventory and transportation costs. With one platform to track the movement of goods over both parcel and pool networks, retailers have real-time supply chain visibility into any store replenishment shipment (down to the item level) from the moment inventory leaves the DC all the way through to receipt at the store.
Connecting Teams and Their Supply Chain Data
By managing transportation holistically and driving visibility across sales channels and transportation costs, retailers are better positioned to increase overall omnichannel profitability. This requires much stronger collaboration between traditional retail and ecommerce disciplines and working with one source of data that aggregates carrier data across different supply chain operations. In doing this, brands can better track end-to-end transportation performance and gain valuable insights.
To support these efforts, some retailers are implementing automated notifications in their supply chain operations. While customers are often notified of delivery delays during the last mile, these types of alerts can extend further back in the supply chain to identify issues earlier and increase visibility into all stages of the distribution cycle. Insights based on the ability to track specific transportation metrics such as origins, cartons, and touches per order, as well as performance-based metrics tied directly to distribution channel (i.e., DC to consumer vs. ship from store to consumer) also help retailers make more data-driven decisions. With more detailed and granular data that is easily accessible, including SKU-level transportation cost information, retailers can more accurately account for product markup or shipping fees for various service levels, understand loss or profit by product category, and determine cost and revenue across areas like sales channel, carrier, geography, and service level.
The stress exerted on the retail industry by COVID-19 requires companies to have supply chain operations that are even more agile than before. While the rise of ecommerce has undoubtedly opened new opportunities for brands, the pressure is on for retailers to set their logistics operations up for success. By unifying data sources for greater supply chain visibility, companies will be able to streamline omnichannel execution while lowering costs during these unprecedented times.
