Frits van den Bos is Manager of Innovation at GS1 Netherlands, a data standards non-profit which establishes supply chain standards like the unique Global Trade Item Number. The company defines ways to store and transfer data so organisations can exchange information smoothly. Given his expertise in the field, we reached out to him for ways retailers can optimise their supply chain.
1 Invest, Invest, Invest
If you look at Amazon and Alibaba, they’re heavily investing in their supply chain capabilities. This isn’t necessary normal — what we’ve seen so far is that most people operating in e-commerce are really focused on building their platforms, their user base, their communities, but at some point you really have to invest in efficiency. This said, Amazon isn’t necessarily doing everything right — recently we’ve learned from the news that they get rid of products returned to them in Germany — these are all aspects that you need to take into account when designing a supply chain. But as a rough rule of thumb, if you’re investing enough into your supply chain, the amount you’re spending on supply chain should make you wince a little.
2 Think About The Big Picture
People tend to analyse their potential customers or their supplier but if you really want to fulfil the ever-changing demands of the consumer, it’s important to consider the shopping environments offered to them. Today, consumers go online and look at the cheapest version. Maybe they’ll opt to go with a Chinese website and wait two weeks for the product to arrive at their door but they won’t pay any shipping costs. Others think “I want to have it now!” and then they opt for another site with two hour delivery or they go into the store. So look at the bigger picture, what roles you can play within the supply chain. What USPs can you offer in the context of the shopping environment you’re competing within?
3 Big Data Is Key
If you want to follow consumer buying trends, big data can be helpful, especially from places like social media. I think that big data can also help with forecasting purchases, so that’s basically what companies like Amazon are doing when they say we know what you’re going to buy. And if you’re very good at it, you can then act on it in terms of supply chain behaviour. So for example, if you tweet a lot about going to the dentists, Amazon might display toothbrushes when you visit their home page. They might also ship toothbrushes in your direction, not to your door but to a distribution centre nearby to be sure there’s a high enough stock of toothbrushes in your area. This means if you make a decision to buy a toothbrush, they’re covered.
4 Tracking Parcels Is Increasingly Vital
If we look at where delivery is headed, what you see is that there will be many more parcel delivery companies as well as many more systems — systems that sort parcels, systems that deliver parcels like self-driving trucks. So if you look at that and think about a supply chain where you’d have all these parties shipping all those parcels and using all those systems, you can imagine that you’d have to think about standards. After all, if you ship a parcel from the UK to Europe, you hand it over and when it crosses the border, you don’t want to put on a new label for that parcel so it can be processed by the other carrier. You want to keep the same label but want to enable the other carrier to be able to read the barcodes on the parcel, which isn’t currently the case.
So that’s where I think companies should rethink their way of doing business in order to achieve an improved cross border traceability. At the moment, 40% of parcels can’t be tracked and traced across the border. They can improve service, they can hand over parcels for instance to a city logistics operator if you want to be more sustainable in the area of city distribution, they can improve the returns process and can cut costs if you don’t have to change the labels all the time.
5 Three Is A Magic Number
We published a study in 2013 for e-commerce companies and we developed a set of three core competences that you should master if you’ve got a supply chain. These were flexibility, information and collaboration.
If you look at collaboration, find the right partners, in terms of flexibility as well as in sourcing and flexibility in stock. Information exchange is key: how do you exchange information efficiently between different companies along the supply chain. That could be one to one or one piece of information you send to all players across the supply chain. That’s where standards for identification and data exchange become crucial. When thinking about collaboration, ask yourself: what is your role in a supply chain/network that wants to fulfill consumer needs?
As told to Savant Events.
Interested in learning more about Supply Chain Optimisation? Take a look at the program of Savant Supply Chain Congress in Amsterdam on the 8th and 9th of May!