The COVID-19 pandemic and recent global disruptions have exposed the vulnerability of supply chains, and perhaps no industry felt the impact more than retail. Today, retail businesses continue to grapple with an array of issues such as inflation and supply chain risks, relentless consumer demand, supply shocks, trade restrictions, labor shortages and constraints, and dependence on “just-in-time” inventory systems.
At the recent annual National Retail Federation (NRF) trade show in New York, I spoke with some of the industry’s top leaders about how companies can stay ahead of uncertainties and ongoing disruptions. A consensus emerged around the critical need to build more resilient, intelligent supply chains.
The journey to more resilient and intelligent supply chains begins with enterprise modernization. Enterprise modernization enables consumer businesses to create more efficient processes and increase business value by accelerating innovation and adopting new technologies into their processes to:
- Define new ways of working
- Increase sustainability practices
- Enhance shopping experiences across physical and digital channels
- Provide seamless integration between customer-facing and back-end capabilities
- Leverage data, insights, machine learning and intelligent workflows
Through innovation and transformation engagements that span from strategy to implementation, IBM Consulting™ is helping retail organizations tackle today’s modernized supply chains and address the following top trends:
Trend 1: AI and automation
In an IBM® Institute for Business Value (IBV) study, top-performing Chief Supply Chain Officers (CSCOs) are now using 95% more digitization and AI automation than their peers, many of whose systems still remain siloed. These siloes make it difficult to access various systems and extract data from multiple databases.
Deployed across a hybrid cloud environment, AI and intelligent workflows can deliver 360-degree insights and impact analysis that provide interconnectivity and help with predictability.
IBM and SAP have developed industry cloud solutions as part of their longstanding 50-plus year partnership. The industry cloud solutions provide intelligent workflows to help companies mitigate supply chain volatility and adjust to the unforeseen with self-learning and self-calibration. Automation can liberate the workforce from repetitive tasks.
Join us at the NRF Supply Chain 360 in April
Trend 2: Hybrid retail
Welcome to the age of hybrid retail, where consumers no longer see a distinct line between online and offline shopping experiences. They expect their shopping experiences to be seamlessly connected across platforms, online and off, 24/7.
Experiential hybrid retail is an omnichannel approach to strategically blending physical, digital and virtual channels. In relation to supply chains, this means combining different sales and operation systems, or merging warehouse or fulfillment operations to serve online and in-store requirements easily.
To maintain a competitive advantage and deliver on customer expectations, retail supply chain management needs unparalleled degrees of visibility, transparency and automation. IBM is helping clients tackle this challenge with IBM Intelligent Merchandise Planning for SAP® Retail. This flexible and scalable solution utilizes advanced AI and machine learning capabilities to handle huge quantities of data, minimize manual intervention and maximize accuracy.
Trend 3: Sustainability in retail
The demand for sustainable brands continues to grow. According to a 2022 IBV consumer study, some consumers will pay up to 70% more for products branded as sustainable. The study also found that purpose-driven consumers (those who “choose products and brands based on how well they align to their values”) now represent the market’s single largest segment, eclipsing value-driven consumers who make purchasing decisions based on price.
Transformational sustainability occurs when sustainability becomes an integral part of an organization’s business strategy. This requires an action plan for sustainability to become core to the company’s values. To help companies accelerate sustainability, IBM has created a five-step guide.
The importance of having the right technology and consulting partner
Leveraging these trends requires overhauling core business processes and integrating technologies such as hybrid cloud, automation and AI. Thus, retail organizations are looking for industry-leading services and solutions that allow them to be nimble, flexible and continuously scalable. IBM Consulting is uniquely positioned to help clients digitally transform by combining innovative ways of working with leading technologies and leveraging multidisciplinary IBM industry experts.
For UK pharmacy Boots, online business skyrocketed during the pandemic. They needed to quickly create a more seamless shopping experience, which kicked off their engagement with IBM Consulting. Applying the IBM Garage Methodology, the Boots and IBM iX® teams used the Red Hat® OpenShift® on IBM Cloud container platform to build, replicate and launch a modernized digital environment for e-commerce tools. Since its digital transformation, the company’s customer base has grown more than 45%, and orders have increased more than 42% annually. What’s more, revenue is up more than 54% annually and up more than 115% over two years.
The future of retail
It’s clear: Today’s retail leaders must maintain supply chain resiliency to support the next-generation retail experience of omnichannel engagement, experiential shopping and conscious consumerism that today’s consumer demands.
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- Source: https://www.ibm.com/blogs/internet-of-things/top-supply-chain-trends-in-retail-2023/
