Catering for Empowered Shoppers

Distribution tastes good

Distribution tastes good

We all recognize the advertising scene: summer somewhere, warm and glamorous. A guy with a body like Adonis is delivering a crate of ice cold Coke to an office with thirsty female workers just when they desire it most. Unfortunately this is where the fairytale ends. This is also where any supply chain ends: with the product in the hands of the consumer. The challenge is to deliver quickly, efficiently and according to any preferences customers might have.

Convenience is a growing trend which impacts all of us in many forms. Convenience applies to how we buy the product and how we receive it. This has quite some impact on the supply chain which not only has to respond to smaller orders but also greater choice. It is also challenged by new distribution channels. A mix of distribution channels ranging from bulk delivery in pallet quantities to single item (unit of sale) store-ready picking are driving complexity into an already cost-pressured supply chain model. Add to this the need to preserve product integrity (temperature, humidity, shelf life) for best-in-class customer service. It is a challenge which will separate the wheat from the chaff.

If the Shopper Won’t Come to You, Then….

Traditionally retailers rely on the shoppers visiting their stores and may look to grow revenue through a number of means such as more choice, promotions or low pricing policies. Increasingly, customers do not always want to go the store, rather looking for greater convenience. Seeing the change in buying habits some retailers are providing a home delivery service, which is good for the consumer, but inefficient in a Distribution Centre: the DC’s are usually designed to replenish stores, but not for picking end consumer orders.

Many consumers, especially in urban areas, lead very busy lives and cannot always be available for deliveries from different distribution channels. Therefore, secure consolidation and collection is a yet unfulfilled demand. This can happen at the original store, local petrol station around the corner or even at a purpose-built collection facility. Different concepts are currently being trialed around the world, coming soon to a place near you.

Improving Customer Experience to Secure Loyalty

Retailers are not the only ones expanding their delivery channels. Some product manufacturers have established distribution channels and they will try to use this to improve their customer experience. A good example is a primary Coca-Cola bottling company like Coca-Cola Amatil (CCA). They deliver in bulk (full pallet) to supermarkets and also at a case level to hotels, restaurants, corner shops, petrol stations, etc. The CCA network is perfectly aligned with its customers’ needs and provides more than just Coca-Cola. With increasing variety in their portfolio, supplying soft drinks and alcoholic beverages, they are well positioned to add complimentary products into their supply chain and maximize the utilization of their network.

CCA rewards innovative concepts

CCA rewards innovative concepts

This requires new supply chain solutions, especially redesigned distribution networks. Innovative concepts will change the way orders are delivered while increasing efficiency in the warehouse and the delivery part of the supply chain. Improving service levels will bring companies closer to their customers. True innovators will find ways to be more effective whilst creating an improved customer experience. Those that do not rise to the challenge will have to look for ways to make up for it; lower prices alone will not always do the trick.

Consumers Shaping Networks Ever More

At the end the consumers will decide where, when and how they spend their money. As we are all consumers, we are part of the supply chain future so in five years’ time I can think back about this article and wonder how much it all has changed.

One Response to Catering for Empowered Shoppers

  1. DennyDustin says:

    Convenience impacts all of us in many forms and influences a lot of our decision making as buyers. This post is very helpful for retailers. Thanks!

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