The majority of retail leaders (89%) consider the complexity and diversity of today's supply chain risks to be one of the largest threats to corporate growth, according to Capgemini Research. In light of these changes, retail executives are transforming their supply chains from a simple functional system to a holistic, integrated network focused on value creation.
Retail Leader and RIS News talked with industry leaders focused on the value chain —- Justin Honaman, Amazon Web Services’ head of worldwide retail and consumer goods go-to-market; Guy Yehiav, president of SmartSense by Digi; and Matt Laukaitis, SAPS’s executive vice president and global general manager of consumer industries — to provide insight into the evolution of the supply chain function from cost-center to value-creator.
RL and RIS: How are retailers shifting from a supply chain mentality to a value chain mindset?
Laukaitis: Retail companies are balancing the impact of global disruption and the need for a resilient supply chain. With so much choice at their fingertips, consumers expect more than ever before; ultra-convenience, flawless service and seamless experiences are now foundational to brand loyalty. Simultaneously, the global supply chain is experiencing stress, and retailers must continually adapt to shipping delays, higher delivery costs and fluctuating consumer demands.
In the current business landscape, companies are actively reconsidering their approaches to optimize processes and guarantee efficient and sustainable product delivery to customers. This shift is rooted in a broader goal of eliminating the traditional division between front-office and back-office operations. Instead, businesses are aiming to create a unified and comprehensive experience that enables customers to effortlessly access data from any point in the supply chain. The integration of real-time data visibility plays a crucial role in the future of value chain management, where the emphasis moves beyond cost efficiency towards building resilience and promoting sustainability.
It’s also important to underscore the fact that the value chain does not stop when the customer buys the product. With today’s ability to understand the overall relationship and the lifetime value that the customer enjoys with their purchase, retailers are finding new ways to stay relevant all throughout the lifecycle, including re-commerce, exchange and return/resale.
Yehiav: This shift has been a large effort since the early 1990s. One can identify if a retailer has a supply chain mentality or value chain mindset by the way they answer the question, ‘Where does your supply chain start?’ If they say it starts at the shelf, they’re demand-driven with a value chain mentality. If they talk about when the truck comes or other transportation logistics, warehousing, etc., they’re thinking supply first. More and more retailers are moving to a demand-driven approach for their business, adding value to their customers and aligning with ever-changing customer demands while maintaining a better P&L on their books.
Honaman: Supply chain is a broad topic that typically includes inventory, logistics, distribution and warehousing. When we think of the value chain, you have constituents that are suppliers that lead up into your supply chain and then you have constituents that are your end customer after the supply chain part of the process. Supply chain is one element of the value chain.
This September 25-27, RL and RIS are joining forces to debut Value Chain Tech, a new event in Seattle focused on the technologies that power the key pillars of value chain success: agility, resiliency, collaboration and sustainability.