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Improving Retail With Supply Chain Digitization

The Fourth Industrial Revolution is disrupting almost every industry in the world. The breadth and depth of these changes herald the transformation of entire systems of production, management, and governance. Despite the relatively deep penetration of these technologies in media, retail, and high tech, industries are less than 40 percent digitized according to survey conducted by McKinsey.


Retail is the second biggest industry with a focus on digitization and is undergoing major changes mainly due to consumer trends, such as the demand for faster delivery of goods. This results in high pressure on the Supply Chain that needs to fulfill these demands.

A survey by McKinsey

 

The benefits of Supply Chain digitization

Organisations should use data and technology to analyze what needs to be improved and invest in Supply Chain individualization. One of the benefits of digitization is developing processes that can satisfy consumer trends.

Organisations that have been able to match consumers’ needs have experienced a rise in sales, which means that Supply Chain is no longer limited to the cost reduction dimension, but can now increase sales and revenue. Both Amazon and Apple are good examples of consumer-driven supply chain organizations.

The challenges in Supply Chain digitization

Big organisations face a lot of challenges because they operated in a ‘face to face’ mode for such a long time. Now, they see a very rapid rise in the online trends. To change a structure designed to produce a big amount of products the Supply Chain has to be reinvented. Organisations have to scale down all the processes and make it more individualized, which involves a lot of investment.

 

Despite Supply Chain’s potential impact on revenue and profit growth, organisations aren’t yet investing heavily in this dimension. From the survey conducted by McKinsey, we can see that only 2 percent of the respondents reported that Supply Chain is the focus of their forward-looking digital strategies. While the potential and investments are huge, the RoI is in the long run – Amazon didn’t deliver profits for a long time.

A survey by McKinsey

 

Successful Supply Chain digitization

There are different strategies in Supply Chain digitization. One of them is the acquisition of online retailers who already have the necessary platforms. In many cases, they have been bought by big organisations in order to use these platforms as their own. It is a good approach for more traditional companies to have someone already specialized in the field.

 

The second option is technifying the Supply Chain. Investing in Supply Chain innovation using data analytics and technology. In this case, organisations have to invest in people with appropriate skills.

 

Walmart is an example of the first case. They have been acquiring zed.com, which was a very big online retailer and many other online sites, which they have been using as a base for their own online platform. This is the strategy they use to fight Amazon.

 

Another example is Target, that bought Shipt, an online grocery delivery service. They used Shipt in order to fulfil the customers’ demands from home. This was copied by many other organisations, which added the digital distribution to their brick and mortar operations as well.

McKinsey found that leading organisations tend to respond to digitization by changing their corporate strategies significantly. Many digital disruptions require fundamental changes to business models. 49 percent of leading organisations are investing in digital more than their counterparts do.

 

The impact on HR

There will be a shift in demand for talent. The number of positions connected to Supply Chain advancements will exponentially increase. As a consequence, there will be an increasing demand for particular talent with appropriate skill sets.

 

This includes broad Supply Chain experience and a grasp of the processes. Digital channels comprehension, that e-tailers and retailers who are already in the online industry, will be in high demand. People that have led the change from a brick and mortar company to a successful online market will be extremely valued.


While looking for executive talent we’ve seen an increased demand for technical skills like Integrated planning & Execution, Smart Warehousing, Digital Procurement, B2C Logistics, Omni-Channel Integration and Predictive Supply chain analytics. Soft skills like transformational leadership, strategic thinking and Creativity are pressing requirements too.

 

According to a recent study by Deloitte, only a quarter of executives are highly confident that they have the right workforce composition and skill sets needed for future.

 

As we embrace the 4th Industrial Revolution, we at Loftus Bradford are helping clients with their revolution and evolution by bringing the right talent into right positions.

Girish Pramani

Engagement Manager consulting CPG, Retail and Pharma companies globally on attracting high potential talent. He recruits talent in E-Commerce, Supply Chain and commercial functions at Executive level.

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