Here's an interesting article about: CI in Manufacturing and Services

How to increase availability using AI, Digital Twins and Mobile

This article is the follow on from the Servitisation article:

Is Servitisation really the answer?

The following article was published in CILT Focus magazine in October 2018:
Is Servitisation really the answer?

Today I have been discussing CILT Oracle Event 2 May 2019 with Catherine.

I have created the following as a hypothetical solution to the problem of how to successfully implement ERP and other IT systems: Architecting Business Change.

This is the basis of ABC: ABC on Digital Market place

I am hoping we can create something as useful as the Ollie Wight Proven Path out of this

This week Alex tells me he wants to understand 5S so I published this:Workplace Organisation; if you need more please let me know

Last week Alex asked me how to create a Value Stream Map for his service organisation; so I shared this with him: creating-a-value-stream-map-a3

The Challenges of Implementing an Omni-Channel Supply Chain

“The implications of omni-channel retailing are far reaching and, whilst retailers are leading the revolution, their suppliers also need to be ready for the changes.  Yet many are still unsure how their businesses will be affected let alone how they should respond to the biggest change to the retail world in living memory” observed Professor Richard Wilding OBE, co-Chair of LiSC UK at the recent LiSC UK meeting at the Institute of Directors in London.

Omni-channel is one of the latest buzz words to appear in our language, describing a truly integrated approach across the whole retail operation that delivers a seamless response to the consumer experience through all available shopping channels, whether on mobile internet devices, computers, in-store, on television and in catalogues. “Historically,” explained Richard “retailers have developed separate and distinct supply chains to service the internet market, but this is no longer effective or appropriate. The jury is still out as to whether business can make money from omni-channel, but it’s critical to have a solution in place just to survive!”

A Business Revolution
Dr Phil Streatfield, Retail Partner LCP Consulting, is the co-author of a report recently published by LCP called The OmniChannel Revolution. “In writing our report we were looking to understand not only the scale of the challenge facing retailers in their battle to keep up with the aspirations of increasingly tech-savvy customer regarding product visibility, availability, service quality and fulfilment, but also wanted to gain insight into how retail boards were embracing the change.”  

All in Good Time “The move to an omni-channel supply chain will take a retailer, on average, 3 years to achieve; this may be surprising, but when you think how the changes will affect operating models, stock location, physical distribution methods, IT systems, returns, and  even your culture, it’s easy to see why” explained Phil.  

The implications for digital technology are vast and developing apace. “A much higher level of systems integration is required, which is very complex to deliver and can add significantly to the timescales.”

 “Customers are already shopping using omni-channel behaviours. We have reached the point where we have to re-engineer the retail model or risk significant impacts of unsustainable multi-channel inconsistencies and inefficiencies” he predicted. 

63% of retailers surveyed for the report are aiming to make the transition to omnichannel in the next two years, and 75% of businesses are looking to invest up to 3% of their annual turnover in omni-channel development.   Phil commented “at least 25% of the businesses we surveyed had little understanding of whether they would get a return on their investment. They see this as an urgent priority requiring investment just to enable them to stay in the game.  

Overall it looks as if the retail industry is set to invest c£5bn in the next 5 years, with omni-channel fast becoming the ‘need to have’ model for retailers.”

Brand Loyalty

Retailers need to respond to the changing behaviour of their customers and, in doing so, create a seamless experience that maintains and generates brand loyalty to secure competitive advantage. “Tools and data acquisition are only part of the challenge. Omni-channel retailers must develop profound knowledge and insight from the data and disseminate it across all parts of the business in order to generate a paradigm shift in customer intimacy and understanding” observed Phil.

But a company’s brand is not solely represented by the retailer itself; third party suppliers often deliver the brand experience in the final mile to the customer. “Choosing the wrong partner can create a sub-optimal customer experience and undermine the retailer’s brand potentially casing lasting damage.” noted Phil.

Neil Ashworth, Collect+ commented “What customers really value is reliability first and foremost, then price. Customers tradeoff speed for price very quickly.” 

Boardroom Wars

An important and recurring topic of interest to LiSC UK members is how to raise the profile of supply chain in the Boardroom; the challenges brought by the transition to omni-channel will certainly alter the balance of influence in favour of supply chain. Phil explained “A rebalancing of Board relationships between trading and supply chain functions will be inevitable. Given the need to tightly integrate assortment, channel and customer experience, the traditional functional boundaries will become more blurred. Everyone on the Board will need to understand this shift changing business and the impact it will have on their functions. Commercially savvy Supply Chain professionals with accountability for ensuring a consistent customer experience will emerge as key players at the board table.” 

Changing the Game

Phil concluded: “Change is inevitable with the move to omni-channel happening now.  If retailers and their suppliers are going to succeed during this transition it’s critical to fundamentally rethink the business processes and operating model. To ensure success changes need to be part of a more holistic business evolution across buying, retail operations, supply chain and IT.” 

