Modern Approach to Supply Chain Resilience Using Intelligent Order Management

Transcript

00:22 

Tauseef Muhammad: Good morning. Thank you very much for joining the second episode of Vision Cast. I'm your host, Tauseef. And today we are going so much deeper into the conversation we had last episode about retail. Today, we can explore the supply chain, and the problems that are facing supply chain after pandemic, you guys been hearing about a lot of things that are happening, the technology perspective or the business side of it, there's a lot going on within the supply chain world. But today, we have our in-house expert, we call him a supply chain guru, Mr. Rauf Ahmad, he's a senior vice president here, welcome to the show.

01:01

Rauf Ahmed: Thank you very much good to be here.  

Trends in the supply chain landscape                                        

01:03            

TM: So let's just get into it. So Rauf , I just wanted to start with a very recent line that I read about: what is the competitive advantage that you actually get to a supply chain? What do you need to know, in order to compete with this problem or fiasco of supply chains? And what is going on actually in the supply chain world?

01:31  

RA: I think there are a number of things which are happening right now, first of all, in terms of consumer demand and consumer behavior, there's been a lot of changes with pandemic, and people expect a multi-channel experience in terms of buying shopping, and a quick turnaround in terms of fulfillment. Also brands and companies had to adopt, typical manufacturers or distributors, who did not typically have an online presence, or they have an online presence, all of a sudden, now, everybody's trying to sell online, as well as brick and mortar, to the b2b channels as well. So that's the first, major change in consumer behavior. And then, of course, there have been disruptions on the supply side, as well both in terms of disruptions, whether at the factories or vendors or in the transportation channels, which is causing this, this whole challenge for the organizations.  

Connected experiences within supply chains 

02:31  

TM: In the last episode, we talked about, customer behavior and retailers and the business and in fact, they are just carrying the end user, because now, the end user is not just an end user buying stuff, they may be selling stuff, and they are looking for a completely different kind of experience. So, can you talk about how this connected experience is? And how this is the solution, that we are talking about, in order processing, what is the connected experience within the supply chain, and how companies are looking into the end user, not as a consumer, but also, needing to know, the entire lifecycle of those products.  

03:15  

RA: so essentially, what's at stake is that the consumers are the buyers, since there is a certain level of expectation, in terms of, fulfillment, or delivery of the orders at their desired location, or desired time, so, what the companies really need is a good process to be able to take demand from all different channels, and then route the demand to different sourcing or fulfillment channels. A lot of companies have had traditionally, a limited number of options to fulfill the demand, either you or your source, you're bringing stock in house, fulfilling your own DC or through your 3 PLs, and everybody had a typical number of models that they support. So now, with the change in demand, and the diversity in the catalogs, and the diversity and the type of consumers and channels, that whole process of fulfillment is being disrupted as well, companies have to be able to adapt to be able to, provide new avenues or new options for fulfillment and order routing

Making customer journeys more resilient  

04:35  

TM: So, that's great, but there's a lot of consumers having a higher demand. So how can you work and optimize this customer journey, by making your supply chain resilient or creating a different sort of system and IOM or different system. How can we make that customer's journey more resilient?

05:00  

RA: So, what we want as an organizations, what they need to be able to do now is that, whenever you make a promise to the consumer, whenever you take an order or you want to be able to fulfill it, right, and you want to be able to fulfill it through any which channel or any which medium, so you not only be able to ship direct to the customer, but also be able to provide, pickup options, the whole omni channel experience, but then also, in certain cases, you want to be able to leverage vendors and your factories, capacities, and your distributors, capacities as well and do a lot of dropships, and a lot of retailers are also experiencing or trying to experience or experiment with, endless aisles type of concept where you want to be able to provide additional catalog of items available for your customers or consumers walking into the store. In that experience it requires a backbone operations system, which can allow you to not only take those orders, which are beyond your traditional catalog, but also route those orders to the route right vendors to the right factory is a distributor and then fulfill and ship from there directly to the customer, or allow for a pickup from the store. So from a connector experience, you want to be able to offer all these options to the customers. But you tie it with a supply chain resilience, because it also, if once you have this process of orchestration and order fulfillment in place, what you can also do is leverage it quickly reroute orders or reroute demand to different fulfillment channels easily and quickly, as soon as one channel gets disrupted. So that's a very fundamental portion in this whole process. For instance, if I am typically shipping orders from one DC, and all of a sudden, there has been some issues, and I'm not able to ship from that DC anymore, I want to be able to quickly without having to go through a lot of customizations or any questions quickly be able to route those orders to a to a vendor or a factory for direct ship to maybe my other fulfillment center, which may not be exactly in the colocation area, but it could still be able to fulfill my demand.

