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Innovation Inspiration for the Disrupted World of Retail Supply Chains

by Thomas O'Connor  |  May 4, 2020  |  Submit a Comment

The world´s retail supply chains are being tested in unprecedented ways by the COVID-19 crisis. While many are currently focused on the post-lockdown recovery as markets start to re-open, others are positioning themselves for the future. New ways of working are being identified and innovations are being developed.

Given this environment it pays to look towards the leading innovations from across the retail supply chain community. Here at Gartner I’ve been lucky enough to lead our Retail Supply Chainnovator Award Program since 2017, working to highlight and recognise innovative and high impact retail supply chain initiatives. This years finalists, just announced last week, are another excellent batch and showed a fantastic diversity across their efforts. 

Finalist 1: Ralph Lauren for their digital product IDs initiative that cost-effectively tags each individual item manufactured, making them identifiable for both business users and consumers. This provides benefits ranging from counterfeit mitigation to optimized product flow and increased consumer engagement.

Finalist 2: Tory Burch for their state-of-the-art unified commerce distribution center. The initiative, enabled by advanced material handling equipment and supporting systems, has significantly cut cost to serve while delivering both faster delivery lead times and improved Net Promoter Scores.

Finalist 3: Woolworths Group for their initiative to rethink the Australian standard pallet to two-thirds its traditional size. This has already delivered benefits including improved voice of the customer scores, reduced manual handling of products, and improvements in operational efficiency.

So what are key actions you can take from these initiatives? I’d suggest starting with the following:

  • Provide value from manufacturers to consumers by leveraging digital solutions such as Ralph Lauren’s QR code-enabled digital product ID. Increase the likelihood of buy-in and success for your initiative by taking a multistakeholder approach.
  • Build momentum for supply chain transformations through an initial discrete innovation project, such as Tory Burch’s state-of-the-art unified commerce DC. For example, the visibility this new DC provided to the business was a catalyst for an informal sales, inventory and operations execution (SIOE) program to be established.
  • Challenge existing business norms, as Woolworths Group did in its ⅔ pallet initiative, to identify high-value new ways of working end to end. Take a broad view both in terms of impacted stakeholders, such as consumers, store operations and suppliers, as well as supply chain physical operations, processes, metrics and technology.

In depth detail on each of our finalists innovations can be accessed by Gartner clients here. 

So Who’s The Winner?

Traditionally we’ve announced the winners of the Supply Chainnovator awards at the Gartner Supply Chain Symposium in North America each May, however, due to COVID-19 that of course isn’t happening in 2020. This year the winner from our excellent group is scheduled to be announced live by my colleague Eric O’Daffer and I via webinar (sign up to attend here) on June 9th at 10am U.S. EDT. However, for those of you that will miss having me up on stage to present the award (I jest!) I have managed to dig up a photo of me presenting the award from last years ceremony with the 2019 winners JD.com

This Week’s Food For Thought:

Typically I’ve been giving a few links here to information that I believed readers might find useful, however, there were two big announcements in the past week that I really wanted to focus on so rather than an extended list of links you’ve got some extra commentary from me this week:

  1. Amazon’s Q1-2020 Earnings Release. To anyone watching Amazon closely it should come as no surprise that they are investing during the COVID-19 crisis to position themselves for success both now and into the future. But where they are focusing? Clear emphasis is being applied to the stocking and rapid delivery of essentials such as household staples while increasing order capacity for Prime Now, Amazon Fresh, and Whole Foods Market. To really emphasise the point that they’re investing, check out this quote from CEO Jeff Bezos “If you’re a shareowner in Amazon, you may want to take a seat, because we’re not thinking small. Under normal circumstances, in this coming Q2, we’d expect to make some $4 billion or more in operating profit. But these aren’t normal circumstances. Instead, we expect to spend the entirety of that $4 billion, and perhaps a bit more, on COVID-related expenses getting products to customers and keeping employees safe.”
  2. Shopify’s announcement of the Shop App. Over the last few years Shopify has been successfully positioning itself as an Amazon competitor by establishing a platform that brands could use to quickly and effectively stand up a high quality online store with the brand, rather than Amazon or someone else, owning the direct relationship with shoppers. So what is Shop? Essentially its an update and rebrand of Shopify’s Arrive package tracking app with new capabilities that allow consumers to discover products and purchase. By rebranding Arrive, they have immediately captured 16 million users but to me the whole idea of the app goes against a key pillar of Shopify’s value proposition: the fact that they have not traditionally owned the relationship with the shopper (as Shop will now let them do) has differentiated them from Amazon. The Shop app therefore looks like it is taking them away from the core of their differentiation and value. Whether I’m right or wrong on this one, it’s definitely one I’ll be watching. 

As a quick reminder, Gartner continues to produce a wide array of content in all our usual areas while also providing focused research on COVID-19 with a significant volume of this made publicly available here

Finally, feel free to comment in the section below and I’ll be sure to respond.

Until next week – stay safe.

Best,

Thomas

Note: I’m currently publishing this blog each Monday morning (US Eastern Time) so if you’ve found this one useful please do look out for a weekly notification from my account on LinkedIn

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Thomas O'Connor
Sr Director Analyst I
4 years at Gartner
9 years IT Industry

Thomas O'Connor is a Senior Director, Analyst, in the Gartner Supply Chain Industries and Programs team, based in Sydney, Australia. Mr. O'Connor is Gartner's global lead analyst for retail demand-driven supply chain maturity, performance management and benchmarking initiatives (also supporting Consumer Products), working closely with supply chain executives to drive improved supply chain performance and organizational alignment. In addition, he is focused on how the supply chain can act as a key enabler of unified commerce where businesses present a unified shopping experience across all channels to consumers' in both retail- and consumer-products-focused organizations. This includes unified commerce fulfillment strategies, establishing direct-to-consumer operations and the supply chain's growing interactions with store operations such as fulfillment from store, buy online pick-up in store (click and collect) and returns.Read Full Bio




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