Rethinking the Supply Chain to Align With Consumer ValuesBy Germán Peralta | Wed, 04/27/2022 - 10:00
In 2022, the traditional supply chain scheme is becoming increasingly obsolete. Ultra-fast delivery, instant gratification and ever more demanding customers are becoming the norm, and retailers that don’t live up to this challenge will be left behind. This has also created a ripe scenario for local businesses to thrive, opening up the first opportunity for a new approach to the supply chain configuration, with both suppliers and retailers catering to carbon footprint-conscious consumers through a special focus on how local businesses can connect with consumers on a local level.
This new scenario involves four main components that nurture a healthy and innovative supply chain: locally-focused development, big data, technology and an innovative human resources approach, all within the context of a reduced carbon footprint. It might seem daunting but with the right approach, it is attainable.
First, and most importantly, it is necessary to think locally. This requires involving local producers into the robust supply chain that connects consumers with locally-produced goods. These local businesses, our local heroes, help communities thrive by allowing sustainable development, creating jobs and significantly shortening supply chain challenges by creating long-term alliances of mutual benefit.
Carbon footprint, a pervasive challenge for retailers, derives from consumers’ awareness of their purchasing habits related to carbon emission impact. As a basic principle, the longer the supply chain, the larger the carbon footprint. Nowadays, with global overnight shipping available for many consumer goods, this reality is becoming increasingly evident as consumers tend to acquire a more conscious approach to what they order and who they order it from. This was highlighted when the supply chain was affected due to the COVID-19 pandemic and created a global bottleneck on long-haul deliveries, and by long-haul, I mean across the globe. This caused uncertainty for retailers that relied on these kinds of deliveries from their warehouses. By involving local producers, we override this problem by sourcing inventories from our next-door partner which, ultimately, has a positive impact on the end consumer.
Secondly, the retail business should not only consist of bringing products to consumers but offering the best products based on quality, convenience, energy efficiency and the smallest possible carbon footprint. Companies should be up to the challenge of an ever-changing landscape and consumption patterns that are part of the Latin American way of life. The diversity and uniqueness within even a single country, such as Mexico, implies that what may be good for one city might not be enough for another.
By being aware of consumption patterns, warehouses and supply chains can foresee the demand and act accordingly, thanks to applied data science using big data. This has the potential of ensuring the right amount of stock on hand at any given moment, creating a flawless purchasing experience that reflects the ultimate goal of every retailer: customer satisfaction.
Then it comes down to technology. Retailers might have a lot of data but it’s rendered useless without the appropriate tools. And sometimes a tool is promoted as a one-fits-all solution that, in the end, may not be the required answer for a given retailer. Technology is applied everywhere, so why not to local retail? The development of in-house solutions is key in keeping up with increasing consumer demands and expectations, so investing in technology is a very efficient way to keep business on track while creating a healthy, easily scalable business model.
We should keep consumers’ values in mind when innovating to provide not only the immediate satisfaction that fast-delivery has promised everyone but doing so in an ethical and sustainable manner, backed by technology. Immediate satisfaction should not be equal to a huge waste of time, resources, energy, and manpower. On the contrary: it is an opportunity to rethink what we’ve been doing, to innovate and to create better opportunities for everyone.
This brings us to the fourth aspect of the supply chain for retail businesses: human resources. What is more important than attracting and retaining talent that is committed to a company’s business goals, while also being satisfied? For ultra-fast retail, the well-being of employees and partners is sometimes overlooked, replaced with the incessant pursuit of customer satisfaction. Why not think the other way around? By creating a sustainable work environment for collaborators — a safe space where they can thrive and grow — the business will be able to maintain healthy customer satisfaction levels. Happy people inside, happy people outside.
In the end, rethinking and redefining the retail industry requires constant innovation, which translates into R&D investment, the ability to react quickly, and the willingness to take risks. Companies should never stop innovating and developing new all-around solutions, especially for their supply chain, because any improvements or setbacks will generate a deep impact on all aspects of the business.
A locally-centered approach means taking advantage of artificial intelligence and big data to find the best strategies to meet consumers’ needs without relying too much on typically long supply chains, which have traditionally been the most immediate solution for retailers and are now obsolete. By taking into account these four pivotal aspects of the supply chain’s innovation, retailers would be able to keep up with the accelerated transformation of the business landscape and create significant experiences in an incessantly changing world.