Data-driven supply chain
Telstra Retail Industry Executive Gareth Jude and Cotton On’s Andy Sanderson explore the state of data-driven supply chains in Australia.
There is already a huge appetite for data-driven supply chains in Australia. Retailers, manufactures and transport companies are recognising that data can improve all of their key logistical metrics, including inventory, delivery and defect ratios.
“From a supply chain perspective, [we] are an enabler to the retail business,” says Andy Sanderson, General Manager of Distribution and International Operations for Cotton On Group. “We are in the engine room, and it’s our responsibility to work out smart ways to have visibility of inventory, speed to market and responsiveness to replenishment.”
Businesses are already moving towards making the necessary investments in key enabling technologies for data and supply chain. Key investment areas so far have been in IoT, Machine Learning and collaboration platforms.
“It’s been said that data is the new oil,” says Jude. “The more we can use data, the more valuable it becomes. But it becomes especially valuable when we can collaborate and share it, because the value of data the multiplies.”
It is an increasingly competitive retail ecosystem, businesses are keen to retain an edge over their competitors, so the intention to invest more in the data-driven space is strong.
“There is also an intention for those investments to get bigger, improving profitability, agility and the ability to compete in the age of Amazon,” Jude says.
Sanderson says that the dynamic between business and customers is evolving along with the data.
“Data has always been an advantage in retail, so if I know my customers better than you know yours, I will serve them better. If I know my supply chain better than [you know] your supply chain, I will be able to operate my supply chain better.”Andy Sanderson, General Manager of Distribution and International Operations for Cotton On Group
“We’ve got our traditional retail store environment, but the dynamic of e-commerce, wholesale markets and strategic partnerships with our licensed customers both in Australia and overseas, means that we’ve had an ever-changing customer landscape,” Sanderson says.
Data-driven supply chains also provide the ability to use that information to help drive the best outcome in near real-time, assisting to deliver the best possible customer experience.
“Our solutions within the supply chain will be data-driven, working back from customer. Whether that’s an online transaction, or EFTPOS – it’s live, it’s global and it’s happening every minute of every day.”
Data-driven supply chains can simplify cooperation with other stakeholders and make it easy to leverage data to develop solutions for customers.
“If our customers expectation is that e-commerce is about speed and next-day delivery, then we need data to substantiate that,” says Sanderson. “We can’t run our business in isolation, so we look to leverage great partnerships through the value chain.”
Despite broad enthusiasm across the industry, there are still a few barriers to businesses reaping the full rewards of data-driven supply chains. One of the two most prevalent issues is the security of data, exacerbated by the recent ransomware attacks on a number of high-profile companies.
“People want to know if they share their data, it won’t go missing,” Jude says. He recommends thinking of data as another resource in a ritual ecosystem that needs to be protected.
“We protect our stock in-store with cameras, we have security firms to protect our goods in warehouses…Why not protect one of the most valuable resources we have – our data – through cyber security?”
The other issue is relational; people want to be sure that they have a common purpose and share core values.
“Companies they need to be secure in the knowledge that their objectives are aligned,” says Jude. “In other words, I want to know that if I share my data and collaborate with you, we both win.”
Business have migrated over time from a purely transactional relation to values-based partnership, Sanderson says, and you can look to leverage a partner’s point of expertise within the value chain.
“There should be a transparency between organisations. If we grow, we win, and they win – the partnership approach is adding real value in key markets.”
He also emphasises the importance of remaining in touch with your business and ensuring that you understand the relationship between physical and virtual assets.
“You’ve got to actually still go and correlate the data by walk-in stores, keeping in touch with e-commerce customers, being in your distribution centres and meeting with your partners,” Sanderson says. “There’s a translatable part between information and what’s actually happening in the physical supply chain."
“E-commerce has channels within channels – whether it’s door-to-door, Click and Collect, personalisation, they all drive nuances that our customers’ demand, and we have to enable and support that. It’s a challenge, but it’s a good one.”
The way forward
In order to derive the most value out of data-driven supply chains and understand where the technology is headed, Jude recommends having experts involved in every level of the process.
“We need professionals who understand supply chains, but there’s an extra skill required now and that’s the skill of the data scientist. This is the future of data-driven supply chains,” he says.
“If the data scientists become isolated from the business and operate in ivory towers, they will become irrelevant. The skill should be integrated with the business.”
“We’ve got to squint into the future in terms of how we set ourselves up to create a better supply chain,” Sanderson says. “That could be improving speed to market, improving availability or lowering the cost of operations.”
Jude says that in terms of data-driven supply chain evolution and development, there’s no turning back – the value of data cannot be overstated.
“Data has always been an advantage in retail, so if I know my customers better than you know yours, I will serve them batter. If I know my supply chain better than [you know] your supply chain, I will be able to operate my supply chain better,” says Jude.
“Therefore, the potential is almost limitless, and I think that’s a path that’s inextricable, and can’t be turned around.”