Published October 11, 2018
How has digital disrupted supply chains and do these disruptions also impact the supply chains of traditional retail?
Each for eCommerce
Remember when a customer performed the task of order picker and final delivery transportation or the catalogue business where we were paid to do the picking and final delivery? The customer actually came to the store, selected what they wanted to buy, stood in line waiting to pay us for the items, and then provided the transportation to get their purchases to their home. With the advent of eCommerce, we pick the customer’s items and we deliver the items to their home, unlike catalogue there are no shipping and handling fees. This each supply chain for eCommerce is obviously different from what retailers have traditionally done and has created huge disruptions in the retailers supply chains. Traditionally retailers moved containers, trailers, pallets, and/or cases to their stores or eaches for catalogue fulfillment, now with eCommerce they have been forced to have a supply chain that allows them to send eaches to customers’ homes without being paid for shipping and handling.
- The unit load principle of material handling describes the problem with accommodating the each supply chain. The unit load principle says that less effort, work, and cost is required to move and store many individual items as a single load than to move many items one at a time. This principle:
- It is easier to handle one container of 22 pallets than to move the 22 pallets individually
- It is easier to handle one pallet of 28 cases than to move the 28 cases individually
- It is easier to handle one case of 12 bottles than to move the 12 bottles individually
- Handling 22 pallets individually is more difficult and expensive than handling the 22 pallets as one container
- Handling the 28 cases individually is more difficult and expensive than handling the 28 cases as one pallet
- Handling 12 bottles as eaches is more difficult and expensive than handling the 12 bottles as one case
- The container supply chain is more efficient than the pallet supply chain. The pallet supply chain is more efficient than the case supply chain. The case supply chain is more efficient than the each supply chain. Conversely, the most inefficient and expensive supply chain is the each supply chain.
The each supply chain has gone from a customer performed activity to a company performed activity with no additional compensation to the company (shipping and handling fees in the catalogue supply chain). The digital disruption of supply chains has forced us to accommodate the least efficient, most difficult, and the most expensive supply chain, the each supply chain.
Each for Traditional Retail
The perfect storm of traditional retail (in-store or offline) occurred when the huge SKU explosion took place in the variety of SKU’s offered for sale. For example, once upon a time there were just milk chocolate M&M’s in different size packages. Now we see milk chocolate, peanut, peanut butter, almond, pretzel, crispy, dark chocolate, etc. flavors in different sizes (mini, regular, and max) in different colors, and packages. This SKU proliferation in every aisle of the store resulted in retailers dedicating more space to each product family and lower Return on Invested Capital (ROIC). However, once we are forced by eCommerce to have an each supply chain the concept of each replenishment, instead of case replenishment of the store has followed or will follow. As the each supply chain for store replenishment and the resulting shrinking of the size of the store occurs, we find that just like the impact of the each supply chain on eCommerce, the each supply chain for store replenishment has forced us to accommodate the least efficient, the most difficult, and the most expensive supply chain, the each supply chain.
Each for The New Retail
The New Retail is the combination of eCommerce and traditional retail Bricks & Clicks, Offline & Online (for Amazon: Online to Offline (O2O) and for Walmart: Offline to Online (O2O)). The New Retail is not about integrating O2O, rather blurring the boundaries between O2O. The New Retail is not about omnichannel, but unichannel (Unified Channel). The New Retail is not just unichannel but the combination of unicommerce, unimarketing, and unilogistics. The New Retail is not just about retail. It is about the combination of retail and entertainment (retailtainment), shopping as a competition, shopping and socialization, and shopping and recreation. The correct answer to the question about each for The New Retail is it is the combination of the answers for each for eCommerce and each for traditional retail.
- Video: Creating Competitive Advantage
- White Paper: Achieving Revenue Gains from Distributed Logistics