We are witnessing a clear shift from linear supply chains to more integrated networks connecting many players as an aftermath of the Covid-19 pandemic. As hailed by global supply chain experts, the supply chain of the future will need to be agile, flexible, efficient, resilient, and digitally networked. The recently held Tattv’22, the Annual Operations Summit – flagship event organized by SIOM, Nashik, dwelled on redefining the overall supply chain strategy, the need for increased visibility, and chartering new paths. The panel discussion, ‘Omnichannel Supply Chain,’ hosted during the summit, offered fascinating experiences of companies, and deciphered how they circumvented the most unprecedented times and emerged successfully to not only survive but also thrive. Here’s offering a perspective of their thought-provoking discussion...
Dr. Samir Yerpude, Leader – Digital & Connected Customer, Tata Motors Ltd.
Elon Musk once stated a very interesting statement, “The supply chain stuff is really tricky.” But for me, I am a firm believer of the people who have stated that Impossible is Possible in the supply chain. For me, the supply chain is like nature, and it exists everywhere. The past couple of years have thrown some unforeseen challenges and forced organizations to adopt omnichannel supply chain strategies. Citing the positives, the supply chain has helped us build resilience and the power to innovate. It has made us believe that sky is not the limit, especially looking at the e-commerce numbers, which have touched US$5,500 bn in 2021. The COVID19 possibly was one of the worst pandemics in history that has successfully devastated the economy. It has uprooted the normal and forced industries to innovate and build resilience. Different industries demonstrated different impacts during and post the pandemic. While some reported negative growth, others went on to book record profits. But there was one common point across the manufacturing and retail industries, i.e., a completely stressed supply chain with a shortage of resources. Under such circumstances where consumers were thoroughly confused, industries had some tough choices to make. Adopting to Omni-channel strategy became one of the recommended alternatives, while consumers expected trust, transparency, and experience at all channels. Delivering at customer location becomes a norm, even though the customer ordered through different channels such as web, in stores or via a call center, etc. Organizations were forced to redefine their customer experience strategies, offering omnichannel experience, balancing supply and demand, and simultaneously remain profitable. This provoked out of the box thinking not just at an industry level but also for individual organizations. I clearly observed five distinct actions taken by the organizations to ensure customer experience and profitability at the same time.
There was a clear disruption in demand and stress induced in the supply chain. Organizations segmented their product lines along with the customers identifying the most profitable ones that would induce stabilization and growth. The skill set required was analyzed and regrouped to understand and build mitigation strategies for such disruptions.
The safety of the organizational human capital was secured by way of providing the necessary health services and vaccination coverages. Physical health and mental wellbeing of the resources guaranteed the necessary support to the organization.
The entire ecosystem was reconfigured and new contracts were created across as required, with the players in the chain including the vendors suiting the omni-channel strategy.
Short- and long-term plans were drawn to capitalize on the situation including re-deployment of resources as required to warrant flexibility and agility. Fail fast strategy adoption encompassing quick decision making across the different channels benefitted the organization.
Introduction and implementation of Digital Technologies in the IT landscape powered the businesses with data for the generation of insights. Systems were configured to deliver the omni-channel experience to the customers. The organization was equipped with cognitive capabilities, which in some cases, were also extended to automatic decision making with the help of AI technologies.
To ensure longevity, organizations need to be foresighted. They should constantly validate the business operating model to assure continuity and growth. Future proofing of the supply chain to encompass agility and higher customer satisfaction levels is critical. Superior customer experience is not accidental in an omni channel ecosystem, but a result of constant efforts and a customer centric strategy interwoven with the organization DNA. Customer experience proves to be the new brand and will be the key driver for the growth of the organization.
Mr. TK Balakumar, Chief Operating Officer, BigBasket
Ever since the pandemic has hit us, organizations have started looking out for alternatives to serve its customers. What measures did BigBasket take to sustain as well as improve the business performance?
When the PM announced the national lockdown in March 2020, the very next day, it was almost near collapse for us in terms of operations. Earlier we used to deliver about 2.5 lakh orders per day. Once the lockdown was announced, next day the capacity depleted from 100% to about less than 20%. Even the 20% who were ready to come, were not able to reach office because of the strict lockdown and no availability of transport In that scenario, we were left wondering how we should manage problem of such magnanimity. To top it all, customers’ expectations were quite high as we had come under essentials category. On one side, the demand was shooting up to the tune of 5X-6X with people also unable to venture out of homes, and on the other, the capacity was reduced to 1/5th of we used to have. It was an extremely tough situation. Additionally, there were newer and newer government directives every passing day, making the operations even more complex. Having said that, we quickly got into act. We started working on the mantra of ‘Doing More with Less’. We revisited every aspect of our business starting from technology, server capacity, people capacity, inventory management, serving more customers, to name a few.
