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04/25/2022

EY offers insight into fulfillment technology

Dan Berthiaume
Senior Editor, Technology
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EY says retailers should keep customers at the center of supply chain strategies.

There are a variety of technology-driven solutions and strategies retailers can deploy to maximize fulfillment efficiency and effectiveness.

Chain Store Age recently sat down with Tony Ward, EY experience-led consumer journey leader, to discuss the latest trends in fulfillment technology. Ward provided his opinions about leading-edge topics including micro-fulfillment, third-party logistics providers, and how to mitigate ongoing disruptions in the global supply chain.

How should a retailer evaluate their fulfillment technology infrastructure?
To meet consumer expectations, retailers require operational excellence. Retailers need to review their overall experience they want to deliver, incorporating consumer expectations. Even after retailers reevaluated their fulfillment technology infrastructure during the pandemic, today’s high e-commerce sales are increasing the demand for logistics automation and is causing retailers to take another look at their technology infrastructure.

Using data analytics and operational testing will help retailers evaluate where the gaps and optimization opportunities are and what solutions are the best fit, including third-party delivery providers or installing micro-fulfillment centers.

When should a retailer consider deploying micro-fulfillment technology?
A retailer’s goal in today’s landscape is to integrate seamlessly with the lives of their customers. The EY Future Consumer Index showed that customers are no longer sympathetic to distribution challenges and delays and are willing to abandon brands based on price and availability.

The biggest reason retailers would adopt a micro-fulfillment strategy is for speed and enhanced experience. If processing is where there are deficiencies, a retailer could look into teaming with larger operational companies to help with fulfillment. Similarly, if a retailer is experiencing long last-mile delivery challenges, connecting with local delivery or in-store pick-up/return facilities could be the solution.

What advantages does a third-party last mile delivery provider offer?
In most cases, third-party last mile delivery providers are more expensive. However, a third-party last mile delivery provider offers a few advantages. They allow some retailers to save time and money, increase logistics capacity, optimize operations and, perhaps most importantly, improve customer sentiment and satisfaction. Leveraging third-party providers can be a good way of meeting experience expectations while not having the huge capital expense in order to get the desired experience.

How can retailers mitigate the impact of ongoing supply chain disruptions?
Visibility is critical to mitigating disruptions in the supply chain. Control tower solutions are an option to provide visibility into the entire network, alert one to existing challenges or those coming, and provide a way to make changes mid flow to mitigate challenges.

Source-to-consumer vertical integration is another option, and paves the path to more consistent supply chain infrastructure. Investing in digital and analytics to increase your awareness and understanding across the end-to-end supply chain will help retailers know where the road bumps are and how to avoid them. Not working in silos will also help retailers be more responsive and agile as they navigate today’s challenges, such as increased demand stop gaps or raw material shortages.

Cambridge Retail Advisors: Don’t overlook the near shore
In commentary recently provided to Chain Store Age by Ken Morris, managing partner, Cambridge Retail Advisors, Morris recommended that retailers consider “nearshore” options for sourcing products that make them less dependent on China as part of their supply chain disruption mitigation strategy.

“You can go back through the supply chain and understand where everything is in real time,” he said. “You can change a shipment from a boat to a plane, identify bottlenecks, and react in real time with notifications by phone, text or email.”

Morris said retailers should look at using nearshore souring providers in combination with investing in advanced transportation management solutions.