Transforming and optimising retail supply chains through digitalisation

The evolution of digital technology has had a profound impact on how Grocers, Retailers, and FMCG markets operate. Consumer satisfaction in particular is under the spotlight and as a result, product distribution processes have undergone significant transformation with emphasis on efficiency and effectiveness. Digitalisation empowers data-driven decision-making to enhance overall customer experience, while also improving the bottom line for businesses.

In a recent webinar, we examined how the most successful Retailers and FMCG players in the supply chain lean on integrated technology to stay on top of rapidly changing consumer trends and mitigate costs while becoming more sustainable and better allocating resources for the future.

What is supply chain digitalisation?

Supply chain digitalisation refers to the process of integrating digital technologies into all aspects of the supply chain to improve efficiency, visibility and decision-making. This involves replacing traditional manual processes with automated systems and using data to optimise operations. Supply chain management in retail is complicated; digitalisation aims to streamline it. 

Key aspects of retail supply chain digitalisation include:

Automation: Replacing manual tasks with software and robotics to streamline processes, such as order processing, inventory management and transportation.

Data analytics: Using real-time data collection and analysis to monitor supply chain performance, predict demand and optimise inventory levels.

Cloud-based platforms: Implementing cloud solutions that allow for better collaboration and real-time visibility between stakeholders like suppliers, manufacturers and distributors.

Internet of Things (IoT): Using sensors and connected devices to track goods and assets throughout the supply chain, improving monitoring and traceability.

Blockchain: Ensuring transparency and security by using blockchain technology to track the movement of goods, verify transactions and prevent fraud.

By adopting digital tools, businesses can enhance the agility, flexibility and scalability of their supply chains, enabling better responsiveness to market changes and customer demands.

Benefits of digitalising the retail supply chain

Digitalising the retail supply chain offers several key benefits that help businesses improve efficiency, reduce costs and enhance customer satisfaction. Here are some of the main advantages:

• Improved visibility and transparency

Digital tools enable real-time tracking of inventory and shipments, allowing retailers to monitor the movement of goods throughout the supply chain. This transparency helps in proactive decision-making and reduces the chances of stockouts or overstocking.

• Enhanced efficiency and automation

Automation of tasks like order processing, inventory management and restocking eliminates manual work, reduces human error and speeds up operations, leading to quicker response times and improved customer service.

• Better demand forecasting

Advanced analytics and machine learning can predict customer demand more accurately by analysing historical sales data and market trends. This helps retailers optimise inventory levels and reduce excess stock, minimising costs.

• Cost reduction

Digitalisation in retail helps optimise logistics, reducing transportation costs and improving warehouse management, resulting in lower operational expenses and a more efficient use of resources.

• Improved collaboration with suppliers

Digital platforms enable seamless communication and data sharing between retailers and suppliers, ensuring more timely deliveries, accurate orders and better alignment on inventory levels, all of which contribute to a more responsive and agile retail supply chain.

• Enhanced customer experience

A digitalised supply chain allows retailers to respond faster to customer demands, offer personalised services and ensure timely delivery, ultimately improving customer satisfaction and loyalty.

By embracing digital solutions, retailers can create a more agile, cost-effective and customer-focused supply chain, enhancing their competitive edge in the marketplace.

The customer knows best

Consumers are the dominant force driving markets today. As consumer preferences evolve and retailers find themselves faced with ever-changing demands, staying proactive and informed about purchasing trends is essential if you want to keep up. Modern consumers want convenience, value, transparency and sustainably sourced products, and most of the time this means bringing the market to them. COVID-19 transformed how we live and shop, cementing e-commerce, direct-to-consumer supply chains and demand chain management. Bringing the market to consumers requires significant digital investment in exchange for a strong return on investment. A digital retail supply chain achieves:

• Final consumer demand and behaviour predictions
• Successful forecasting for pricing strategies and promotions 
• Accurate and timely stock replenishment
• Efficient logistics execution by optimising warehouse and transport operations
• Enhanced supply chain integration and collaboration
• Successfully managing supply chain complexity and providing enhanced transparency

‘Digitalisation is becoming a competitive necessity for grocery supply chain members who cannot stay behind if they want to survive in this cut-throat environment.’

- Neil Ashworth, Non-Executive Director, Retail Logistics Expert

Seeing is believing—and saving

Data is the new gold and can enhance your business if you know how to use it. Though retailers operating in hyper-competitive markets can be reluctant to share their data, when real-time data visibility (RTDV) is integrated into the Transportation Management Platform, it provides valuable insights, which help you make data-driven decisions, improve operational efficiency, mitigate costs and be more sustainable.

‘RDTV provides a significant opportunity to break the operational silos between grocery supply chain members and is supported by functional and cross-functional activities, processes and KPIs.’

— Gabriel Thomsen, Heineken

Supply chain visibility combined with data insights unlocks meaningful savings for operations and procurement teams. But what does this look like in practice?

