If it’s not one thing, it’s another. Pre-pandemic, supply chains weren’t a hot topic. But the event turned retail on its head, and supply chains suddenly became more complex and less reliable. While inventory and fulfillment continue to drive customer experiences and repeat business, supply chains have become more complex and less reliable.The sudden shift in demand for retailers was epic, and as a result, new industry leaders emerged. Target thrived through online ordering, which provided shoppers with three different delivery methods, using its stores as fulfillment centers. Walmarts’ ecommerce sales grew 74%, which was driven by offering grocery pickup and delivery.
The retail, warehousing, and transport industries have managed to adjust, but it hasn’t been easy. For many, the ability to adjust to new changes may not be sustainable especially if you’re relying on legacy technology to run an ultra-modern operation.
Today, supply chains continue to be the weak link in the retail and fulfillment chain. Globalization has made supplier networks more complex and vulnerable than ever. Simon Ellis, Vice President, IDC, is quoted in a recent IDC study, saying, “Optimizing individual supply chain functions and processes has helped enterprises progress as far as they can. But the growing complexity of global supply chains continues to increase beyond the capabilities of traditional or legacy systems.”
Legacy supply chain systems can’t keep up with rapid change
Customer expectations for higher levels of service and fast, next-day delivery, continue to be extraordinarily high. But the technology to support these expectations, in many cases, can’t keep up with the rapidly changing marketplace.
According to the IDC study, “Supply chains are under enormous pressure, both to be more efficient and effective and to be able to support new and emerging business models.” Nearly one-third of companies expect their business to be disrupted within the next three years by a competitor with more advanced supply chain capabilities.
Supply chain disruption isn’t just about physical disruption. It’s affecting business models, where companies are learning that their supply chains can’t support the data, analytics, and decision-making capabilities they need to fulfill customer expectations for personalization, convenience, and speed.
Since these capabilities are also the key drivers of business growth, the retail ecosystem is rightly concerned about developing a competitive or industry-leading omnichannel retail experience.
The IDC report states, “If one thinks about disruption through the lens of supply chain resilience — the ability to respond quickly and effectively to changes in the marketplace — then physical and business model disruption converge around a similar set of capabilities.”
Transformation is the key to resilience in a disrupted and demanding market, and the ability to respond to change has never been more important.
An opportunity to become a market leader
While the supply chain has its challenges, organizations that step up to meet the challenges can position themselves to become an industry or market leader. Companies that continue to rely solely on legacy systems and processes will gradually experience a decline in cost competitiveness. At some point, keeping up with more efficient competitors may become impossible.
Bob Lord, Senior Vice President, Cognitive Applications and Developer Ecosystems, IBM, says in a recent press release that supply chains are now mission-critical and are crucial to driving success and profitability for all businesses. “Many organizations have risen to the top of their industries by building efficient and agile supply chains,” he says.
The key to supply chain success, according to Juan Andres Pro Dios, CIO for El Corte Ingles, one of Europe’s largest department store chains, is taming complexity with technology. He’s quoted in the IDC study: “The complex, global nature of our omnichannel operations presents a significant supply chain challenge that could be turned into a business opportunity if the right technology is applied.”
Some technology companies are responding by modernizing their legacy applications to run in the cloud, with tools to help them innovate quickly in response to market changes. Lord said that modernizing supply chains on top of open, hybrid-cloud platforms such as IBM Sterling Supply Chain Suite can help companies across all industries enter a new era of global competitiveness.
Pivotree offers several tools to help businesses modernize order management systems such as IBM Sterling Order Management, including Pivotree WMS for warehouse management and inventory tracking, Pivotree Connect for supply chain systems integration, and Pivotree Control Tower for systems and process monitoring.
Supply chain disruption is the new normal. Companies that modernize their supply chain systems to work as an ecosystem of integrated solutions will be in the best position to weather disruptions and quickly take advantage of new business opportunities.
About Pivotree: Pivotree designs, builds, and manages frictionless commerce experiences for brands and their customers around the world. We provide end-to-end solutions and services in Commerce, Data Management, and Supply Chain for hundreds of brands globally.