Article | August 17, 2017

How To Beat Amazon By Digitizing Your Supply Chain

Transparency In The Supply Chain

By Bernard Goor, vice president and industry evangelist, One Network Enterprises

If traditional retailers have not gotten the newsflash yet, here it is: Amazon is coming after your business. As demonstrated by Amazon’s intent to purchase Whole Foods, there is no stopping the e-commerce giant from using its vast resources to continue its pursuit of retail dominance. A quick look at the retail company valuations in 2017 compared to 10 years ago clearly shows the significant impact Amazon has had on all retailers.

Confronted by this dire reality, what options do retailers have? Stuck on low margins and outdated business models, their only chance to survive resides in implementing two strategies swiftly and decisively:

  1. Digitize the consumer experience. We all know it by now: Shoppers want the retail brands to deliver consistent and personalized experiences across all the stages of their shopping journeys, no matter which channel they use. This will force retailers to implement new business models, such as digitizing their brick-and-mortar stores, offering click and collect, delivering to the shoppers’ home the same day or the next day. This will require massive investments which most retailers can’t support unless they free up working capital somewhere else in their business — especially in their supply chain.
  2. Digitize the supply chain. Retailers have traditionally not been very good at collaborating with their supply chain partners. This adversarial and win-lose mentality has to give way. Instead, they need to create a collaborative and connected win-win framework with their supply chain partners in order to reduce the high levels of inventory typically maintained, or worse, avoid less-than-optimal on-shelf availability. By implementing a digital supply network, retailers can connect in real time with their distributors, suppliers, and carriers, and enable them to synchronize demand and supply at every node in the network. This allows retailers to improve on-shelf availability, increase service levels, reduce COGS, and optimize inventories at every node in the network.

Let’s illustrate how a digital supply network can transform the retailers’ supply chains and drive massive improvements in their top and bottom lines:

In a traditional supply chain…

With a digital supply network…
  • You use enterprise solutions (e.g. ERP) to conduct your B2B business.
  • You leverage a fit-for-purpose multi-party platform to conduct your B2B business.
  • Each company on your B2B network uses its own data.
  • Each company in a multi-party platform leverages a single version of the truth.
  • Every discussion between parties in your B2B network involves reconciling different sets of numbers maintained within each enterprise, with costs time, aggravation — and ultimately revenues and profits.
  • Every discussion between parties in your B2B network leverages a single set of data on the network, which makes it very easy for parties to quickly agree and settle.
  • All the companies upstream in your supply network are connected to you via a complex, expensive and manual combination of EDI, emails and spreadsheets.
  • All the companies upstream in your supply network are connected to you via a single connection to a multi-party platform.
  • Each company in your B2B network leverages its own set of systems to enable its enterprise-centric Procure-to-Pay and Order-to-Cash transactions, which means that everyone is replicating the same operations endlessly across the network — at great cost.
  • Each company in your B2B network leverages common multi-party processes to operate multi-party transactions on the buy and sell side, resulting in greater agility and velocity, at a much lower cost.
  • You use planning systems that require you to extract large data cubes from your execution systems, produce plans in a disconnected mode, and transfer your plans back into your execution layer at some later time, causing the plans to be late and ineffective.
  • You leverage machine learning-based planning agents that run directly on your execution data streams, allowing you to optimize your operations in real time.
  • Your current supply chain setup causes delays, frictions and inefficiencies, and makes it structurally very difficult for you to improve the performance of your supply chain, in terms of cost, velocity and transparency.
  • A digital supply network will enable you and your trading partners to optimize the entire supply network, resulting in increased revenues, lower costs, greater agility and full transparency.

In an effort to remain competitive (and in some cases, remain in business), retailers must digitize their supply chains by implementing a consumer-driven, intelligent, digital supply network to help improve on-shelf availability, increase revenue, reduce COGS, and slash inventories. In so doing, they will be able to generate the cash flow required to transform their shopper experience and compete more effectively against Amazon.

Every retailer is on the clock as indecision, status-quo and inertia play to Amazon’s hand. It is time for retailers to act, and leverage the same modern capabilities that have helped Amazon achieve such impressive results. Digital supply networks make be the lifeblood retailers need to deliver better service and value to their shoppers, and more importantly to ensure its long-term survival.

About The Author
Bernard Goor is Vice President and Industry Evangelist at One Network Enterprises, the global provider of a secure, and scalable multi-party business network. For more information, contact the author at bgoor@onenetwork.com or visit www.onenetwork.com.