Shippers and retailers often find it challenging to verify their pricing strategies when negotiating with carriers. This is mainly due to the lack of external reference points from a procurement standpoint. Data tools like Market Insights provide an effective solution to these challenges, offering real-time insights into European transport markets, lanes and their development. It provides external, neutral and trustworthy market indexes—including capacity, contract and spot rates—and helps intelligently allocate loads between spot and contract options, secure the best rates and achieve tangible procurement savings.

In Europe, retail warehouses have evolved throughout recent decades. These hubs have taken the responsibility off the suppliers’ shoulders when it comes to distributing products to retail stores. However, it does mean that retailers need visibility of incoming and outgoing loads. Inbound and outbound deliveries pass through the facility at the same time, and if one is delayed, this creates a domino effect. In the realm of inbound logistics, the challenge lies in accurately tracking the whereabouts and estimated time of arrival of deliveries to effectively organise unloading and processing. On the outbound side, inefficient route planning and poor coordination of deliveries means costly transit fees, more transportation waste and reduced overall efficiency.

Lower Emissions = Bigger Savings

A Transportation Management Platform allows retailers to reduce emissions by assigning more sustainable routes and monitoring touchpoints along the way.

The benefits of CO2 reporting for retailers and FMCG companies are two-fold. Customers want to know they are purchasing from ecologically responsible retailers and producers, meanwhile accurately reporting on emissions can positively impact the bottom line as soon every kilogram of CO2 will have a price attached to it.

Carbon Visibility tools comprehensively track emissions taking into consideration primary data like engine age and size, exact route, load type, average speed, and driver acceleration to formulate precise calculations and accurate emissions reporting. But what does this look like in practice?

Making the supply chain more sustainable involves the use of various tools and strategies that are readily available today to fundamentally reduce the environmental impact of transportation and logistics operations:

• Last-mile delivery solutions that use electric vehicles or bicycles
• Circular economy concepts with emphasis on reusing and recycling materials
• Green suppliers that focus only on end-to-end sustainable production methods
• Reducing empty miles with route optimisation, full truck utilisation, efficient loading and unloading processes, and shipper-carrier collaboration.

In union there is strength

Supply chain operations have significant influence over the high inflation and rising product prices, which means it’s in logistics managers’ hands to bring these costs down. How? By implementing unified solutions that both manage operational costs and the price of goods, while ensuring retailers and FMCG businesses stay competitive. Doing nothing represents too much of a risk. You can act by focusing on the following three key areas:

• Intelligent, unified solutions that enable automation, such as machine learning, artificial intelligence, and clever algorithms
• Data, which is most valuable when its aggregated, visible, and in real-time
• Interoperability – which is key to collaboration, sharing and interacting with others in your supply chain

“The supply chains of the future will not look like the supply chains of the past.”

– Professor Michael Bourlakis, Cranfield University

Retail and FMCG markets are complex. Millions of SKUs to manage, multiple delivery points between locations, and supply chain demand volatility can only be managed if unification - collaboration, end-to-end visibility and data sharing – is fully enabled. Steps to unify and achieve vertical integration in the supply chain must include interconnectivity, cloud technology and data sharing. A Transportation Management Platform provides the conditions for supply chain to function optimally. When transport service providers, suppliers and retailers rely on the same platform, collaboration is easy, fewer costs are passed on to customers and all players enjoy better profitability.

Traditional vs. digital supply chains

Traditional supply chains rely on manual processes, limited data visibility and slower decision-making, often resulting in inefficiencies and higher costs. In contrast, digital supply chains leverage technologies like automation, AI and real-time data integration, improving efficiency, transparency and responsiveness. This enables faster decision-making, cost savings and greater flexibility, allowing businesses to adapt quickly to changes and disruptions. Digital supply chains streamline operations, reduce errors and enhance collaboration, offering significant advantages over the traditional, more rigid systems.

How Transporeon supports the digitalisation of retail supply chains

Transporeon supports the digitalisation of retail procurement by connecting retailers, suppliers and logistics providers in real time. It automates processes like freight procurement and shipment tracking, improving efficiency and reducing errors. With real-time tracking and data-driven insights, Transporeon helps optimise inventory and improve decision-making, leading to a more agile and efficient supply chain.

Future trends in retail supply chain digitalisation

Future trends in retail supply chain digitalisation include the increased use of AI and machine learning for demand forecasting, inventory optimisation and predictive analytics. Blockchain technology is expected to enhance transparency and security in transactions and product tracking. Robotic process automation (RPA) will automate repetitive tasks, improving efficiency and reducing errors. Additionally, the adoption of IoT devices will allow real-time tracking of goods and assets, providing better visibility throughout the supply chain. Cloud-based platforms will continue to grow, enabling seamless data sharing and collaboration between supply chain partners. Lastly, sustainability will play a bigger role, with retailers using technology to track and reduce their carbon footprint and make more eco-friendly decisions. These trends will drive greater efficiency, flexibility and transparency in the retail supply chain.