SUPPLY CHAIN

The secret to a successful holiday shopping season: the supply chain

Whether you’re a retailer in New York City, London, Hong Kong or Madrid, winning the holiday season takes many months of preparation.

Teams come together to plan literally everything, from their product deals to the flow of the store and how many cashiers will be needed for each shift. The list goes on and on.
What I find interesting is that one of the most unappreciated elements of this ramp up period, and one that you rarely hear about outside of retail circles is the supply chain. The irony is, one missing link in the supply chain can lead to disruptions that can upset all the preparations retailers have made in their stores and on-line and the ultimate result is an unhappy customer.

The reason the supply chain garners such little praise is that the eyes of the shopping world are focused on the hottest products and best deals, the ones we all read about online and see on television. While “deals” dominate the discussions, it’s the supply chain — much like Santa’s sleigh — that holds the ultimate keys to spreading holiday cheer.

Most people don’t think about or take notice of the supply chain until something goes wrong. And without technologies, such as augmented intelligence (AI), which includes the involvement of humans, and the Internet of Things (IoT), it’s a matter of when it happens, not if.

Supply chain solutions are becoming increasingly complex and are overflowing with different formats of data, unimaginable amounts of data. Just think about it. Every product, invoice, bill of lading, and piece of data associated with a transaction or shipment from the company or one of its hundreds or thousands of suppliers and partners is part of the supply chain. And every single one of them has ability to interrupt the supply chain, not to mention uncontrollable factors like a flat tire on the delivery truck or a snow storm near a distribution facility.

With customers demanding flawless execution throughout the entire purchasing experience, retailers need a supply chain that is agile enough to manage inevitable disruptions and make quick, intelligent decisions. With AI and IoT, retailers can do just that by analyzing previously “unseen” data, including everything from in-house omnichannel sales metrics to outside information on consumer trends, weather, news articles, social media posts, and more. They can then pull valuable insights that greatly improve their ability to manage inventory, drive efficiency and mitigate risk. Supply chains powered by AI even have the ability to predict disruptions before they happen—like spotting that potential storm I mentioned earlier—and recommending the necessary action to avoid disruption.

Just imagine a retailer’s most anticipated product of the season — let’s say a beautiful limited-edition wrist watch — is expected to reach store shelves just days before the holidays. Consumers are literally counting down the days to its arrival, and suddenly, a snowstorm is forecasted to hit the main distribution center exactly when shipments should commence, threatening to delay the retailer’s entire fleet.

Typically, this would result in a flurry of activity. People across an entire organization, as well as suppliers and business partners, make endless calls, emails and texts, all to decide what action will be best for the business and its customers.

Even with the best contingency plans, it’s very likely that a delay of some kind will occur. What happens when the watch arrives late? We all know how customers will feel. When highly-anticipated items are out of stock on the biggest shopping days of the year, according to a study, more than three quarters of shoppers will abandon a retailer’s website and search elsewhere online for their gift, according to data from Deloitte.

But supply chains that use cognitive technologies can recognize the potential disruption due bad weather with enough time to notify supply chain managers, analyze the impact on inbound and outbound shipments, and share a recommendation of alternative actions to redirect inventory and ensure timely deliveries.

By using these solutions at IBM, the company has saved more than $40 million, reduced informational retrieval time by as much as 75%, and increased visibility into the entire supply chain. Retailers that implement similar technologies can cut the time it takes to make highly informed business decision from days to a matter of minutes. Most importantly, consumers still receive their products exactly when they expect.

These quiet victories and no disruption to the customer experience are what will determine a retailer’s success this season. Above all, it requires flexibility and nimbleness within the supply chain. No amount of preparedness will erase the unpredictability of the holidays. However, with a finger on the pulse of data, all holiday shipments can still reach their destination in the time and at the place promised — and without the need of a holiday miracle.

Harriet Green, general manager, IBM Watson Internet of Things, customer engagement and education

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