07:24

TM: I think when you mentioned dropshipping, and the areas that dropship can be done, the mom and pop, selling stuff from home, and they are selling on Amazon, or marketplace sellers, but I just wanted to understand one thing, that for a business to be in this competitive world, how they can bring that competitive advantage into this business, because all the retailers, and you mentioned Endless Aisle as well, I heard this terminology back in 2013, when the term digital transformation was all over the place. Then omni channel transformation and from retail to shared card and all those things. But still the majority of the retailer's team may or may not figure out what exactly you need to do. My question here is, how can you bring that competitive advantage to a business?

08:28

RA: So, both from a buyer's and seller's perspective. If you look at it from a seller's perspective, sellers want to increase the revenue, and you want to increase the experience of your customer, as far as the customer walks into your store, you want to be able to make sure that they walk out of the store after making the purchase, right. So having the Endless Aisle just gives you the ability to provide or open, additional products in the catalog, which are probably not even present in your store, you're not even selling those directly through your own channels, right.  

So you're able to experience and experiment a little better by onboarding additional vendors and onboarding additional sellers on your platform, through the Endless Aisle mechanism, and then exposing those additional, products to your consumers and customers. So in one way, it's helping you secure revenue and making sure that the customer does not go to a competitor. And another way you're also expanding your relationships with your vendors, your additional vendors or regional sellers as well and that sort of expands can provide you that additional cushion or coverage right. So that's kind of in from a buyers sell buyers perspective, as a consumer, I definitely need more options. if I walk into a store, and walking into a store is up probably a better option for a lot of the consumer these days because you want to experience the firsthand experience the human experience. So you still want to have that in play. And while offer the flexibility of online commerce or marketplaces within the store as well, so that you can vary the best of both world, in that live environment. So in both ways from a seller and buyer perspective, this is kind of a new experience. And if you're able to provide it to your consumer base, you definitely have an edge over the competitors, because, as a consumer, we prefer to go where we can have more options.

The future of Brick and mortar

10:39                       

TM: That's interesting. In our last episode, we touched upon one very interesting area about the omni channel. And within the omni channel, there's a notion, there's a lot of retailers closing their brick-and-mortar stores, Toys R US has shut down, Sears are those are big box retailers, they gone, Kmart gone. And then on contrary, Amazon is opening those brick-and-mortar stores. So how you see, this paradigm change within someone is closing out, that brick and mortar is dying, but the big E commerce giant is opening the retailers, is it that they figure out the technology or consumer behavior? Or are the other people still lagging behind? What's your take in this situation? Or what is going on within the supply chain?  

11:34

RA: So I think it just, from Amazon's and from the Dorothy's big players perspective, you really are, what you're leveraging is your backbone, which is your supply chain, which is your ability to, ship anywhere, and, within a day or two days, so that's a huge backbone that you can rely on. Now, bringing on top of that, bringing the end-to-end person live experience to the consumers, it creates more loyalty, I think, from that context. And also, it allows Amazons of the world to go into consumer base, which are the types of categories or products, which are typically not sold through online, like grocery items. It's still heavily in person experience. So in order to tap that market, they definitely had to go in person to throw their perspective, that's the concept. Amazon is not opening toy stores, right, Amazon. So if you look at it that context, the key here is, what is it that people need personal experience? And what is it that is really what we buy in person, right? So you have to pay attention to that. I mean, even in terms of, type of toys or other home goods or regular retail. The key trick that I think there that is missing from these retailers is they're probably not looking at the demographic as well as they should, and trying to figure out what is it that they should be selling at which locations, they're not leveraging data as much as they should, and they have huge inventories stuck in different silos in different stores. So if they were to, I mean, if I'm Toys R Us, if I'm able to ship from my toys or our store, right, I take an online E commerce order and fulfill it for my toys r us store or have a same day, next day delivery in each ZIP Code, of course, my store would still be functioning, it would still be acting as a warehouse as well as a retail store. So I mean, there are a number of things which I think the stores ought to be doing, if they do not want to be falling into that same sort of conundrum.

