Last week, at the Gartner Supply Chain Conference, supply chain leaders across EMEA gathered in London. We shared research, best practices, and even a few war stories. Although there were tons of sessions to choose from, it was clear that there’s massive change underway in supply chain: Supply chain leaders are facing new challenges with the rise of eCommerce.
Supply Chain Leaders Face Increasing Talent Shortage
Day One’s Main Keynote emphasized the pace of change in industries due to digital disruption.To leap the hurdle of change, Gartner recommended that “Innovation in Talent” will be one of the keys to success.
The speaker, Dana Stiffler, dove into a challenge that is well-known to SCM leaders in North America — the talent squeeze. In a hypothetical example, she shared that she was searching for a S&OP analyst with specific BI tool experience and AI capabilities. While this may not sound so difficult on paper, sourcing this candidate would be like finding a needle in a haystack, especially with an estimated 90 possible candidates in a London population of 4.7 million (sourced from Gartner’s Talent Neuron data).
By creating this ‘unicorn’ job spec, the talent pool appears to be the limiting factor to some parts of our digital evolution. The most innovative companies are turning the concept of the job spec on it’s head, testing greater recruiting flexibility when it comes to industry experience or traditional enterprise skills. It also turns out that some data scientists prefer to work on a variety of problems, instead of the same brand’s problems day in and out, making the possibility for freelance or project specific work interesting.
Whether it’s a data science role or your next logistics leader, today’s shortage of formally trained supply chain talent doesn’t have to be a growth limiter. Creative approaches to hiring, from seeking specific skills in a different industry and training strong talent in new skills, to enabling more flexible work arrangements will be required to meet the pace of change required for success.
Customer Experience Tops The List Across Industries
In addition to attracting leaders from a vast array of sectors like Telecom, Manufacturing and Agriculture, the conference featured two industry vertical days – Life Sciences and Retail. While networking and attending sessions, inevitably the conversation would turn to customer experience (CX). It was clear that Amazon loomed large not only in retail, but even in pharma or medical device-centric presentations where direct-to-consumer (D2C) fulfillment is on the horizon.
Chris Richter, my colleague at Convey, shared our Final Mile Maturity Model in his presentation, “How Does Your Delivery Maturity Experience Ship Up?” One of our key findings is that when working to evolve from React (Level 1) to Anticipate (Level 2), culture and a commitment to customer experience is the most important factor for progression.
This sentiment proved true at the conference as well. Though our customer insights and survey data suggest that a mere 20.8% are committed to CX in all decision making – the bulk of attendees we talked with are part of the 70% or so who have CX on their minds but aren’t yet fully engaged. Now is the time for supply chain leaders to implement CX measures not only in your day to day work – but also in your incentive structures.
Brands Struggle to Meet Consumer Shipping Expectations
In Tom Enright’s session about competing effectively online, he proposed an interesting approach to address consumers’ rising demands for fast and free shipping. Today, in a classic carrot versus stick manner, retailers tend to offer premium delivery options for premium rates — essentially punishing consumers for seeking a better class of service. These prices are often based on generic estimates, sometimes leaving the retailer with a shipping cost gap to fill or a bit of profit per order.
Tom’s proposal is a variation on the former Jet.com concept of incentives for cost-effective behavior. Jet.com would baseline their price at a relatively high level of shipping service and offer an incentive for flexibility or specific scheduling of a delivery that meets the brands’ fulfillment capacity. Note that there would be a lot of technology, data integration and carrier network optimization needed to do this.
The assumptions here are that incentives are more effective than penalties and that for many purchases, consumers are perfectly happy to wait a few days. In essence, Tom is advocating that brands use psychology to slow down consumers’ ever-increasing demands for instant gratification instead of trying to get everything shipped anywhere in under 2 hours.
Final Mile Retail Fulfillment Complexity is Rising
One of my favorite sessions was presented by a practitioner, Thomas Eichhorn, SVP Infrastructure, Operations and Enterprise Architecture at Adidas. He shared real world stories and a certain pragmatism about how to respond to service expectations that he says include same day and consumer selected delivery, free shipping and returns, and an integrated and seamless shopping experience (across channels). The reality is that Adidas is embracing the complexity needed to respond to these demands – using partnerships and technology to manage through it all.
Adidas is doing three primary things to make it happen:
- Getting closer to the consumer by using their stores, partnerships and traditional DCs to reach consumers within shrinking delivery SLAs.
- Decentralizing inventory physically, while pooling inventory virtually to enable ‘any location’ to serve as the optimal final mile fulfillment hub and overcoming artificial barriers that exist only on paper.
- Investing in automation and testing new innovations that will reduce costs and manage tight labor availability.
Another Thomas, Gartner analyst Thomas O’Connor, echoed the Adidas message. His session on Supply Chain’s fight for the European consumer pointed at the increasing complexity of, well, everything related to final mile and post-purchase experiences. Whether it’s fulfillment complexity, inventory sourcing options or returns – consumers’ appetite for tailored options is only increasing. Brands that fail to recognize and devise strategies to cope with and even thrive in this new normal will find themselves losing share to those, likeAdidas, who are already halfway down the playing field.
Inertia Remains a Top Roadblock for Digital SCM Mastery
One of the last sessions I attended was replete with data – but struck me as a clarion call to supply chain leaders everywhere. James Lisica talked about how to counter disruption through mastery of digital logistics. While there were many benchmarks in his talk, one salient set of findings jumped out. The five digital development roadblocks Lisica cited had nothing to do with technology or capability. They were all about leadership, buy-in and the will to act. Without urgency to respond to the shifts in buyer behavior – whether B2C or B2B – no brand and no supply chain will change in time to benefit from the opportunity that digitalization has to offer.