October 2, 2020 | technology | No Comments
As General Manager of Zebra Analytics, Guy is responsible for the growth, leadership strategy and customer success of the business unit.
It’s safe to say that the Covid-19 pandemic has greatly altered life and business as we know it. In our current reality, the only constant now is change, and regardless of your industry, successfully navigating an increasingly volatile environment cannot be accomplished with an eye for old practices.
Let’s take forecasting, for example. Forecasting has long been a go-to planning tool, using historical data and other indexes to predict future inventory, supply chain and labor needs. However, accurate forecasting based on historical data is much less effective due to the new realities of Covid-19.
For retailers and CPG companies, the pandemic has skewed forecasting’s value through massive demand swings, localized panic buying and supply shortages forcing extensive substitutions. No mathematical model can forecast with reasonable accuracy amid those erratic trends. Forecasts were always wrong anyway since they are predictions of the future — the important thing is how wrong they are. If their degree of inaccuracy (expressed as a percentage) is consistent over time, then companies can use them to measure the safety stock and model stock. The practicality of this has changed drastically in the “new normal” and made forecasting a major challenge.
It’s essential that organizations align with the times through a proactive response plan that incorporates advanced technology, automated intelligence, machine learning and resiliency in the supply chain. And it doesn’t stop there — while developing a sound plan is all well and good, organizations must actually be able to execute on it in order to navigate the current challenging environment.
What The Winners Are Doing
The ripple effects of Covid-19 have taken a drastic toll on a variety of industries. However, despite these arduous circumstances, there have also been glimmers of positivity. The pandemic has featured a fair share of winners, as an elevated focus on leveraging technology infrastructure has been a proven recipe for success among companies navigating the pandemic’s unexpected obstacles.
Organizations with a strong online presence and flexible e-commerce and supply chain capabilities have been able to combat in-store shopping reductions by offering equally positive digital experiences to help offset lost in-store sales.
Best Buy, for example, grew its ecommerce sales by 242% in Q2 to record online revenue of nearly $5 billion, leading to a sharp 200% increase of its online sales over the first six months of the fiscal year compared to 2019. The company’s stores were closed during the majority of Q1, but it was still able to retain 92% of its lost revenue through ecommerce. Omnichannel services, such as curbside pickup, click and collect and buy online pick up in-store (BOPIS), totaled 41% of its digital sales.
Some retailers and grocers are turning to artificial and virtual reality (A/VR) technology to replicate in-store shopping experiences — a trend that was already rising in popularity in 2019. Companies have also utilized advanced data maturity and accelerated automation, which both work to enhance operational efficiency, streamline internal processes, identify areas for improvement and pinpoint the most effective cost-cutting measures. American retailers closed the click-and-collect gap between the U.S. and the UK (which had held for three full years) in barely a month during the pandemic.
The Gift Of Advanced Technology
Leveraging innovative technology empowers organizations to implement proactive practices and procedures for surviving today’s tumultuous environment. For example, the new and improved RFID labels with better sensing antennas can trace an item’s store location to a specific shelf, identify consumer-buying trends and fitting-room conversion rates that increase purchases for retailers, and offer actionable insights on future demand volatility.
Automated robots inside grocery stores can help management optimize their shelf alignments and inventory management to foster enhanced flexibility. An advanced analytics solution provides real-time visibility into a CPG company’s internal operations and the supply chain. These are all features of today’s “system of reality,” where the power of technological innovation, computing and the increasing number of mobile devices empower every associate. It evolved from a cloud-based “system of record” of the early 2000s and a “system of planning” based solely on historical data in the 1990s.
The system of reality is here to stay and grow. I believe the organizations that capitalize on it will be the ones that ultimately survive the pandemic. Unlike traditional forecasting data, advanced technology solutions leverage artificial intelligence (AI) demand-sensing capabilities that enable organizations to adapt to the most erratic demand shifts by generating automated directives for inventory management (thus improving capital investment performance) based on consumer behavior. From a supply chain standpoint, organizations can leverage advanced technology to quickly spot any anomalies and immediately trace them back to their original source.
Establishing Agility For The Future
Until Covid-19 is behind us, some uncertainty is here to stay. That said, companies from all industries need to increase agility to navigate future obstacles. Another wave of the virus may occur in the fall and/or winter. Advanced technology would help organizations manage the store closings and reduced occupancy limits that may come along with it and develop intense safety compliance protocols that help safeguard employee and customer safety.
It could also help organizations adjust to erratic consumer habits like panic buying and demand volatility by integrating data-driven visibility into their supply chains. Without the benefits of digital innovation, organizations lack the resources needed to execute their plans. However, with advanced technology, the power is in their hands.
Through this approach, organizations are separating themselves from industry competitors in the short-term and positioning themselves for long-term growth through innovation and ingenuity. There’s never been a more reasonable and rewardable time to do it.
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