To download the report, visit www.lcpconsulting.com

A Time of Change

Once upon a time, not too long ago, supply chain was represented on the Board at John Lewis as a source of information for the other functions “But not so today,” explained Terry Murphy, Director NDC Operations at John Lewis, “now the supply chain plays a much more significant and accountable role.”

“John Lewis has undergone significant change in recent years. Much of the change is taking place as a result of what’s happening online, but we need to be much more flexible for the future of the business, and that is unknown!” commented Terry. He went on “Historically our stores were split 55% retail space, 45% stock room and back offices, todays it’s nearer an 80:20 split. But omnichannel is changing that balance again as we create space for click and collect storage. We've also had to rethink the way we approach returns - ‘returns’ is not a dirty word! The business recognises that returns often drive footfall into the store; returns are part of the selling experience.” 

The Customer Experience

“Two thirds of the orders we receive involve more than one channel, three quarters of UK consumers own a smartphone, 80% of people use their smartphones in-store – mobile technology and omni-channel are the new norm. 

We have seen a 90% increase in orders placed between 6am and 8am, as consumers increasingly use their phones as alarm clocks and shop from their beds or breakfast tables!” 

“No-one predicted how online retail would grow at John Lewis and we have had to be agile and flexible to ensure we deliver a seamless experience for our customers,” explained Terry, “they don’t need to know that the items on their order may be shipped from different fulfilment centres, customers just want what they ordered on the day and time they were promised it.” 

He continued, “Our customers are increasingly demanding more convenience for the delivery of their orders and for the process of returns. In

2010 26% of our online orders were for next day delivery; by 2013 this had risen to 65% of £1.25bn orders!  We have a large estate and are able to utilise both John Lewis and Waitrose stores for click and collect services, and we also use the network of Collect+ stores; while this gives our customers improved convenience, it creates its own challenges for the business.”

“We in the supply chain have to share the implications for any new propositions across the business,” explained Terry, “the key change in our Boardroom is that the business now speaks the language of supply chain. It may be that we don’t make the most cost effective decision for a fulfilment centre, trading off automation for flexibility for example, but the business understands why that decision has been made.  We also recognise the impact on our people of the changes we are making; our night operations are now crucial to the business and need to be resourced accordingly, and the need for flexible working has also presented its own challenges.”

Looking Forward

“What will online look like tomorrow? Honestly, I just don’t know!” admitted Terry.  “We can use our market intelligence, forecasts and customer knowledge to help us define strategy, but we need to engage with people inside and outside the business so we can keep pace with the change. It’s unpredictable!”

Delivering the Goods

“The most convenient place for home delivery is the home” said Peter Louden, “yet more than 100 million home deliveries fail first time.” Peter is Project Director for an interesting new parcel delivery and collection initiative at Network Rail, which hopes to attract rail passengers to collect their parcels from railway stations as part of their daily commute. “There is massive footfall in railways stations” explained Peter, “with more than 1.4 billion passenger journeys every year. This, coupled with the increasing propensity for employers to stop private deliveries to the workplace means this service could be just what retailers and consumers are looking for.” 

Carrier Challenges

Undoubtedly the retailers need to offer a variety of delivery solutions for their customers. A quick scan of social media sites will reveal a lack of satisfied customers, and everyone seems to have a horror story to tell about parcels left in wheelie bins on refuse collection day. Peter also looked beyond the retailers “The parcel carriers are also suffering in this market. Delivery failures cost the sector c£1 billion every year and there are serious capacity challenges at peak times such as Christmas. Rising B2C volumes only exacerbate the issues and the impact is compounded in the south east of the country.” 

But it’s not just delivering parcels that causes headaches; returns are just as contentious.  Retailers who offer a variety of reliable ways to collect and return parcels are not only attracting more customers, but are also seeing increased loyalty from them. 

Changing the Rules

Network Rail thinks it has a solution that would be highly attractive to retailers, carriers and customers alike.  “Our offer gives retailers supply chain flexibility in a number of ways, not least of which is their ability to change carrier without changing their customer proposition, which is very hard to achieve with present delivery models.  It also provides capacity resilience during peak operating periods, managing a big risk in retailers’ supply chains. Carriers can benefit from a shared user model, reducing the number of doorstep deliveries they need to effect and rebalancing the B2B / B2C mix. The consumer benefits from an increased choice of delivery options and longer opening hours than the Post Office or carrier depots. 

Peter concluded, “There is a proliferation of service offers in the market place, but that’s not a bad thing. In a massive turnaround for retailers, consumers are now firmly back in the driving seat; they know what they want and when they want it, and are less likely to be influenced by the retailer’s choices in this area. Customers are increasingly drawn to retailers who offer delivery, returns and collection services that fit into their lifestyles.”