If 2020 taught us anything, it demonstrated that to succeed, maximize resilience, and ensure business continuity, companies need to utilize every available channel – e-commerce, direct-to-consumer, retail stores, distributors, and marketplaces like Amazon. That way if one channel is disrupted, whether by natural or man-made causes, the show will go on. In this environment, enterprise and functional silos, coupled with batch processes, won’t do. Companies will need to rely even more on supply chain networks to consolidate demand across every channel and have a view into every point of supply, to be able to satisfy customer demand efficiently, grow revenues, and minimize costs.
The pandemic highlighted the urgent need for businesses not to rely on a single channel for servicing customers. Many companies that were doing well through brick and mortar, both retailers and manufacturers, suffered a huge blow when the pandemic hit and stores closed. Many of them are now scrambling to catch up and bolster or create their e-commerce channels and just in time. E-commerce has surged with Accenture reporting that “much of this new e-commerce activity has been from new users. COVID-19 will permanently change consumer behavior. Consumers’ attitudes, behaviors, and purchasing habits are changing—and many of these new ways will remain post-pandemic.” It is clear that companies that can exploit this channel, but those who fail to do so will slip behind their competitors.
Meeting the Challenges of Direct-to-Consumer
Organizations today know the value of being customer-centric, focusing on the end-customer, and tailoring the supply chain to serve customer demand as and when it happens. However, this means having products available, keeping customers informed of the progress of their order, and ensuring a timely and smooth delivery experience. In these times, it’s extremely difficult and costly to acquire a customer, and a single bad interaction can lose them.
That becomes a major challenge when customers are everywhere, in stores, physical and virtual, shopping on third-party marketplaces, and researching and reviewing on social. Today, being customer-centric requires a view across all demand channels and the ability to aggregate that demand. It also requires visibility to all available supply so organizations can coordinate that supply to meet demand at the lowest cost. That might be a pick-up in store, ship from store, ship from DC, or from the manufacturer direct to consumer.
To do so efficiently requires the ability to plan, collaborate, and execute across the extended supply chain. What does it take?
A Connected Real-Time Business Network. Companies need to be connected, not just to their immediate trading partners, but to their entire supply network. This means connecting and coordinating with distribution centers, fulfillment partners, retail locations, and parcel carriers, and perhaps with “white glove” installation and service partners.
Processes to Support Order Size of One. Companies of all sizes need to become better at efficiently managing single item orders. However, those new to e-commerce and accustomed to shipping bulk order quantities to distribution centers and stores will need to move to smaller order quantities through to the end customer. The rule upstream has been to enforce minimum order quantities in order to drive efficiencies and lower costs. Today, shippers must process a “little-and-often” approach that is predicated on point-of-origin collaboration and consolidation to move smaller quantities more frequently based on real-time demand updates.
Real-Time Data. It is possible to move to smaller order quantities and actually decrease costs by using the end-to-end network since it can provide real-time data down to the item level. This eliminates information lead times and enables real-time visibility and collaboration. In turn, this reduces variability and the bullwhip effect for all trading partners by providing real-time insight into demand across all tiers. It creates better alignment between departments and partners and coordinated response to demand and makes possible truly demand-driven logistics. From a transportation perspective, mixed loads will become the new normal.
A real-time network also enables visibility to, and the ability to redirect and reallocate supply from all sources, stores, warehouses, suppliers, even product in-transit to match demand. This means more agility and accuracy in deploying inventory and using the most cost-effective source of inventory for customer orders.
Integrated Logistics. For optimal efficiency, organizations also need logistics options across every mode, from international and ocean to domestic and last-mile delivery. Networks enable this because the technology views inbound and outbound orders as two sides of the same coin. What one trading partner considers inbound, another considers outbound. Thus, the only way a last-mile solution can benefit both the consumer as well as the companies providing the goods and services, is to optimize all inbound and outbound across a single network. Providing visibility, control, and math-based or AI-based decision-making at different supply chain touchpoints empowers trading partners to make well-informed decisions about positioning and moving inventory. Telematics and full order visibility enables companies to better anticipate logistics issues, minimize disruptions, predict ETAs and drive customer satisfaction.
Alerts and Analytics. Applying real-time, network-wide data, combined with AI and intelligent autonomous agents, greatly increases visibility to potential problems and expands an organization’s range of options for resolving them. Predictive analytics enable the business to anticipate issues sooner, while prescriptive analytics provide guided resolutions to fix them optimally. In many cases, where the resolution is within predefined “guardrails,” intelligent agents can resolve issues autonomously. This type of AI-assisted and autonomous problem solving is especially important in omnichannel environments, where there are a lot of channels and a high volume of orders and shipments in flux. Applying AI can also help balance complex trade-offs and consider the repercussions of decisions across many variables and at scale, in way that human planners cannot.
The omnichannel challenge of reaching direct to the consumer is winnable. Real-time data, networks, machine learning, and intelligent agents, make it possible for an individual home-based order to trigger a response from the supply network, while also aggregating this demand in real-time across all customers to leverage economies of scale. This allows the supply chain to function as a unified and agile ecosystem to achieve the highest levels of customer service at the lowest possible cost. Yes, even when the orders are home-based for individual items.
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Joe Bellini is COO at One Network Enterprises, provider of an AI-enabled business network platform that enables all trading partners to manage, optimize and automate complex business processes in real-time. To learn more, visit www.onenetwork.com or follow One Network at https://www.linkedin.com/company/one-network-enterprises.
