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10/29/2020

How Retailers Can Rethink Their Supply Chain To Meet DTC Needs

Unsurprisingly, the last several months have seen huge transformation across industries, especially in retail. With physical locations shuttered, e-commerce growth has accelerated at exponential rates and shows no signs of slowing down. This includes not only DTC brands, but also traditional brands that, for the first time, are selling directly to consumers.

For example, PepsiCo built a new end-to-end system, Snacks.com, in one month to generate demand for its Frito-Lay portfolio of products, and Heinz created its first-ever DTC business line in the U.K. On the fashion front, Levi’s is just one of the many brands that is accelerating its DTC shift to accommodate the changing retail environment.

Retail’s rapid move into the DTC space is not only timely, but it provides a host of opportunities, including everything from sales growth to product personalization to first-party data collection. At the same time, this shift has exposed a number of flaws in the supply chain, leaving brands working tirelessly to meet demand for their products.

E-commerce is nothing new, though the exponential acceleration across categories is. Previously, you couldn’t mention e-commerce without inevitably speaking about Amazon, which has continued its domination as the go-to destination for online everything. However, today’s savviest retailers are seeing Amazon not as competition, but instead as a blueprint for what optimized supply chains must look like in order to seamlessly meet customers’ needs.

The astounding quarterly results recently posted by Shopify and Amazon are both signs that COVID has caused a massive acceleration in the shift to e-commerce. Traditional retailers are having to compress a decade of supply chain transformation into the next 12 months if they want to maintain or strengthen their market positions.

As retailers continue to look to Amazon for guidance, they should dig deep — not just into what Amazon offers, but how. In many ways, there is no greater logistics company right now than Amazon itself. With the COVID-19 crisis forcing companies to compress a decade of supply chain transformation into six months, moving beyond costly, painful, multi-year enterprise resource planning (ERP) implementations is critical. So how can today’s retailers leverage innovation in technology to successfully compete in a DTC world?

By seamlessly collecting and integrating data from multiple parties in the supply chain, harnessing insights, and quickly pivoting on inventory and communicating availability back to consumers, retailers need to take these three actions:

1. Remove data silos 

Retailers need to unify the data silos from supply chains into one intelligently coordinated fabric, including data from legacy systems. When data can be shared more freely, rather than data being siloed, companies can more effectively model and respond to supply chain needs. By coordinating data sets, companies can gain more actionable insights to make more informed decisions.

2. Embrace data automation 

As pressure to accelerate supply chain transformation continues, companies are seeking data automation platforms to manage supply chains for physical products. Partnering with a data automation specialist can play an integral role in helping companies expedite supply chain improvements and better serve their customers through automation of intercompany data flows.

3. Provide real-time execution 

A unified, real-time data layer is critical to helping retailers better manage their product flows with greater visibility and speed across their supply chains. By automating data collection in supply chains and relying on machine learning, supplier and customer data can be made smarter to ensure real-time execution. This means that customers will have greater insight into availability, which ultimately creates even great satisfaction and loyalty.

Rob Bailey

As the retail industry playbook is rewritten to acknowledge the increasingly important role of e-commerce and DTC channels, retailers have no choice but to optimize their supply chains. The speed at which retailers can adopt improved supply chain technology and automation will dictate their ability to keep pace with growing demand for their products.

Rob Bailey is CEO and founder of data-automation company BackboneAI, a supply chain data-transformation engine.

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