Mr. Rahul S Dogar is a Co-Founder and serves as Board Member and Strategy & Business Development Head at Holisol. He brings to the table more than two decades of experience in logistics and supply chain with companies like Ikea, Agility, Aqua Logistics, APL.
In today’s business environment, customer experience is taking the centre stage and defining business models. The consumer is becoming more and more demanding and yet price-sensitive, the consumer-facing businesses are focussing on how to make their supply chain agile, responsive while balancing the cost.
The sales environment today is very different and much more complex, having improper inventory levels at the sales point can increase inefficiencies in the supply chain and loss of capital, for example stocking up the excess inventory leads to loss or damage of the product, and it also makes the product obsolete leading to scrapping or disposal of the product. And too little inventory prevents companies from meeting customer’s demands which not only leads to loss of sales it also affects the brand reputation.
COVID19 has also brought many challenges in front of the companies such as a major shift to online purchase, the behaviour of hoarding of essentials led to a mismatch of supply vs. demand, adapting to changes in lockdown norms and reorganizing the distribution of inventory to meet the demands.
The efficient supply chains are now recognized as a competitive advantage and hence companies have a huge focus on optimizing processes and using technology to improve their supply chains.
Because of the increasing complexity in supply chains, customers are seeking entities who can partner with them to provide solutions for these complexities, using technology.
The key market trends driving the change in supply chain logistics are:
Unlimited Choices
The end consumers are being given unlimited choices of products and how they are purchased/delivered or returned. Lead times, accuracy, availability, and reliability are all critically important and so are keeping up with the whims of consumers. Today retailers need to optimize their supply chains to keep up with the rapidly evolving world of the multi-channel retail marketplace.
To meet the market needs supply chain logistics players are focussing on creating a cost-effective solution such as Omni/multi-channel fulfilment centre, which are fully functional as well as plug & play with skilled workforce having experience of managing both offline and online order fulfilment from a single pool of inventory. These multi-user fulfilment solutions offer them the flexibility of scaling up and scaling down their operations based on market demand. In addition, they can switch inventories among different sales channels depending upon the channel performance without having to build additional inventory, thus enabling drastic improvement inventory optimization. They help retailers in bringing them closer to the consumption market with their wide network of facilities across India.
Instant Gratification
A “new normal” is emerging when it comes to the delivery speed that customers expect while ordering online. The narrative i.e., being driven by the industry leaders, placing increasingly more pressure on others to respond accordingly. The one central requirement for a 10-20-30-90-minute delivery promise is a dense network of hyperlocal fulfilment centres located within the consumption hubs. The distance between the fulfilment facility & customer must be kept to a minimum to ensure quick deliveries are possible within the promised delivery timelines.
The supply chain logistics players are investing heavily in building a strong fulfilment network across India to give access to the consumption market to their customers. We are observing a rise in the development of state-of-art and wide range of facilities such as multi-channel fulfilment centres, dedicated fulfilment centres, pick-up centres, hyper-local fulfilment centres, customer experience centres, exchange centres, automated sales centres, return and refurbishment centres and dark stores. We expect this investment will only scale up for higher penetration of the consumption market and improving the capability to serve the consumer faster.
The rising popularity of D2C (Direct-to-Consumer)
The Indian retail landscape has changed dramatically throughout the pandemic. As foot traffic in stores diminished owing to social distancing norms, online sales saw record-breaking revenues for retailers. Moreover, customer demands for safe and contactless home deliveries established the fact that adopting omnichannel selling practices and offering innovative delivery options is necessary for growth.
Many brands are experiencing the constraints of the marketplace including impact on the customer experience. This has led to the gaining popularity of the D2C model to engage the end consumer and increase brand loyalty by providing them customer-friendly policies, product quality and standardized experience irrespective of the platform they are buying from including social media, WhatsApp selling, or their online stores.
When things come back to normal, the bar for the D2C share of the business would be reset at a much higher level compared to a pre-Covid scenario. According to a recent report by McKinsey, 75% of consumers have tried the new shopping behaviours, and the majority intend to keep these in their routine.
With the growing focus on D2C, requirements are being more agile & complex. There is a need to handle and ship out an increasingly large number of orders in less and less time. The supply chain players are building a logistics platform offering customize packaging solutions, faster shipping options, a robust fulfilment network and technology solutions to make the customer’s supply chain agile and responsive. This enables retailers to achieve economies of scale by cutting the intermediary out of the equation and make profits and offering lower prices to the end consumer, creating a win-win situation.
Rising Digitization
The customers’ supply chain being digitized especially there is a major realisation due to the COVID19 as companies with digital knowhow weathered the storm comparatively better. Multiple events like pandemics, natural disasters, and geopolitical instability, and demand variability, geographic and supplier-specific challenges can have a detrimental impact on the supply chain.
Customers are now focusing on using advanced analytics tools using AI & Big Data to enable real-time predictive analysis of emerging events, from financial, regulatory, operational, geopolitical, and natural disaster perspectives.
The supply chain service providers are taking initiatives such as the deployment of mechanical automation at the fulfilment centres to enhance productivity, accuracy, and timeliness. A lot of automation is taking place in both storage & handling including an overhead conveying system for transporting different items, sorting and sequencing, conveying systems and automated guided vehicles for in-house transport, manual, semi-automated and fully automated picking systems including “Goods To Picker”, Pick To Light, Pick By Voice etc. for fast order processing, Ergonomic work stations for accurate picking & Packing performance, WMS solutions for manual, semi-automated and fully automated warehouses, KPI and dashboard tools as control towers & decision support systems.
To stay ahead of the curve in today’s fast-changing retail landscape, companies need to understand all emerging trends and technologies are critical in shaping their supply chain operations for the coming times.
Today consumers are becoming increasingly aware and well connected. They expect a personalized experience and immediate gratification. To get the right products to the right customer, at the right place, at right time and at a cost that satisfies their needs, the retailers need to transform their supply chain to make it agile, responsive, and fast to earn the satisfaction and brand loyalty from their customers.