Technologies that help order fulfillment.

13:54

TM: That's interesting. Last week, I ordered something. I was trying to find one toy for my son, his birthday is coming up. So, I looked at Amazon and Amazon was saying that they're going to ship me after seven or 10 days, that is a very famous item. So, I looked at Walmart, and one of the stores has that thing, and for first time I experience this, okay, we can deliver to your home the same day, and I was wondering like that UPS USPS, FedEx, they cannot deliver on the same day, and within hours, there's a regular person in a regular car that came in and then dropped the parcel at my place. So, I just got curious, what's going on? Is Amazon just building their own Uber world or what are they doing? Then it's interesting, they’re creating this uber rising model of delivery, in which Amazon doing their own deliveries with their own trucks, but Walmart figured out, how to override that model, and all those private folks, I can avoid maybe using DoorDash, or an Uber Eats and stuff. They're also part of that network to use that delivery. So that's, very interesting model. But one thing, which is also interesting that all those things to happen in the technology world, I'm sure, that people are looking at the end of the customer, because you mentioned that customer needs the stuff at the door, right now, like yesterday, kind of stuff. Is there any technology out there? who looked at the customer first then, the other areas? And have you encountered those technologies? And what is the technology that can help order fulfillment?

15:49

RA: So, to see, we're working with, this is the role of distributed order management solutions, and we're working with Microsoft solution, which is intelligent order management, it's a new sort of new application, new solution Microsoft introduced last year. It's very powerful, configurable, and you can easily adopt, onboard new, all of your any of your order channels, or fulfillment channels onto the platform, and then create, or configure, order fulfillment routes, or order fulfillment, orchestration logic within intelligent order management, and you can enable any of these, order online pick up from store picked up pass, or near a store for pickup automatically, your pick the cheapest option to ship to a consumer, or pick the nearest DC or three PL to ship to a customer, in shortest amount of time, all of those things, you can easily configure these routes, you can even go as far as trying to figure out, whether it's in your best interest to fulfill from your own stores or to do a direct ship, even though you may have inventory, So you can use AI to create those to generate those decisions within the orchestration logic, and leverage that, and if you're somebody who's actually willing to experiment of trying to implement endless aisles type of model, you can actually leverage intelligent order management, to route the orders to respective vendors or, distributors to, fulfill customer demand.   

19:17

TM: Yes. Then he asks how dreadful it was when I got into the supply chain? That's the second part of the question.

19:23

RA: I think, from my experience, perspective, it's probably a mix of few things, it's first of all, the intention to reduce, your cost of goods or, your bottom-line inventory costs and that’s the burden that you're trying to reduce, and then you're trying to reduce the inventory that you're keeping in stock. And that's the fundamental element that you're trying to gain speed in some instances. So either you're trying to reduce your inventory, your inventory costs, have less of your cash caught up into that, or you're trying to achieve speed, instead of bringing inventory your products from vendors to your DCS and then selling it to the customers, there are situations which where you can do, things like cross docking, or, maybe shipping direct to the customer or customer does it pick up from across two applications? Those, are ways that that supply chain logistics teams have come up with over the time trying to maximize, consumer, or maybe in some cases b2b experience with your, brand or your company?

Connected supply chain experiences

20:38

TM: Okay, that question was from “Slick” and thank you Slick for the question, I hope that answers your question, but offline, if you still want to have a conversation, please leave your email and Rauf can connect with you and have a detailed conversation. On that note, Rauf, I just want to get a little bit deeper on the supply chain side, which is all those different technology and different things, that you have the solution for fulfillment, you have the connected experience e commerce solutions. So making the supply chain resilient, it requires a connected experience, the end to end visibility, how you can be transparent, what it’s like working with the small, medium, large enterprise companies, how you are working, to make that connected experience, making more unified supply chain connected experience, end to end visibility, which can give better control, what are you doing and how you're solving this, for the companies that you're working with?                                    

