Home' MHD Supply Chain Solutions : MHD Mar-Apl 2015 Contents N
ot only is e-commerce rapidly becoming
a significant channel for revenue growth
for retailers in Australia, there are plenty
of foreign businesses gaining the attention -
and spending - of our consumers beyond our
shores. If Australian retailers want to prosper in
this highly competitive e-commerce world, the
successful integration of online channels with
physical supply chains is vitally important.
Frost & Sullivan estimates that local and
overseas online retail purchases by Australians
alone will reach $25 billion this year. But the
worrying trend is that currently 33-50 per cent
of all online expenditure is going to overseas
sites. The impact is that selling online is
becoming a commercial necessity for many
This has completely disrupted the traditional
single-channel supply chain as we knew it.
Many of today’s retailers are simply not set up to
handle consumers’ increasing expectations for
speed and convenience in a cost-effective way,
and are already cracking under the strain of the
new omni-channel world.
To throw another spanner into the works,
the sheer geographical distances between
Australia’s capital cities means competition in
the online game is being determined by how
well the supply chain is working, and whether
customers maintain their loyalty.
A robust yet flexible supply chain is no longer
a competitive advantage in e-commerce – it’s
become a crucial requirement for survival.
There’s no doubt that a supply chain is only
as strong as its weakest link. Once business
partners connect or integrate their systems, they
rely on each other to keep their promises to
THE ICONIC and SurfStitch are two classic
examples of online retailers that are aggressively
backing this strategy, both offering next day
delivery, free shipping, and generous return
policies. But for many, the costs – a large
portion of which stems from expensive IT
systems and warehousing, and the actual
deliveries of goods to people’s homes once
they’ve been ordered online – are tenaciously
high, and new revenues coming in may not be
increasing quick enough.
What is clear is that there are three key
strategic drivers - customer, flexibility and
visibility – that are critical components of
successfully integrating online channels with
physical supply chains.
Power of the customer
Selling anything is about understanding and
responding to the customer’s requirements.
Customers will continue to raise the bar of
expectations, with 24x7 accessibility on the
device of their choice, and instant, accurate
access to product specifications, price and
availability, along with flexible delivery and
The implication is that everyone up and down
the supply chain must provide accurate, real-
time data. Stock availability, pricing, delivery
dates and cost, order status and so on, must
be updated, calculated and recalculated within
seconds. Mobile devices capturing every
transaction along the supply chain clearly plays
an important role, so barcoding and scanning
at pick, pack and delivery interfaces is vital.
Ease of use, tight integration and investment in
the training of staff to not only use the devices
properly, but also understand the implication of
misuse, will be key.
Strive for flexibility
Conventional supply chains once had clearly
defined links and handovers between
manufacturers, distributors, retailers and
consumers. Bulk movement and storage of
physical product was common. End consumers
didn’t mind, or even preferred, to select, pay
and collect their product in person from a real
store. If delivery was required, it was from that
retail store to the buyer’s home.
Today, dynamic multi-dimensional networks
are required. The picture of a strong, inflexible,
hard-wired supply ‘chain’ is replaced by an
image of a finer, more elastic supply ‘web’ that
is equally strong, but with many endpoints and
a built-in real-time communication system.
The challenge to brand owners and their
supply chain participants is to make the flow of
commerce faster and more responsive to the pull
of customer demand. Planning and forecasting
capability is a feature that is often overlooked,
but is a key factor to enable demand-driven
pull planning with scheduling and rescheduling
production and distribution on the fly. It means
Speed is of the
courtesy of WalMart.
MHD SUPPLY CHAIN SOLUTIONS — MARCH / APRIL 2015
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