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Supply Chain Insights

Order Management – a lifeline for retailers in a COVID-19 world

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By Raghav Sibal, Managing Director, ANZ, Manhattan Associates

The ongoing pandemic has changed the way that people purchase and acquire goods. Soaring demand for eCommerce and increased interest in new ways of collecting purchases, such as curb side pickup and click & collect, mean that Australian retailers are now faced with the challenge of recalibrating their business strategy to serve an increasingly complex omni-channel environment. Alongside various city and state lockdowns, many brands have had to get creative and accelerate their journey towards digital services over the last year. However, not all of them have successfully managed the transition.

To assist, new business-to-consumer distribution models are coming to market, with a core focus on the importance of ‘living’ the omnichannel customer experience, rather than just talking about it. One such model is Order Management Systems (OMS), which integrate all sales and distribution channels into one place, bringing absolute transparency and making it easier for retailers to manage customer orders. An OMS helps retailers to see what inventory they have where, what’s been allocated, what is in transit, what’s been sold, what is available, what needs to be replenished and what’s being returned.

Optimising order sourcing

New demands being placed on retailers today have forced innovation to occur at an unprecedented pace. From adding drop-shipped items to websites to quickly beefing up sales, launching quick ‘on ramp’ digital solutions, or streamlining operations to maximise strained employee bandwidth, the need for innovation through technology has never been greater. In fact, in the latest Forrester Wave Report, it was revealed that 39% of retailers increased their investments in technology immediately after the pandemic began to disrupt supply chain operations.

Without this necessary push towards efficiency-boosting technology, retailers would be left behind their competition. With innovations like OMS, retailers have even been able to review the rules of stock allocation, temporarily giving priority to in-store stock over warehouse stock, thus, freeing up any trapped inventory confined within closed stores. This comes as a great advantage to the many retailers whose physical stores were closed for long periods during lockdowns.

Optimising order sourcing is a new focus for retailers, allowing brands to use the stock available in their entire network, wherever it is located. A smart OMS allows retailers to use the ‘pool’ of physical stores in large urban areas to offer same day, or next day delivery by couriers, whilst also favouring the warehouse stock for less immediate orders.

Addressing multiple shipments

Recent research undertaken by Manhattan Associates has shown that due to the ongoing impacts of the pandemic and its convenience, home delivery is now the preferred delivery option for 69% of Australian online shoppers. Interestingly, 60% of Australian consumers indicated they often receive their online order in multiple shipments and 81% of them said that they think this is an inefficient and unsustainable way of delivering goods. In fact, the same number (81%) also said they would prefer to receive their order at a later date if it meant that it would arrive in one consolidated delivery. These changing consumer preferences pose challenges for retailers and their supply chains to match their inventory and delivery capabilities against what customers actually want.

For those orders that have to be shipped in multiple deliveries, advanced OMS systems allow customers to view the status of all items within an order in a Digital Self-Service order tracking page. If an order is shipped in multiple packages, customers can view all tracking details, estimated time of arrival, and the delivery date of each package from a single page. If all items have not been shipped, the customer can view the status of all items, including items which are in in-process or cancelled. By providing customers with complete order transparency there is less uncertainty around an order’s status, working to substantially reduce customer call volumes to the contact centre to check where an order is.

Cost-effective omnichannel offerings

In a recent study, conducted by Manhattan Associates and IHL Group, it was revealed that retailers who optimised their digital customer journey saw their margins improve by three to eight points more than those who didn’t. Additionally, by enhancing the customer journey through the use of technology, retailers are equipped with the knowledge they need to understand what their consumers want, and in turn, they can clearly communicate their promises to consumers – such as delivery dates and returns processes – leading to a positive bump in overall margins.

According to several independent studies, the conversion rate is said to increase up to 30% when a brand communicates a precise delivery date promise on a product page. However, 50% of consumers agree that they would in fact abandon a purchase if there was no delivery date indicated at the checkout. This is a good signal of the importance of offering total transparency to the customer regarding their order, as without it, consumers are left uneasy about not only the wait time for delivery, but the credibility of the brand itself.

Turning returns into a positive customer experience

Since the pandemic, the ability to promote a more efficient returns process for eCommerce purchases in-store has become an increasingly important all-round service for brands looking to maintain an adequate retailer-to-consumer relationship. Using an OMS in-store application, customer service teams can directly search for customers’ original orders and records of the returned items. Then, the products that are in return-worthy condition are immediately integrated into the global stock pool, making them available for sale online, even if the item was not originally listed at the point of sale.

