Typical starting point of client
- Traditional „brick-and-mortar”-oriented companies (retailers as well as consumer goods producers) who want to grow digital sales channels through closer integration with the end consumer quickly realise that the required supply chain is different.
- Requirements of supply chain capabilities can change dramatically and in combination with high digital growth rates lead to severe disruptions in supply chain costs and service levels.
- A typical warehouse operation could easily have to handle an increase in number of order lines of +300% just from transferring 10% of sales volume from a traditional store replenishment flow to a B2C flow, which will have a massive impact on costs and profitability if not handled correctly.
- First of all, every function in the organisation needs to realise that a shift from traditional to digital sales channels can be an extreme change and needs to be thoroughly assessed to identify gaps and define appropriate actions.
- Instead of tweaking an existing supply chain setup to make the new fulfilment models fit into existing operations, make sure to adopt a customer-side view to really understand what the key differentiators will be when operating in a digital environment and what your specific “customer promise” needs to be (for example, regarding order-to-delivery lead-times, real-time order handling, full transparency of stock levels and shipping options).
- Define what will make you the winner in the new market space and translate that into a set of core capabilities for your supply chain function that you need to develop to fulfil the customer promise.
- Assess your capabilities to understand existing gaps that impede digital growth – make sure to cover all functions involved, from manufacturing and planning to warehousing and distribution, but also support functions like marketing, customer interaction and finance.
- Secure internal alignment on trade-offs between costs and profits as well as investments needed to make sure that sales and pricing forecasts correctly reflect the increased supply chain costs that typically come from online flows.
- True understanding of cost and service impacts from a digital sales shift and internal alignment on 1) needed actions / roadmap and 2) impact on overall growth as well as profitability.
- Ability to gradually shift volumes from offline to online without risking service levels or cost-efficiency.
- Clear rationale for initiating customer and consumer dialogues on digital business opportunities.