Looking ahead: Innovation and collaboration in supply chain development

Supply Chain 2014-2015

For all the investment in technology and systems, data collection and automation, there is a pre­vailing view among the retailers that collabora­tion between retailers could be just as influential in supply chain development.

As published in Retail Week & DWF Supply Chain: Trends and Innovations in Retail 2014-15 report 

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A supply chain director in a major retail group says: “If I took this on a three to five year trajectory, I’d say the greatest innovation will happen in collaboration. When you think about the fulfilment to home by the different channels, retailers are all doing it their own way. I don’t think the carriers will consolidate but I think retailers might collaborate with other retailers because they want to own their customer’s ex­perience right to the door step.”

Meanwhile, the distribution director of a cos­metics chain stresses the sustainability benefits of such collaboration. “We might be competitors but at the end of the day we are all trying to do the same thing. And I think we are all intelligent enough to know that in terms of the environ­ment and social responsibility, we have to work together. In the high street you have different types of retailers but they all use transport and providers to get to the same place. And we can work together to find synergies and better ways of working together.”

Five Years' Time

The speed of innovation over recent years, much of which has been precipitated by the advent of multichannel and omnichannel retailing, un­derlines that five years is a long time in terms of technological development. Indeed, in look­ing forward, several of the retailers illustrate both the difficulty of predicting how things will take shape and the need to be prepared for continuing change, by referring to what has happened in recent years.

A certainty, however, in the view of the sup­ply chain director of a fashion retailer is that customer service will be more important than ever, and it will be the ability to cater to the om-nichannel consumer that will matter.

“Historically, service success was store-based,” he says. “It has become progressively ecom-based. But in five years’ time it will be omnichannel service based. And profitability of retailers will be driven as much by service as it will by product because the economics of service are both powerful and dangerous in equal measure.”

The supply chain “will progressively be­come leaner, faster and more cost effective than it is today”, predicts a supply chain director within a national retail chain. “I think it will be highly automated and I think the amount of time taken to get merchandise from supplier to store will be reduced.”

The head of transport at a specialist retailer says that with technology “developing exponen­tially”, it would be a “brave man who would venture to say where we will be in five years’ time”, adding poignantly: “I don’t really think that any of these new systems we’re putting in are future-proof.”

A final comment from the distribution director of a cosmetics retailer speaks to the same notion, namely that the transforma­tion seen in recent years shows that, above all, the retail supply chain of the future must be one that can adapt quickly in a fast-changing world.

“I would expect to have a more resilient model,” he says. “We are living in a fast-chang­ing world and I think this feeling of instability will continue. The constant change and volatil­ity we feel now will still be here in five years’ time. So we will need a supply chain that can support change and that means we will have to become more agile and more flexible and fully support the omnichannel strategy.”

What’s clear is that agility and lightning-fast reactions to changing retail conditions are two vastly important skills that supply chain directors will need to possess to succeed in the future – so long as their supply chain networks are up to the challenge of supporting that change.

Watch out for our next blog post which will look at legal challenges in a multichannel world.

If you have any questions or would like more information, please contact Hilary Ross Partner & Head of Retail, Food & Hospitality sector.

This information is intended as a general discussion surrounding the topics covered and is for guidance purposes only. It does not constitute legal advice and should not be regarded as a substitute for taking legal advice. DWF is not responsible for any activity undertaken based on this information.

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Hilary Ross

Executive Partner (London) - Head of Retail, Food & Hospitality

Recognised by The Lawyer as one of the UK’s Top 100 lawyers, I advise clients on compliance and challenges across the EU in relation to products, systems and safety.

Dominic Watkins

Partner - Head of Food Group

I am Head of DWF’s internationally renowned food sector group as well as being Head of Regulatory in London.

Ed Meikle

Partner - Head of Retail Group

I advise on all aspects of intellectual property law, especially advising businesses in retail, food, sport and consumer products on the development, commercialisation and protection of their brands and technology.