How Retail Supply Chains Can Adapt to the New Normal

This article was originally published in PARCEL on July 14th, 2021. Check out the original article here. 

We’ve all heard a lot in recent months about supply chain resilience — and with good reason. The cycle of lockdowns, reopenings, and supply chain disruptions caused by the coronavirus crisis forced virtually all businesses to change, adapt, and evolve in some way. For those that have survived the initial waves of disruption, the remaining question is how to plan for — and adapt to — what comes next.

Nowhere is this more true than in the retail supply chain. As McKinsey notes in a recent article: “Near-term issues of cash management for liquidity and solvency are clearly paramount. But soon afterward, businesses will need to act on broader resilience plans as the shock begins to upturn established industry structures, resetting competitive positions forever.” No matter the shape and size of your retail supply chain, there’s a mountain of uncertainty as you approach any new business decision.

There’s no surefire set of tips or tricks that can help retail supply chains adapt to the new normal. But there is one often-overlooked principle that can help guide supply chain managers and other stakeholders through this transitional period: focus on exceptional customer delivery experiences.

Understanding the Amazon Effect

Two key facts about Amazon’s success during the pandemic tell you nearly everything you need to know about the new normal:

• By May of 2020, more than 15% of Amazon’s shipments were arriving late as a result of COVID-related increases in click-to-ship and click-to-door rates.
• At the same time, Amazon’s stock continued to soar, and the company’s astronomic success showed little signs of abating.

The Amazon Effect (in which end consumers increasingly demand better visibility into delivery and faster shipping turnarounds) is real, and it has a meaningful impact on businesses up and down the value chain. But if Amazon can succeed even if one- or two-day shipping isn’t feasible, then we have to reexamine the value we place on the different elements of Amazon’s influence. At the end of the day, it’s not all about speed; it’s about providing a consistent, transparent delivery experience to customers. To wit, HubSpot recently posted an article that offers e-commerce business advice by way of Amazon, in which the author writes: “Amazon has grown to where it is now, not because of some magic formula, but because it acknowledges one fundamental truth: businesses exist only because of their customers.”

Delivering on Customer Experience in the Last Mile

So what does a customer-centric last mile — i.e. one that prioritizes strong customer delivery experiences— in retail look like? It looks like giving customers the ability to schedule their own deliveries from multiple capacity-aware options. It looks like offering proactive communications when an order is ready to ship, when it’s out for delivery, and when it’s expected to arrive. And, crucially, it looks like notifying customers immediately if there’s a delay or if an order needs to be rescheduled. For big and bulky items, say furniture or appliances, this proactive communication needs to include accurate ETAs on the day of delivery (so that customers are home to let technicians in for an installation). Options for real-time order tracking in situations like these can also be crucial to providing transparency and predictability to end customers.

In short, you need to make sure that customers can get all the information about their orders and deliveries without picking up the phone. When a situation does arise that warrants an inbound or outbound call, you need to offer up-to-the-minute information and a flexible attitude towards resolving the problem.

Grappling with Uncertainty in the Retail Supply Chain

To make the kind of customer experience we’re describing feasible, your average retail supply chain manager would have to significantly up their own level of visibility into their last mile delivery operations, as well as warehouse management and other touchpoints. On top of that, you’d need tools and technology in place that enabled flexibility and helped maximize capacity.

Is it really worth the investment to adopt these tools for the sake of crafting great delivery experiences? Will that really help you evolve rapidly to thrive in the mysterious new normal?

The thing is: these kinds of tools and tactics are already necessary to create an adaptable, resilient retail supply chain in the first place. In another McKinsey post (Five actions retail supply chains can take to navigate the coronavirus pandemic), they recommend relaxing one- and two-day shipping requirements and optimizing routes to improve capacity while boosting flexibility around changing orders and returns.

You wouldn’t expect anyone to argue too vehemently against these tactics — but when we frame them around the customer and the customer experience, a few things become obvious:

• We can’t truly know what consumer buying habits or preferences will look like in the “new normal.” Will there still be demand for curbside pickup? Will consumers keep buying via ecommerce at the same rate?
• We don’t know what consumers will buy in what volumes — but we do know what they want: they want to make purchases of items of all shapes and sizes with confidence. They want deliveries that provide a great brand experience and a feeling of empowerment.
• When making technology decisions, we can then focus on meeting those basic needs, even in the face of uncertainty. Routing workflows can be judged on how well they let businesses adapt to changing customer demand and maximize the number of deliveries in a given day. Tracking functionality can be judged by whether or not it can be extended to the customer and leveraged into a delightful brand experience.

There is no cure for supply chain uncertainty or volatility, particularly in the retail last mile. But when brands succeed, they always do so because of their customers. When brands optimize routes, capacity, communication, etc. it should be with those very same customers in mind. It’s impossible to say exactly what the new normal will look like, but providing elevated, empowered, engaging customer experiences throughout the fulfillment process is your best bet for thriving in it.