The pandemic exposed the fragility of many supply chain networks. Global economies and brands suffered from an inability to adapt dynamically to shifting signals of demand, consumer preferences, labour requirements, and transportation, storage, inventory, as well as trade policy changes.
Stated by McKinsey, “Investments in technology and automation in distribution centres are now at the forefront of most chief supply chain officers’ agendas.” Research and consulting firm Gartner recently upped its supply chain management technology forecast from 8% to 14% in compounded annual growth rate – forecasting a US$28bn investment by 2025.
Matching supply with demand
The fashion retail industry is transforming its store, digital, fulfilment, and service experiences to attract omnichannel consumers, increase employee productivity, and boost profitability, while balancing a growing environmental footprint.
With digital transformation initiatives taking hold in supply chains too, brands can better match supply and demand through cloud, composable IT architecture, microservices, and artificial intelligence.
To say change is afoot is an understatement, yet at the end of the day, the way revenue is generated has always been the same: need a new outfit? Online orders are then shipped and consumers are happy.
The difference between today’s retail landscape and that of the past is that in 2022 there will be exponentially more choice (of products, purchase options, fulfilment options, delivery options, payment options and more). Consumers control the buying journey, making it that much more complicated for the brands serving them to meet expectations.
As if the picture were complicated enough, many brands are still dealing with the aftershocks of the global pandemic, including severe labour shortages in warehouses, truck depots, and retail stores.
Supply chain commerce
Finally, there is one unforeseen effect of the pandemic that is perhaps shaking brands to their core more than anything else. There is a strong emphasis from increasing numbers of consumers (driven primarily by the Gen Z demographic) on sustainability and ‘green’ credentials.
Combined, these trends and challenges are creating the perfect stage for supply chain commerce.
Supply chain commerce is an emerging market category. At its core, it is about unification and a new way to solve the age-old problem of supply and demand, and moving goods from point A to point B. In order to meet consumer and societal expectations of greater responsibility – both today and tomorrow – we must re-engineer physical and digital supply chains in order to connect them.
Consumers have become omnichannel natives in the last couple of years, making fashion purchases via physical stores, online, call centres, mobile apps, social media platforms, and even pop-up shops.
Time is a premium and they expect brands to know their likes (and dislikes), serve them, and fulfil their purchases how, when and where they want them. As a result, purpose-driven buyers are increasingly demanding visibility into brands’ business practices, including sustainability initiatives, often expecting tangible evidence of their impact on the environment.
When considering supply, many brands still operate supply chains that pre-date omnichannel capabilities with some still managing ecommerce and physical stores independently of each other. In a digital-first retail landscape, these legacy systems simply don’t work – both economically as well as environmentally. They are optimised for individual use cases and not agile enough to meet shifting consumer demands.
The rise of the Zoomers
The shift in spending power toward Gen Z is a massive development in our time. While generational changes are a regular occurrence, maybe no shift is (or will be) more seismic than the rise of this ‘Zoomer’ group.
According to a recent article in Vogue, Gen Z consumers are 38% more likely to have shopped online in the last three months. They are willing to purchase across channels, have an appetite for higher-quality items and – just as importantly – are eager to stay on trend with cultural developments like sustainability.
This awareness of societal trends is leading to some key generational spending markers as well. Since Zoomers believe previous generations represented overconsumption, capitalism, and materialism, they prefer brands that match their core values, such as environmental responsibility, equality, and fair trade.
Supply chains are undoubtedly one of the fundamental pillars that underpin globalisation, capitalism and consumerism. Yet those issues are often cited as primary causes of the current climate emergency we face today. Providing greener, more sustainable clothing, shipping options, and return options to consumers is the essence of supply chain commerce in our opinion. It goes beyond the simple fulfilment of supply and demand.
The right technology can empower and enable companies to offer their consumers options that are more informed and greener at every stage of the purchasing process.
It’s at work from the moment a person clicks on a buy-now button, to a more-efficient packing process that reduces shipping volumes, to optimised transportation routing that reduces travel miles, trucks on the road and planes in the air. The end results are reduced CO2 emissions, exceptional customer experiences and greater alignment with consumer sentiments – all at the same time.
This is made possible by unifying all elements of the buying journey, from warehouse and shipping to commerce and fulfilment.
That is what gives consumers and brands the ability to make last-minute order changes or combine shipments right up until items leave the warehouse, store, dark site or micro fulfilment centre. Supply chain commerce gives the end-consumer tools to make greener, more sustainable purchasing decisions, and brands that do so will – likely – be rewarded with greater loyalty and repeat business.
The integration of national economies into a global economic system has been one of the most significant developments of the last century. We must not lose sight of the fact that the flow of goods around the world is vitally important to the livelihoods and well-being of billions of people around the globe.
At the same time, we also have a duty to recognise that the movement of goods can be inherently hard on the environment and a growing contingent of consumers demand that we do better.
Supply chain commerce offers capitalism a ‘sliding doors’ moment to take a different path. A greener, more sustainable future that balances consumer expectations with the health of the planet is a chance for capitalism to find its conscience.
About the author: Ann Sung Ruckstuhl, CMO and SVP at Manhattan Associates, is a Silicon Valley tech executive who has built, grown, and transformed businesses large and small. She has successfully led game-changing start-ups and Fortune 500 companies through periods of hypergrowth including eBay, Hewlett-Packard, LiveOps, SOASTA, Symantec and Unisys. She has also driven business transformation through fast-evolving technologies including AI, IoT, cloud, SaaS, cybersecurity, digital payments, mobile and microprocessors.