How Disruption Accelerated Digital Supply Chain Transformation
In 2020, when the pandemic erupted, Tesco—a leading British retailer of groceries and general merchandise—was staring at challenges it had never seen.
Having been designated an “essential” retailer, Tesco saw a huge rush to its stores while other outlets were temporarily closed. And as customers chose to buy from the safety of their homes, demand for online shopping grew at an unprecedented rate.
Tesco responded by more than doubling its capacity for online orders, to more than 1.5 million a week. To support this increase, it opened an urban fulfillment center—a small automated warehouse—within each store. The retailer plans to add several more fulfillment centers in the next 12 months to boost its online delivery capabilities.
Tesco’s online sales have increased by 77% since the pandemic began. The retailer could have easily missed this growth opportunity and taken a big hit on revenue, but it rose to the challenge by testing several approaches to modernizing its omnichannel retail operation and enhancing its digital sales capabilities.
Tesco, of course, isn’t the only enterprise that responded to the pandemic by pivoting to combat supply-chain disruption. Many enterprises accelerated the digitalization of their customer and supply-chain interactions by as much as three to four years.
It wasn’t only about turning retail space into warehouses to accommodate a broken supply chain. As traditional retail channels weakened, iconic brands, including Nike, added or expanded their online direct-to-consumer sales. Nike’s digital sales grew 79% after its brick-and-mortar stores shuttered in 2020.
A B2B Push from Inside Out
The e-commerce rush wasn’t limited to retailers. Many business-to-business (B2B) sales and interactions pivoted to e-commerce as well.
The pandemic catalyzed digital transformation at many global enterprises. Over 69% of leaders said social and economic disruption were accelerating their digital business initiatives, a 2020 board of directors survey by Gartner revealed. Many said their business changed more in the first few months of the outbreak than it had in the previous decade.
The push for digital has come from the inside out. Technology has helped internal teams rally to support customers and partners during the lockdown, free of the inertia and change-management issues often associated with such programs.
Even with an accelerated pace of digital transformation, enterprises have a long way to go. A recent Harvard Business Review Analytic Services and GEP study showed that more than 72% of companies believed their key supply chain capabilities—supply planning, demand planning, supplier risk management, warehousing and logistics, procurement, and inventory management—to be digitally immature.
The Time for Digital Transformation Is Now
New technologies can provide comprehensive supply-chain visibility with real-time data and intelligence to help companies make timely and effective decisions based on shifting market dynamics.
Artificial intelligence (AI), internet of things (IoT), predictive analytics, and other transformative technologies can help enterprises respond to sudden shifts in demand and supply trends, and plan for such shifts in advance.
Enterprises must prioritize their digital supply-chain investments in three key areas: visibility, planning, and collaboration. They must look at upgrading or replacing their legacy enterprise resource planning (ERP) and supply-chain systems with next-generation cloud-based supply-chain platforms designed to support rapid innovation. Effective supply-chain collaboration, both within and outside the enterprise, is critical for increased agility and resilience. Over 66% of companies in the Harvard Business Review Analytic Services and GEP study said they will be focusing on improving collaboration.
While investing in the right technology is critical for supply-chain transformation, enterprises must also focus on helping their workforce become more digital-savvy. More than 50% of companies plan to invest in training to improve their employees’ skills in using digital tools. The key, however, is to look for technology solutions that have intuitive design and interfaces and don’t have a steep learning curve.
Disruptions like the pandemic are no longer rare and unpredictable “black swan” events. The high threat of natural disasters, political unrest, economic crises, and pandemics will continue, so enterprises must build the capabilities they need to mitigate such disruptions.
Enterprises that had developed strong digital capabilities in advance of the pandemic were better able to cope with the disruption with agility and resilience than those that hadn’t.
Now is the time for enterprises to assess their digital readiness and start investing—or accelerating their investments—in digital supply-chain transformation. A supply-chain digital-maturity assessment can help your organization identify gaps and improvement areas.
To learn how GEP’s comprehensive portfolio of software, strategy, and managed services can help your enterprise build an agile, intelligent, and resilient supply chain, visit gep.com.