Keeping pace with growing customer expectations for ever shorter delivery times, quality of service and responsiveness is a constant challenge for any commercial organisation.
More so given the recent surge in online purchasing where immediacy has become the norm rather than the exception. The ability of sellers to respond to this demand naturally relies on reliable, collaborative communication technologies which provide the means to connect and integrate their business systems to those of their supply chain partners.
Electronic Data Interchange (EDI) has been mainstream in the retail sector for many years and has provided the backbone for Buyers and Sellers alike to exchange business documents and streamline their business processes. The most notable benefits are the reduction in costs and risks associated with manual processing of orders, increased responsiveness and improved customer satisfaction. However, the business model has changed somewhat and the effects of the COVID pandemic has undoubtedly accelerated that change.
While this was evident before the pandemic took hold, the lock-down dramatically accelerated the shift from the high street to online purchasing. We were advised to stay indoors and, as a consequence, turned to Internet retailers and online marketplaces.
There has also been a noticeable change in our shopping habits, particularly amongst younger consumers where the preference is to purchase everything online as opposed to visiting the high street. This has understandably had a dramatic effect on traditional bricks-and-mortar retailers. We have seen many well-known high street names disappear as their business models became uneconomic. There have even been questions raised about whether the UK should levy a purchase tax on online retailing.
A recent Web retailer article stated that some of the more established online marketplaces experienced double-digit growth over the second quarter of 2020. They reported that Amazon marketplace sales were up 52% year-on-year. eBay’s quarterly GMV (Gross Merchandise Volume) grew by 26% and Wal-Mart marketplace, a relatively new entrant, has doubled in size to 50,000 sellers. The online grocery sector has equally experienced double-digit growth over the last two quarters. Tesco in the UK, for example, recently released their online sales figures reporting online grocery orders have skyrocketed from 600,000 to over 1.5 Million orders per week. This is not at all surprising given attention turned to the web during the COVID-19 lockdown period. Analysts predict this activity to remain with the expectation that the percentage of online versus in-store purchasing will surge even further. No doubt other major retailers have experienced similar growth. Whether we like it or not, this is the new order of things.
It wasn’t that long ago we were prepared to wait a few days for our purchases to be delivered. Nowadays we expect next day delivery – even same day from a growing number of retailers. Streamlined business processes coupled with advances in supply chain communication technologies have provided the means to achieve this and who knows where we will be in the near future.
Once the regulatory barriers on the use of drone technology are overcome, perhaps it will become common place for goods to be delivered directly to our homes shortly after completing our online purchases. Amazon have already been trialling this against a minefield of regulatory obstacles which need to be overcome before it becomes a reality. This reality will no doubt come else retailers will find other ways of satisfying consumer demand.
It is essential therefore that the technology that makes all of this possible adapts and evolves in order to keep pace with ever increasing consumer expectations for shorter lead times and better customer service. There is also a natural cyclic effect whereby technology evolves to satisfy increased customer demand, which in turn increases consumer expectations which again furthers technical innovation.
So exactly how has, or rather, how will messaging technology evolve to meet the demands of the new age?
As mentioned, traditional EDI has served us well since it became mainstream in the mid 1980’s. It still serves its purpose today, some 40 years later providing the means by which most quality conscious companies communicate with their supply chain trading partners. As a testament to its success, there are a plethora of EDI solutions available from in-house solutions to the increasingly more popular (outsourced) managed services, all of which fulfil the same purpose and have similar functionality.
Essentially, EDI is a batch process and where immediacy of information is needed, sellers can no longer rely on issuing a purchase order and wait for the supplier to respond with their acknowledgements or confirmation on their ability to fulfil. Amazon, for example, set stringent timeframes in which Merchants are obliged to respond – with consequences if they fail to do so and, in extreme cases, the risk of being delisted as an Amazon partner.
We have also witnessed the nature of relationships between buyers and sellers change to meet demand. There is now a growing trend to issue “Drop-Ship” instructions to key suppliers rather than issue purchase orders for inventory replenishment. Under such agreements it becomes the supplier’s obligation to hold sufficient inventory to satisfy orders and deliver the goods direct to the purchaser thereby reducing costs for the seller and shortening the time for fulfilment.
So, while EDI has its place, how have alternative technologies evolved to meet demand? There is much talk nowadays about having closer, more collaborative, connections with all members of extended supply chains. This means having immediate, real-time access to trading partners ERP data. This is more commonly referred to as “Real-time Data Exchange” (RTDE) as opposed to traditional EDI.
The task of creating such links in the past would have been prohibitively expensive not t mention the technical challenges involved – even if an organisation’s trading partners had the requisite technical resources and expertise to do so. With everything at our disposal today in terms of modern communications technologies and protocols, this should not necessarily be the case.
To rise to the challenge of near immediate fulfilment, sellers need immediate responses from their supply chain partners on their ability to meet demand, whether they have sufficient inventory in stock to meet customer orders – particularly relevant where they have a Drop-ship arrangement in place and can guarantee minimum lead-times and at the lowest/best possible price.
By way of example, AdvanceFirst developed a RTDE solution for a leading automotive aftermarket parts wholesaler to place real-time enquiries upon their supplier community to support customer demands for immediate response on priority VOR (Vehicle Off-Road) parts orders for the best price and for almost immediate delivery. The solution gives the parts wholesaler the opportunity to broadcast purchasing tenders across multiple suppliers for the best optimum response. The solution therefore allows the parts wholesaler to issue real-time queries directly to the suppliers’ ERP systems and receive responses back in real-time rather than waiting for responses through traditional EDI.
There are now many industry specific trade associations and messaging portals which connect customers with their suppliers. These are particularly prevalent in the Hospitality and Catering sector where RTDE is becoming an essential part of the message exchange for the same reasons as mentioned above. The subscribers of such enterprises range from large organisations to small companies who may not necessarily have the same technical expertise or resources. The technology which allows them to connect to their customers therefore has to be relatively inexpensive, simple to deploy and often be available as a web-based option as opposed to a heavy weight system integration project.