We had to even take a call to shut down online traffic for some time at some places where serving the last mile was not possible. In fact, in the cities we were operating, we had to say No to new customers because it was important for us to serve our existing customers first at that time. In about a couple of months, we were able to completely rebuild the capacity that surpassed our own numbers that we had thought of. There were various instances where we had to deploy our vehicles to pick up goods from our vendors because vendors didn’t have vehicles nor they had permissions. We had to collaborate at a very high level to make sure that we turn these tough times into opportunities and ensure winwin for all. The first wave of pandemic was extremely challenging for us just like any other business. Thankfully, during the second wave, we had the expertise and the understanding to manage the unprecedented scenarios. We are happy to share that we have almost achieve 2X business till date than what we achieved in the year 2020.
Customers today are expecting convenience, low prices, quick delivery, and so on. How can businesses create a differentiated supply chain strategy that includes omnichannel fulfilment capability and the right omnichannel operating model?
In India, market size is a huge advantage as well as disadvantage. The disadvantage is that you can get lost in the process which is where I feel that while convenience is the key driver. Companies who were earlier reluctant to take online route had no option but to switch to this channel at the onset of Covid-19 pandemic. The critical success factor for me is about segmenting the target groups and accordingly follow the key parameters required for the success of your business, which include assortment, clear communication with the consumers, and effective pricing. Once the Covid-19 dust settles down, I believe there will be concerted focus on unit economics to drive sustainable growth. During this journey, one can’t overemphasize the importance of technology adoption and its role in an all-encompassing growth.
What do you have to say on multiechelon strategy in omnichannel supply chain?
The multi-echelon strategy is something that has today become the need of the hour for omnichannel. For me, everything boils down on 3C principle – Customer Experience, Capacity Management and Cost Optimization. Keeping these three principles in mind, it’s necessary that we start consolidating omnichannel SCM strategy so that you can use the same to grow your scale with various suppliers and get the better on your margins. Companies should deploy business analytics to gauge customer preferences, which will ultimately help in keeping the right inventory in place. We need to focus on intelligent customer insights, data analytics to continuously finetune your supply chain strategy. Ultimately there are these key parameters that companies need to imbibe in order to sustain and survive in challenging times – Be nimble footed, continuously use technology; and draw insights regularly from consumer behaviour to action them to go after your business goals.
Mr. Jayanta Ghatak, Head – Supply Chain, Payed
Omnichannel shopping is becoming the new norm. it’s quintessential that the retail customers are expecting impeccable service. Doing so, what do you think is required to build a new supply chain?
When we talk of omnichannel, there are 2-3 things that come to our mind – is it a brick & mortar store, a website, a marketplace. I think there are lot more alternatives available today such as telecall, pop-up stores, retail DC, etc. There are multiple channels through which retail companies look to ensure customer satisfaction. Key objective of any business is keeping the customers at the forefront and offer them the convenience they are looking for.
Customer looks for a seamless shopping experience, flexible delivery options, easy goods return policy, free delivery, so on and so forth. Keeping everything in mind, we need to keep in mind the building blocks that organizations need to think through in order to offer a seamless omnichannel experience to customers. You need to also think about the information flow. You need to keep in mind the physical flow of the stocks or movement of products. You need to think through the process automation parameters that you are planning to build to serve the demands of customers.You need to strategize the nodes of last mile delivery and how can you leverage the information flow and the partner assets. These are the key elements to consider while designing the supply chain network. We clearly understand that ‘One size doesn’t fit all’. One must keep in mind the category they are working in because an essential product might require the fastest delivery while a lifestyle product can wait for a day or two. Accordingly plan your supply chain network. It’s a barter between the cost and the convenience and to ensure that you mitigate them.
How do you plan for unforeseen circumstances of returns which directly impact customer experience?
We must determine the controllable and uncontrollable factors. In the logistics and ecommerce parlance, the returns are classified into two categories – non delivered returns & delivered returns. Companies need to deep dive into the reasons for returns. When you look at reasons associated with online platforms, we find that most of the orders are COD orders, therefore customers could return it, which are counted as non-delivered returns. In case of delivered returns, companies need to find out valid reasons for returns. When a customer plans to return the goods received, that customer must be dissatisfied. It directly puts a question mark on the customer retention policy of the company. There are chances that the customers have received a wrong or damaged product, a wrong sized product, or the specifications mentioned on the website are not matching the product delivered.
