DC Velocity - February 2018

one they’re really banking on right now.” Technologies that were mentioned most frequently included artificial intelligence and machine learning, which were seen as potentially having a beneficial impact on such areas as demand forecasting, understanding customers’ preferences, and identifying trends that will impact inventory plans.

Most, though, are just beginning to investigate those and other technologies, such as robotics, blockchain, and the Internet of Things. “There’s a lot of interest and there’s monitoring, but not a lot of money invested,” Gibson says. “There’s still a healthy amount of skepticism about how these technologies will play in the supply chain area.” Return on investment (ROI) is another top concern; Defee says one interviewee called articulating an ROI to justify investment “the No. 1 challenge of disruptive technology.” Not surprisingly, then, when it comes to new technology, retailers are focusing on proven winners, such as analytics and warehouse automation. E-commerce fulfillment is driving investment in those and other technologies, but retailers are also using them to improve store operations, Gibson notes. For example, some are buying automated picking and sequencing technology for their stores because the automated systems do a much better job of picking aisle-specific pallets or cartons than a human can, thus allowing for faster on-shelf replenishment.

COMMON PRINCIPLES

During the course of the researchers’ interviews, several common principles came to the fore. One was that retailers should ensure consistent service and product availability regardless of how they are interacting with customers. Another was that they must become true omnichannel organizations, leveraging inventory, technology, and distribution networks to get to a single pool of stock. Omnichannel success also requires the capacity to deliver orders wherever and whenever the customer wants them. “We’re going to hit that tipping point where a retailer’s capacity to make last-mile deliveries will either be game-changing or it will bog [the operation] down and get very expensive,” Gibson says.

Finally, the researchers say, retailers are starting to understand that being involved in omnichannel does not mean they are obligated to be “all things to all people.” Instead, many are taking advantage of advances in supply chain analytics to judge whether their scope of offerings and cost to serve specific channels and customers are justifiable. How they respond to the data will be driven by external competition and/or internal strategies, Gibson points out. Something may be costly from a supply chain standpoint, he says, but in an omnichannel world, retailers ultimately must make decisions based on overall strategic benefit.