For consumers who are on-the-go, new QR code solutions exist which allow customers to drop a return item at a carrier location. The QR code can be made available to customers via email. This avoids situations where customers previously had issues printing a return label at home.

More efficient returns processes enables faster refunds, improved order accuracy, and delivery transparency, develop a greater peace of mind for consumers, and ultimately, improve overall brand advocacy and loyalty – which comes as the biggest advantage to retailers in the long-term.

Managing order cancellations

With more online orders being placed, today’s consumers expect to have full visibility of their order’s progress, as well the flexibility to cancel their order if needed. With an advanced OMS, customers can cancel items that are being shipped to their address before the items have been packed, without having to reach out to the contact centre. Customers can view which items are eligible for cancellation, select items and reasons for cancellation, and preview their new order total before confirming the cancellation.

Supporting order cancellations and changes as late as possible prevents the situation where a customer wants to cancel an item that has already reached the ‘point of no return’ in the fulfilment process. When these situations occur, it causes friction and frustration for the customer who has to receive and return the item, plus time and cost for the retailer who will often have to absorb the shipping and handling costs for both the shipment and the return.

Order Management for future-proof retailing

With the everchanging nature of the retail landscape, and the increasing demands and expectations of consumers, enhancing retail operations with innovative technology such as OMS will serve as a way for retailers to optimise their operations for the future, to withstand even the harshest fulfilment, delivery, and customer services challenges.

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Supply Chain

bp and Uber sign Global Strategic Delivery Partnership

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  • bp and Uber sign a new global strategic convenience partnership aiming to make more than 3,000 retail locations available on Uber Eats by 2025.
  • The partnership extends current local arrangements in Australia, New Zealand, Poland, South Africa and the west coast of US, adding the UK and eastern US in 2022 and with plans to launch in other European markets from 2023.

Today, bp (NYSE: BP) and Uber Technologies, Inc. (NYSE: UBER) are announcing a new global strategic convenience delivery partnership, extending their existing local arrangements to reach more consumers across the world. Together, the partners will offer a huge range of quality convenience products, including fresh and prepared ranges, from select retail locations.

bp is the first convenience retailer to team up with Uber Eats on a global level and aims to have more than 3,000 retail locations available on the delivery platform over the next three years. The partnership supports bp’s goal of growing its access to customers and expanding its delivery footprint, in response to soaring demand for food, groceries and everyday essentials brought to the door.

The new partnership covers retail sites in Australia, New Zealand, Poland, South Africa and the west coast of US. Sites in the UK and eastern US will be added to the app for the first time this year, with plans to launch in other European markets from 2023.

“We’re thrilled to team up with Uber Eats globally giving us the opportunity to reach many more consumers online in addition to those who currently visit our retail sites. We’ve seen how the pandemic has accelerated customer demand for delivered convenience and this partnership will allow us to scale up quickly on the Uber platform. And for the first time, we will be able to offer delivery options to existing customers on our own BPme app by the end of 2023,” said Emma Delaney, executive vice president customers & products, bp.

With 20,500 bp retail sites across the world and 550 million customers living within 20 minutes of a bp retail site, the partners see enormous opportunities for growth. bp sites offer a range of products tailored to local markets which may include hot and cold drinks, food-for-now options as well as staple groceries, fresh produce and ready meals, plus wine, beer and flowers.

  • In the UK, customers will be able to access a range of Wild Bean Café, and other branded food and products via Uber Eats – with the first 120 sites due live on the platform by the end of June.
  • In the US, the offer will be made available to bp’s network of independently owned retail locations to support the growth of their businesses. The goal is to make it easy for these partners to sign up to the Uber Eats platform and access benefits based on bp’s scale.

bp will benefit from Uber’s global brand and operations footprint, best-in-class technology for dispatching orders, and more than 4.4 million drivers and couriers on the platform worldwide.

As part of the agreement, Uber Eats and bp will work to introduce delivery options onto bp’s own app, BPme – initially planned to be available in the UK, US and Australia by the end of 2023 – powered by Uber Direct. This new offer will allow bp to directly connect its customers to delivery riders, making Uber Eats the trusted partner in fulfilling these orders. Since 2019, bp has seen a three-fold increase in users of the BPme app, with 16 million active loyalty users worldwide.

