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The future of order fulfilment

The future of order fulfilment

Retail

STOrai Magazine

STOrai Magazine

20 Aug 2020, 14:54 — 9 min read

With the trend for hyper-personalisation gaining ground, customers are becoming more demanding and are asking for same-day or even same-hour deliveries. These demands are affecting the logistics and supply chain function. 

 

Meticulous planning and execution are needed to fulfil these demands. With the rapid infusion of new-age technologies, the ability to effortlessly coordinate delivery locations, time, and returns mile by mile is no more a novelty, but an expectation. As the online economy grows rapidly, the importance of last-mile package delivery increases—the final step in the competitive and costly process of moving items to customers’ homes as quickly as possible. Delivering products ‘right now’ is the expected norm.

 

The three pillars of the future movement-of-goods networks

Holistic decision-making: The ability to harness and harmonise traditional and new data to continuously learn, optimise, and predict.

 

Intelligent automation: The ability to utilise the right human or machine for the task at hand and automate digital processes

 

Connected Community: The ability to collaborate and connect with partners to see across the network

 

As these capabilities advance, we are likely to witness a high degree of convergence and movement towards data unification across platforms, which will communicate seamlessly behind the scenes. The highly broken global networks of transportation and logistics providers, ocean carriers, retailers, and other large shippers are expected to witness an incremental but fastpaced movement towards integration, intelligence, and automation that can move more goods more quickly to more places, and with more transparency and efficiency than today.

 

With the rapid infusion of new-age technologies, the ability to effortlessly coordinate delivery locations, time, and returns mile by mile is no more a novelty, but an expectation.

 

The value of these enabling technologies will unlock as they converge. For example, as connected communities grow in parallel with maturing IoT and blockchain standards, critical supply chain data will begin to flow more freely across the network (amplifying the power of cognitive technologies to drive improved holistic decision-making). In a similar vein, when holistic decision-making merges with automation, the power of automation will shift from cheaper to smarter as cognitive technologies and predictive insights feed into a growing robotic network (creating intelligent supply chains that cannot only see into potential bottlenecks but orchestrate around them). 

 

AI and ML-based fulfilment systems

The latest AI and ML platforms can help retailers accelerate their order fulfilment process. These technologies allow retailers to automatically map demand conditions with stock availability across stores, warehouses, distribution centres, and even on-road fleet. For example, a US-based footwear manufacturer acquired multiple start-ups with analytics and ML capabilities in the past 18 months. These acquisitions are aimed at combining RFID technology with predictive analytics to accelerate inventory matching and order fulfilment to meet consumer needs. By combining investments in AI and ML technology solutions and rewriting sourcing policies, retailers can be at the forefront of convenience and provide real-time product availability without having to accumulate unsold inventory.

 

The irreplaceable node in order fulfilment journey: While retailers are still contemplating their plans for fulfilment centres and last-mile delivery for convenient order fulfilment, physical stores play a critical role in the supply chain.

 

Retailers are likely to accelerate the conversion of excess space in their stores into micro-fulfilment centres, especially in densely populated areas. One likely hurdle in retailers’ plan to redeploy an unused store space could be redesigning limitations due to clauses in existing leasing agreements, thus pushing more redesigns to owned storefronts.

 

Key trends

The four key trends in this area that retailers will likely adopt in the short term are:

 

Urban fulfilment

It will give retailers the ability to provide same-day delivery service to the connected consumer in large metropolitan areas. While urban warehousing comes with a high price tag, use of local, small delivery vehicles and reduction in distribution spend can result in net total cost savings.

 

Inventory strategy

A competitive supply chain is built on end-to-end visibility and capability to quickly flex with changing demand. Optimal quantity and timing of inventory to align with sales and production capacity are key to enabling smart inventory capabilities and reducing waste

 

Flexible network

It enables supply chains to move assets faster than ever. The physical network needs to change and evolve to cater to speed as shippers are forced to re-evaluate their service-level expectations. Retailers with brick-and-mortar stores are leaning on their ‘buy online, pick up in-store’ or ‘store-to-car’ delivery options to provide flexibility and predictability without having to transport the last mile

 

Data and technology

It allows retailers to transform their supply chains with unprecedented visibility and insights from data. Technology integrations should be focused on understanding the customer journey and providing a substantive improvement.

 

The top 5 tech

Benefits of the top 5 transformational technologies (IoT, AL/ ML, Blockchain, Vehicle Safety technologies, Autonomous vehicles) in logistics and supply chain are:

 

Productivity

New technologies will aid significant productivity benefits. AI, ML and blockchain give logistics teams greater visibility into actual assets in use as well as upcoming or expected demands, which allows them to better optimise routes and equipment.

 

Visibility

Technologies such as blockchain and IoT/telematics will aid instantaneous tracking of any shipment right down to its SKU level. With blockchain, it is possible to see any handover, goods’ condition, or temperatures at which they were warehoused or transported and for what period. Further, accuracy will also be fuelled by greater visibility. 

 

Workforce satisfaction

Workers tend to experience greater satisfaction when they are given the right tools to enable optimum job performance. Workforce satisfaction, aiding retention and recruitment, is another area where harnessing technology will drive innovation and competitive advantage.

 

Customer satisfaction

The technology will deliver significant benefits across the customer experience spectrum. For example, using AI and ML, logistics players will be able to better understand customer needs, shifting from a reactive to a more proactive relationship. Faster adoption will lead to first-mover advantage

 

Flexibility

Key uptime benefits will derive from technologies such as IoT, supplemented by AI, and human intuition. With a clearer window into vehicle use and performance, fleet managers will be better able to use preventive maintenance to avoid potential breakdowns.

 

Competing in the future of the last mile 

Decision-making driven by data is expected to be critical to success in the future of the last mile. Scores of start-ups and old school companies are queuing up to introduce new last-mile solutions in the most difficult and costly leg of the goods journey. Investment of such vast sums of capital proves that customer-centricity is a new way and drives an influx of new-age tech companies. The infusion of institutional capital points to the wave of convenience and flexibility, which is headed towards consumers.

 

Also read: Coping with COVID-19 in the retail sector

 

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Article source: STOrai MagazineExcerpted from the report ‘Digital Disruption in Retail’ by Deloitte and Retailers Association of India.

 

Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the views, official policy or position of GlobalLinker.

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