Digital transformation is in full swing. However, in order to deliver on its promises, it needs to extend beyond the client's front office and be accompanied by an in-depth transformation of organizations and operations, the Supply Chain in particular. The challenges of this transformation are vital for the logistics sector.
By Yvan Coutaz, Hardis Group Executive Vice President
In IT, the words on everybody's lips are digital transformation, omni-channel transformation, retail outlet digitization, and so on. There is a lot of (maybe too much) focus on the front office, targeting sales or marketing departments at the risk of neglecting what is really important. Digitizing the customer relationship without transforming operations (the Supply Chain in particular) runs the risk of over-promising and under-delivering due to the logistics organization failing to keep pace. Adopting a "customer-centric" approach in the company is crucial these days and it requires major changes and an in-depth transformation of organizations.
The transformation of logistics in France: a major economic and social challenge
As demonstrated by the French government's organization of the national logistics conference in mid-July 2015, the authorities are well aware (admittedly belatedly compared with other countries such as Germany) that changes need to be made in the logistics sector in France and for several reasons.
Transport and logistics, along with the support businesses, account for 1.8 million jobs in France, which is enough to merit the development of the sector. Distribution platforms and warehouses have "replaced" factories. The rise in e-commerce, the flexibility of the Supply Chain, delayed differentiation and the increase in intra- and extra-EU flows all contribute to the development of logistics in France.
Despite the professionalization of the sector and the emergence of international-scale French logistics providers able to whet the appetite of their foreign competitors (the purchase of Norbert Dentressangle last week by US group XPO Logistics is proof of this), France's logistics performance remains lower than some of its neighbors'.
The major challenge for companies over the next few years will be to continue optimizing their Supply Chain to improve economic performance while increasing its flexibility to better meet the requirements of customers who, like you and me, want to receive deliveries whenever and wherever they choose (at home, retail outlets, pick-up points, etc.), with ever-shorter delivery times and at a low cost!
Make "omni-channel" transformation a success with a more efficient and digital Supply Chain
In the transformation to omni-channel, separating the front and back office ceases to make sense. In fact, the silo method is counterproductive. Customers want to be able to see a product online, reserve it and try it in store or locate and pick up an alternative product from another store using click & collect or have it delivered to them at home, etc. This requires an understanding and management of the path to purchase, total real-time stock visibility whatever the storage location (including in the different stores to avoid losing sales), and communicating information systems to improve order management, etc.
The rise in omni-channel sales (web-to-store, store-to-web) with delivery to the customer's home, a pick-up point or store requires adaptations to be made at the warehouse: location of storage and picking areas, grouping of B2B/B2C stocks, specialized picking routes, use of mechanization, etc. It also has an impact on transport: digital should bring increased responsiveness with real-time information and paperless processes. Meanwhile, in stores, incoming stock and preparation activities have changed dramatically with the increase in click & collect and the management of returns of items purchased on the web.
There are considerable impacts on the information system which need to be anticipated: changes to forecasting tools thanks to Big Data, ERP adaptation, implementation of an Order Management System, replacement of the existing WMS with a more efficient one and development of a store logistics IS and mobility tools, etc.
The omni-channel approach profoundly changes organization methods, store models, information systems... and people! Businesses are also changing alongside tools. This dual transformation needs to be supported so marketing, sales, supply chain, human resources and IT departments need to work together to achieve digital and omni-channel maturity throughout the company.