Making Supply Chains More Consumer-Centric

Direct-to-consumer (DTC) delivery and e-commerce were already on the rise before COVID-19 struck, which sent sales soaring in the pandemic when online grocery shopping became a necessity. Grocery e-commerce continues to be one of the fastest-growing categories in online sales because consumers have now experienced the convenience of shopping from home. According to the Food Industry Association, food retailers have invested $1.5 billion in technology and developing online-delivery systems. Big companies with deep resources such as Kraft Heinz and Ben and Jerry’s have shortened their supply chains to put the product directly into the customers’ hands with DTC.

Speed Is a Necessity

With the surge in e-commerce, and growing expectations by consumers for a seamless ordering and delivery experience, it is paramount that supply chains make their consumer interactions easier and faster.

Companies need to understand the different service requirements for various customer segments and invest in the infrastructure and technology that will meet their fulfillment needs—especially the number, size, and location of distribution facilities. Creating and maintaining a highly complex fulfillment infrastructure is expensive and time-consuming—even for big distribution companies. Carriers are now analyzing the true cost of goods and evaluating the impacts of only having large centralized facilities with spread-out supply chain nodes, and limited options for smaller, more local facilities, especially in rural areas.

One solution is for different companies to share existing warehousing and transportation capabilities. In addition to reducing costs and speeding up delivery, this type of “asset-light” approach to fulfillment “provides greater flexibility for a company to scale up or down quickly in conjunction with market conditions and customer demand and drives synergies of infrastructure utilization that can have an improved environmental impact,” states Pierre Mawet, managing director of supply chain and operations for Accenture.

“Last mile” delivery services also make a big difference in the consumer shopping experience. Fulfillment timetables are always in flux and consumers want faster delivery. Some companies ship products directly to stores for customers to pick up at the curb or a customer service desk. “Other retail companies are looking to third parties like Uber drivers, start-ups, or omnichannel providers to handle their order delivery services,” states Radial, which specializes in omnichannel commerce. Last-mile tracking technology is also increasingly popular for letting customers know when their packages will arrive.

Data-Driven Results

Customer-centric distribution will be increasingly driven by data-rich processes, such as IoT technologies including automation, robotics, cloud-based warehouse management systems, ordering and tracking technologies, and big data analytics. These tools and systems are being used to transform logistics/distribution into a lean, automated, responsive, and responsible transportation and delivery system that will continue to add value to the customer experience.

Ultimately, supply chains must make the effort to “deeply understand customers, anticipate and shape their short- and long-term needs, and engage each customer or customer segment with different service levels,” says Mawet. “In other words, an intelligent, customer-centric supply chain that transforms a company’s management, distribution, and transportation is greatly needed, especially with COVID-19 rewriting the rules for how people shop today—a new reality that’s putting massive strain on existing supply chains.”