How can companies control these aspects? First & foremost, companies need to work towards developing tamper-proof packaging to ensure that the goods reach to the customer in safe & undamaged condition. Inventory management and process automation must be in sync so that the wrong delivery of items can be avoided. Companies need to bring in warehouse management software so that there are checks & balances, and you are not shipping out the wrong product.
What do you think about Communication as a very important pillar of an omnichannel supply chain strategy?
One of the key facets of omnichannel is that the channels interact with each other. Otherwise, an omnichannel will not remain an omnichannel but will turn into a segmented multichannel approach. Communication is all about perfect integration between each other to harmonize the entire omnichannel ecosystem. This is where new age technologies have a major role to play.
Mr. Subhrajit Majumder, Vice President, Ecom Express
Digital technologies enable customization in a very effective way. What is the role of technology in delivering an omnichannel experience keeping the sanity of the supply chain?
Omnichannel is no longer a corporate buzzword these days. It is just not a ‘Good to have’ business plan, it is a MUST to have to survive in the current times. That’s the approach that Ecom Express Ltd., has also adopted. Omnichannel is a multichannel approach to sales that focuses on providing a seamless customer experience irrespective of where the customer is shopping from – online, offline or click & collect format, social media, etc. It is also about lead nurturing and user engagement approach. There are four basic tenets of a successful omnichannel strategy – it should have an integrated supply chain strategy; inventory transparency across all the channels; technology footprint; and right alignment of the operations strategy with the marketing strategy.
Omnichannel is not about shopping or ecommerce alone. It is also about enhancing customer service whether it is through chatbots, customer care number, email communication, or an in-person approach. It can also be a sales strategy or a marketing strategy. Omnichannel is a multifaceted coordinated approach to move products end-to-end. The purpose of omnichannel approach would be to strike a perfect balance between customer satisfaction and inventory management. This requires an end-to-end visibility. To get there, retailers will need to break their silos. They will have to merge and sync all their independent entities and be all-inclusive with the help of inventory management. The right approach requires technology that enables inventory to flow and be managed to enable complete visibility throughout the supply chain. To enable the change, brands will have to start early. They must ensure that their website, order management system, and warehouse management system merges with the logistics provider management system. Unless that happens, probably there will be several breaks along the path. For that to happen, there would be additional expenses for hardware and software. It requires advanced planning, consultation in terms of hardware & software. Warehouses must be prepared to take care of stores and web-based orders, ensure that there are no gaps in fulfilment and delivery.
Organizations achieve high level of resilience and also survive large disruptions. Under such uncertain business environments, what do you think organizations should do to adopt to omnichannel supply chain and what role does technology play in the same?
To adopt omnichannel supply chain, retailers will have to remove the operating silos that exist today. The way forward is to gain efficiencies by combining all the elements of omnichannel supply chain together such as merging warehouses, locating warehouses from where the demand surges, in order to maintain inventories both in-store as well as ecommerce business platforms. It should constitute a distribution system that drives forward as well as backward logistics. In this journey, we need to ensure that we pick up the right product. At Ecom Express, the entire process is App-enabled, which has all the features and capabilities to correctly identify the products to be picked up. It ensures a seamless process and a happy customer at the end of the spectrum, which is the very key of our businesses. Companies also need to accurately anticipate demand as far as possible to ensure availability, manage lead times across channels. Another very important aspect to manage in omnichannel business environment is inventory transparency. It’s a cohesive multichannel approach and experience which ensures that customer has easy access to inventory. Companies also need to ensure that inventory at one of the channels is not over exceeding whereas the other channel is starved of that same product, which eventually also amounts to business loss. A robust data management system would enable a right balance between the channels and innovation across all business practices. Companies need to be agile enough to move inventory from one channel to another and this is where technology plays an enabling role to help integrate product platforms, customer engagement channels and back-to-back supply chain.
What is your view on segmented supply chain and its impact on omnichannel strategy?
Segmentation is about maximizing customer service and company profitability. Companies can achieve this by having different supply chain strategies in place for serving different customers associated with different channels and different products ultimately based on the value to the organization. This simply implies that ‘one can’t have one size fits all strategy’. The goal must be finding out the right supply chain process and policy to enhance customer experience. A segmented approach helps companies to prioritize specific segments for customers.