Retail Gazette and InterSystems host dinner with retail supply chain leaders to discuss how to deal with disruption, embrace AI, and revamp network design.
Retail Gazette and technology provider InterSystems published a supply chain white paper last month dubbed ‘Forget last mile for a minute, it’s the first mile that needs transforming’ – and it was against this backdrop a dinner was hosted for retail and FMCG supply chain leaders.
Although delegates at the roundtable agreed the title statement does not tell the whole story, there was general acknowledgment more work needs to be done to untangle legacy technology and put retailers in a position to gain more control of their supply chains to deal with an uncertain economy and global commerce landscape.
During an in-depth conversation over drinks and a three-course dinner, guests indicated disparate data in supply chain systems provides a particular pain point for forward planning, while there was an suggestion many of the reactive changes made to supply chain networks in the pandemic are causing challenges today that are yet to be solved.
Representatives from a diverse range of companies, including drinks conglomerate AB Inbev, café chain Costa Coffee, high street mainstay Marks & Spencer (M&S), and grocer Sainsbury’s, took part in the roundtable at the salubrious Charlotte Street Hotel in London. Below, under the event’s Chatham House Rules, are some of the key themes to emerge from the debate.
Legacy spaghetti on retailers’ plates
Despite the headaches supply chain professionals have encountered in the last decade – from the uncertainty and administrative burden caused by the UK’s exit from the European Union and a pandemic that turned commerce on its head, to the subsequent political and economic instability – the conversation went straight to operating models.
There was an acknowledgement retail supply chains are more complex that ever before, and need combing through in order to position organisations in this industry for change and improvement in the future.
The concept of “legacy spaghetti”, whereby retailers are dealing with multiple systems and solution providers, and disparate data points, was said to be a common problem across the wider industry.
“Operating models have typically been built by necessity rather than design,” explained one retailer, talking broadly about the state of the retail industry.
“The back-end of the retail supply chain has not been neglected, but many years of decision-making and new ideas and installations have caused difficulties.”
Discussion turned to the pandemic and how so many of the quick decisions to enable business to carry on during the crisis now need to be unpicked. This, it was said, takes up a significant amount of supply chain transformation teams’ budget and energy.
“People focused on bringing systems in during Covid but not getting them to talk to each other,” was one comment that received several nods around the table.
One guest spoke about master data management as a key focus area for their organisation, while another bemoaned the challenges that arise with inconsistent data pools, adding that accuracy of data is fundamental to being able to be better at planning.
AI in the retail supply chain
And it is strong data management and orchestration that is required if the advancements in artificial intelligence (AI) that have come through in the last 18 months are truly going to be put to good use in retail supply chains.
Conversation around AI – from both the delegates and the event sponsor, InterSystems – were measured and realistic, which guests found refreshing because this can often be a subject infused with hyperbole.
“What most retailers are doing with AI at the moment – and most organisations in general, actually – is very basic,” said one guest.
Another added: “You have to be really confident in your data and have all the information in the right place to be able to use AI properly.”
One retailer noted: “AI is on our roadmap but we need to define what exactly AI is – at the moment it is spoken about far too generally.
“First of all, retailers need to make clear what the business requirement is and then they should work out how AI can help. That’s the order in which the conversation around AI needs to go, and perhaps isn’t at the moment because it is such a buzz word.”
Leadership and appetite for change
One retailer even agreed c-suite interest in AI could help organisations map out wider change – they explained using the “buzzword” of these times in business cases can help transformation teams get a lot more work signed off by senior management than they otherwise would be able to.
Regardless of such potentially clandestine negotiations taking place, there does appear more willingness among retail c-suites to enact supply chain transformation, according to the roundtable guests.
“The pandemic made leaders realise orchestration of supply chains was crucial,” said one attendee.
And there is an openness and desire among some of the biggest retailers in the UK that restructuring of the first mile of the supply chain is vital for future success. They said this was highlighted by the popular retailer move to employ transformation directors, and also illustrated by the likes of Sainsbury’s and M&S mapping out these plans in their latest publicly-announced company strategies.
Perhaps indicating why this is such an important area to consider, one roundtable guest suggested: “No retailer has yet got it completely right in terms of how their supply chains serve online and stores in tandem.”
Mark Holmes, senior adviser for global supply chain at InterSystems, and co-host of the roundtable dinner, commented: “The supply chain complexities we’ve been living through over the best part of a decade are far from resolved, and the discussions we’ve had with retailers make that only too clear.
“But the road to enhancement, and future and ongoing supply chain success from the first mile all the way through that final point of consumer interaction, comes with better data orchestration and focusing on the foundational tech stack.”
He added: “We at InterSystems can help companies with that – and once they are working with us, they find further opportunities to drive change by optimising use of AI and sophisticated automation techniques.”
Click here to sign up to Retail Gazette‘s free daily email newsletter
