Ann Sung Ruckstuhl, CMO and SVP at Manhattan Associates, explores how the transition to omnichannel supply chain structures must consider environmental concerns.
We are in the midst of a real-time seismic shift as consumers transform expectations from global patterns of supply and demand. The pandemic has exposed the fragility of many supply chain networks.
An inability to dynamically detect and adapt to changing demand signals, consumer preferences, labor requirements, transportation, storage, inventory and trade policy shifts has caused wreaking havoc on economies and brands around the world.
According to McKinsey, “Investments in technology and automation in distribution centers are now at the forefront of most supply chain managers’ agendas.” Gartner recently increased its supply chain management technology forecast from 8% to 14% in compound annual growth rate – forecasting an investment of $28 billion by 2025.
Retailers are striving to transform in-store, digital, fulfillment and service experiences with the goal of appealing to omnichannel consumers, increasing employee productivity and increasing profitability, while trying to balance the growing environmental demands.
Digital transformation initiatives have also shifted into high gear across supply chains, enabling brands to leverage cloud, composable IT architecture, microservices and AI to better match supply on demand.
To say change is on the way is an understatement, but at the end of the day, the way revenue is generated has always been the same: keep your store shelves full, online orders shipped, and consumers happy.
Consumers under control
The difference between today’s retail landscape and that of the past is that in 2022 there will be exponentially more choices (of products, purchase options, fulfillment options, delivery options, payment options, etc.). Consumers control the purchase journey, which makes it all the more difficult for the brands that serve them to meet expectations.
If the picture wasn’t complex enough, many brands are still struggling to mitigate the effects of the aftershocks caused by the global pandemic, which include severe labor shortages in warehouses, on the docks of shipping and truck depots, and in stores with retail associates.
Finally, there is an unforeseen effect of the pandemic that is perhaps shaking brands more deeply than anything else. A growing number of consumers (driven primarily by Gen Z) are placing a strong emphasis on sustainability and “green” credentials.
Combined, these trends and challenges create the perfect framework for what we in Manhattan like to call supply chain commerce.
About Supply Chain Commerce
Supply chain commerce is an emerging market category. It’s basically unification and a new way of solving the age-old problem of supply and demand, and moving goods from point A to point B. Basically, it means rearranging the chains physical and digital supply chains to connect and align them with the expectations of greater consumer and societal responsibility, today and tomorrow.
In terms of demand, over the past two years, a large number of consumers have become omnichannel natives, making purchases in physical stores, online, in call centers, through mobile applications, media platforms social and even pop-up stores.
Time is precious, and they expect brands to know their likes (and dislikes), serve them, and shop how, when, and where they want. Additionally, motivated shoppers are increasingly demanding visibility into brand business practices such as sustainability initiatives – often expecting to see tangible evidence of the environmental impact associated with their purchases.
When it comes to sourcing, many brands still operate supply chains that predated omnichannel capabilities, with some still running e-commerce and physical stores independently of each other.
Optimized for individual use cases and not nimble enough to meet the ever-changing demands of modern consumers, these legacy systems simply don’t work in a digitally driven retail landscape anymore – both in economic and , above all, from an environmental point of view.
The emerging consumer
The shift in purchasing power to Generation Z is a massive development in our time. While generational changes happen regularly, perhaps no change is (or will be) more seismic than the rise of this “Zoomer” group.
According to a recent article by vogue, Gen Z consumers are 38% more likely to have shopped online in the past three months. They are ready to buy across all channels, have an appetite for higher quality items, and – just as importantly – are keen to stay on trend with cultural developments like sustainability.
This awareness of societal trends also leads to some key generational spending markers. Zoomers believe that the generations before them represented overconsumption, capitalism and materialism, which means they are more likely to associate themselves and their wallets with brands that align with their core values, such as as environmentalism, equality and fair trade.
Supply chains are undoubtedly one of the fundamental pillars that underpin globalization, capitalism and consumerism. Yet these issues are often cited as the primary causes of the current climate emergency we face today.
Supply chain commerce is about more than directly satisfying supply and demand; this creates new opportunities for brands to offer greener and more sustainable products, shipping options and return choices to consumers.
Optimize the buying process
The right technology can empower and enable businesses to offer their consumers more informed and greener options at every stage of the buying process.
It works from the moment someone clicks a buy it now button, to a more efficient packaging process that reduces shipping volumes, to an optimized transportation route that reduces miles travelled, trucks on the road and the planes in the air. The end results are reduced CO2 emissions, exceptional customer experiences and better alignment with consumer sentiment – all at the same time.
Unifying all elements of the buying journey, from warehouse and transportation to commerce and fulfillment, makes it all possible.
It’s what gives consumers and brands the ability to make last-minute order changes or combine shipments until items leave the warehouse, store, “dark store” or micro-distribution center. Supply chain commerce gives the end consumer tools to make greener and more sustainable purchasing decisions, and brands that do so will – likely – be rewarded with greater loyalty and renewed business.
The integration of national economies into a global economic system has been one of the most important developments of the last century. We must not lose sight of the fact that the movement of goods around the world is of vital importance to the livelihoods and well-being of billions of people around the world.
At the same time, we also have a duty to recognize that the movement of goods can be inherently harmful to the environment, and that growing numbers of consumers are demanding that we do better – in Manhattan, we agree.
Supply chain commerce offers capitalism a “sliding door” moment to take a different path. It represents a chance for capitalism to reclaim its conscience and become a catalyst for a greener, more sustainable future where consumer expectations and the health of our planet can co-exist.
© 2022 European supermarket magazine – your source for the latest supply chain news. Article of Ann Sung Ruckstuhl, Manhattan Associates. Click on subscribe register for ESM: European Supermarket Magazine.