“With more than 20,500 locations around the world, bp’s reach is enormous—making them critical partners as we pursue our ambitions of helping consumers across the world get what they need delivered to their doorsteps,” said Pierre Dimitri Gore-Coty, Uber’s SVP of Global Delivery. “We are proud to support this next phase of the company’s convenience growth through this delivery partnership and look forward to deeper collaboration in the future.”

bp and Uber already work together in mobility with bp providing electric vehicle charging for Uber’s ride-hail drivers. The companies will explore other areas for future cooperation in convenience, including opportunities to utilize low carbon delivery methods to fulfill orders from bp sites.

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Supply Chain Insights

Officeworks to own and control Distribution Network.

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Officeworks invests in supply chain capabilities, will own and run it’s distribution centre.

Officeworks has changed its supply chain strategy in the wake of COVID-19 issues, with a view to owning and controlling a network of distribution centres across the country.

“When I joined we had a different strategy around our supply chain,” Officeworks managing director Sarah Hunter told The Australian, referring to the company’s previous outsourcing strategy.

“So we’ve worked really hard now to build our supply chain capability. We were in the process of outsourcing it, we are now in the process of building that capability.

Officeworks recently opened Australia’s first solar-powered robotic distribution centre in Derrimut, Victoria.

“We started in Victoria, and we have had approval to build, now board approval to invest, and we are building a new, similar (distribution centre) operation in Western Australia. That’s exciting,” she said.

“Looking at our capital expenditure three, four, or five years ago it’s a material step up in our investment in our supply chain.

“Most importantly for us as a business is that every team member who worked at the old facility has been completely retrained,” she said. “We have 120 team members who are now fully trained in how to work in an automated state-of-the-art environment.”

The need to control its own distribution became clear during the pandemic.

By December, Officeworks saw 46 per cent of its business come from online, including click and collect. Now it needs to move to retain this growth at a cost effective scale.

“We have created a facility that’s not only more productive, it’s going to enable our online business to grow in Victoria and into NSW at the rate that we expect our online business will grow.

“So now we have the capacity, the cost per pick is materially lower because it’s much more productive. It’s a win-win scenario for us. We’ve kept everyone employed with really great job security. We’ve scaled them up to work in the supply chain of the future.

“And on top of that, we now have the capacity for growth in Victoria that frankly we were struggling with through COVID.”

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Business Continuity

Skills shortage puts SAP projects on hold

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Business demand creates double whammy on recruitment pressure

Skills-related issues have hit a quarter of SAP users, in some cases putting projects on hold, according to a survey of companies in the Americas.

Research released by the Americas’ SAP Users’ Group (ASUG) shows that 26 per cent of organisations see skills in supporting, developing, and upgrading SAP systems as their number one challenge in working with the technology.

A quarter of users loyal to the German vendor said skills problems were holding up projects.

Geoff Scott, ASUG CEO, told a webinar last week that the combination of skills shortages in businesses and their technology teams created a vicious cycle of driving the demand for new tools and technologies.

“Business functions come and say, ‘Hey, I need to have all these things done.’ And technology teams say, ‘Well, I don’t have the same skills I used to have.’ And I think it creates a major disruption inside many of our member companies,” he said.

Skills were also a major issue for SAP users looking either to migrate to or support S/4HANA, the latest version of the tech giant’s ERP software based on an in-memory database.

“We are going to feel the pinch of that skill gap. My word of caution is that as you think about moving to S/4 if you have not already, the ability for you to plan that migration may hit some turbulence related to skill gaps with your external partners. That’s something that you absolutely positively should consider,” he said.

While technology issues were the greatest concern in the research overall, broken down, only integration problems were more cited than staff turnover and maintaining knowledgeable staff.

Of those with integration problems, 28 per cent said they were causing data errors to spread, 17 per cent said they were affecting the compatibility between SAP and other applications, and 17 per cent said it meant they were unable to keep up with new technologies.

One respondent said: “Changes made in SAP and Salesforce that do not get reflected in the other system are causing data inconsistencies.”

Overall, the majority of SAP users were increasing their spending on the technology. Fifty-two per cent said they were increasing spending, up from 46 per cent last year.

However, the proportion of users saying they were cutting spending on SAP also rose from 5 per cent last year to 8 per cent in 2022. The number of organisations making the same level of investment fell, according to the ASUG research.

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