The Digital Path to Purchase Requires Multiple Supply Chains

The digital path to purchase and omnichannel operations are complicating supply chain operations in a number of ways. The staff at the Council of Supply Chain Management Professionals (CSCMP) Supply Chain Quarterly notes, “Historically, companies have had one supply chain strategy. Either it’s been ‘we are focused on breakbulk closer to the customer’ or ‘we are very fast and responsive.’ Now they need multiple supply chains, not just for different products but also for the same product.”[1] The staff goes on to note that supply chain professionals can no longer operate in a silo but must interact more closely with other parts of the enterprise, especially marketing. “[The digital path to purchase and omnichannel operations are] definitely going to increase the need for cross-functional interaction. For example, currently the insights into ‘who the shopper is’ reside in marketing, and the responsibility for executing on those insights resides with logistics and operations. So now, even more than in the past, the two are going to have to talk to one another. Marketing needs to understand what is possible in the market. And operations and logistics need to understand why they are [designing different supply chains for different shoppers], because it does increase costs, and if they don’t know why they are doing it, they are not going to execute it properly.”

The Digital Path to Purchase and Boundaryless Retail

As I have noted in previous articles, on the digital path to purchase the customer is king. Omnichannel operations provide the consumer with numerous touchpoints so when he or she is ready to make a purchase they can do so in the way they find most convenient. Mindy Grossman (@mindygrossman), CEO of HSNi, calls this “boundaryless retail.” She told attendees at the National Retail Federation’s 2016 Digital Summit that retailers have entered the age of “boundaryless retail, a world devoid of artificial barriers driven by collaboration and innovation where we leverage technology to be a force of change for retailers and consumers.”[2] Grossman is undoubtedly correct and that should keep some retail executives up at night. Analysts from EY report, “Traditional supply chains can’t meet 21st century service expectations.”[3] They also note, “Companies know this: 81% of senior supply chain executives say their supply chain is not fit for purpose for omni-channel.” EY analysts believe, however, that technology can help these executive rise to the occasion. They explain:

“The digital world has shattered two fundamental assumptions of the traditional supply chain: unknown demand and limited capacity. Connected shoppers, devices and objects reveal real-time demand, while a web of connected carriers, contractors, service providers and suppliers make capacity almost infinite. To succeed in these new conditions, companies need to evolve their supply chains into demand response networks (DRNs) that are built to motivate, sense, modify and respond to demand in real time and in an agile, efficient and sustainable way.”

When you see terms like “sense, modify and respond,” your next thought should be about cognitive computing. Cognitive computing systems can deal with the complexity created by the digital path to purchase and omnichannel operations. Cognitive computing systems — like the Enterra Enterprise Cognitive System™ (ECS), a system that can Sense, Think, Act, and Learn® — can handle many more variables than more traditional systems, can integrate both structured and unstructured data, can discover relationships in that data, can provide actionable insights to executives, and can act autonomously to make routine decisions or provide robotic process automation. Because cognitive computing systems can integrate data, they can provide a single database upon which all parts of the enterprise can draw. This helps facilitate the collaboration the CSCMP staff indicates is so vital in today’s business environment.

Why the Customer is King

omnichannel-04According to EY analysts, today’s consumer expects:

  • Anytime, anywhere shopping
  • Seamless shopping across all channels and devices
  • Personalized interactions and products
  • Transparent, holistic information about the product, including price
  • Free shipping and returns

“Anytime, anywhere shopping” means that customers can be found around the globe and they expect the same kind of service no matter where they live. Is it any wonder that 81% of supply chain professionals believe their supply chains are inadequate to meet those demands? If the digital path to purchase and omnichannel operations create a challenge, they also create an opportunity thanks to the digital data they generate. Imad Nusheiwat, Managing Director of UPS Global Solutions, writes, “It is not just how customers search for products online, but where they live, that can provide valuable information about consumer trends. This is data that logistics companies are mining to provide a clearer blueprint for how to thrive in a world where the line between brick-and-mortar stores and digital is increasingly blurred.”[4] He adds, “The rise of mobile shopping has also overlapped with a steady increase in spending in urban areas, highlighting the need for logistics companies to get ahead in assessing their customers’ needs and identifying essentials that may be unique to a particular market.”

E-commerce is Increasingly Becoming M-commerce

Whether shopping online or in stores, consumers are more frequently using their smartphones in their shopping journeys. Nusheiwat predicts, “The future of the store will most certainly involve mobile. Think line busting checkout via handheld devices. Wi-Fi access storewide and tablet based selling may be the new standard in a few years.” The rise of mobile technologies in the digital path to purchase is a global phenomenon. Nevertheless, Joseph Neusu (@JoseNeusu), Group Digital Marketing Manager for Adclick Africa, cautions retailers and marketers not to let a fascination with mobile technologies divert their attention from their customers. “Most marketers and entrepreneurs,” he writes, “make the mistake of assuming that devices, websites and apps are the main cornerstone of digital marketing instead of the customers. However, this is a recipe for disaster! Nothing can ever replace the position of a customer at the nucleus of any digital marketing strategy.”[5]

The good news is that mobile technologies can provide data that can help a company better understand its customers. Deren Baker (@deren_baker), CEO of Jumpshot, asserts, “Analyzing customer data is paramount for businesses today.”[6] As noted earlier, a cognitive computing platform is one of the best ways to ensure analytics capture what is most important about the information found in collected data. Baker notes, “The competitive advantage provided by basing business decisions on customer behavior has led businesses to adjust budgets accordingly for data and analytics solutions. But even with increased budgets, a disconnect between marketers’ perceptions of customer relationships and how those customers feel seems to exist. A total of 81% of companies believed they had complete views of their customers across touchpoints and devices, according to a recent study by IBM and eConsultancy. Unfortunately, 63% of consumers disagreed, insisting their favorite retailers don’t understand them. An increased analytics budget doesn’t equate to knowing more about your customers. For that, you need to connect the dots between customer touchpoints and analyze the full customer journey.” Cognitive computing systems are excellent at connecting the dots.

Summary

The digital path to purchase and omnichannel operations can only be mastered through the implementation of advanced technologies that can gather, integrate, analyze, and act upon data generated during the customer journey. At the same time, it is the customer not the technology that needs to be the focus of digital strategies. As a result, supply chains need to be created for each potential path a consumer might use.

Footnotes
[1] Staff, “How supply chains can support the shopper experience,” CSCMP Supply Chain Quarterly, Quarter 3 2016.
[2] Laura Heller, “Omnichannel is out, boundaryless retail is in,” FierceRetail, 27 September 2016.
[3] Staff, “When on-demand is the norm, can your supply chain respond?” EY, 2016.
[4] Imad Nusheiwat, “How to Plan for the Shopper of Tomorrow,” Longitudes, 25 October 2015.
[5] Joseph Neusu, “Digital marketing isn’t about the tools – the customer still rules,” Bizcommunity, 13 September 2016.
[6] Deren Baker, “Four Ways to Gain a Holistic View of the Customer Journey,” MarketingProfs, 29 September 2016.

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