21:46                                        

RA: So, I mean, platforms for distributed order management, there are many out there, intelligent order management by Microsoft is one more platform. It's new, and it's advanced. But the key thing that any of these platform needs is connectivity. So what we bring in is the ability to quickly rather rapidly, onboard any of your existing commerce platforms, whether it's b2b, b2c direct to consumer, or whatever channels, you're selling, your powers on, we are able to bring orders from that channel directly to this distributor or a management system to our solution, our connectivity solution, partner link. And then also at the same time, once the orchestration logic runs, and once we know where this order needs to go to TPL, or DC, or to our ERP or directly to a fulfillment channel, we're able to leverage this connectivity platform connectivity solution, then to route the order to the right destination as well, so that it can be fulfilled, and then all the way back from fulfillment, getting the status updates back from your DCS back from your vendors, through ups and stores, through our connectivity platform down to your channels and markets, and, marketplaces and so on. So, we bring in their connectivity element, we bring in their pre-built, pre-configured, ability for us to connect with all these systems and solutions or third-party providers.

23:17

TM: I'm going to throw a curveball Rauf, this is all theory, and this is very good. Tell our audience a real-life example of how you solved this thing, in industry or anything, which other folks weren’t able to resolve, and then you worked really, into the weeds of that problem, and resolved it for the company in real life example. That's what our audience wants to hear.

23:45     

RA: we're working with a number of companies right now, we're working with a food distributor, trying to expedite their order delivery process, that they're using another distributed order management solution right now, which we're trying to replace. So, the new process would be, to leverage this intelligent order management with our partner link solution, bringing in orders from B2B or, from ERP into the order management and then routing it to the right distribution.

24:21              

TM:  Sorry, but what was the problem that you started the conversation with.

24:27

RA: The problem really what we started was the first the complexity of the routing process and the rules that we needed to deal with. We needed to provide a solution which was flexible enough to incorporate all those orchestration rules and layers and priorities and so on. And then also, the second part of that problem was to be able to connect with multiple systems at the same time, and then be able to, route the orders to several different desk conditions.

25:01                

TM: then what was the problem and how you worked out the solution and how the solution helped optimize their productivity or their bottom line after implementing this solution. What happened with the opposition, are they doing great, or they have like this competitive edge now

25:24  

RA: the key thing that they gain out of this particular solution that we're providing is that they are able to find a route the order to the right PC with much more accuracy. And that's basically helping them reduce the manual overhead or, in turn, it's helping reduce increased productivity. That's the key outcome, helping, and that outcome could be different for different customers or different organizations, depending on the situation or use case.

The impact of Chat GPT on supply chains  

25:59           

TM: let's talk about the elephant in the room. Chat GPT. Okay, Chat GPT and AI are buzzing all over the universe. And I heard there is talk of Mars on AI now. So, what's going on, how was this entire technology platform that was built, and do they need to have this AI element to it? Do you see, things are going to change with the chat GPT, how that's going to be impacting this entire supply chain or fulfillment, connected commerce, connected experience, and in fact, the entire omni channel world.   

26:40

RA: Yeah, Chat GPT a lot of the public got introduced to Chat GPT recently, AI solutions, natural language processing has been around for a while now, especially in the enterprise world. So, I think there is a lot of room or a lot of opportunity to leverage AI for decision making. The key thing is to find the right use case where you can get the right ROI, using AI for trivial decision making, it doesn't make much sense, it doesn't convey any ROI. So, for instance, if I was to use AI, in this situation for routing or fulfillment, I'll try to see, I mentioned earlier, whether I, should ship an order for my own stock? Or should I use vendor? Production? I don't know, I mean, things like that, but you want to see what is best? What is the best way forward for you? What can you predict? Can you predict that I would need this inventory tomorrow? Or tonight, so that I should not use it? and how do I know which customer to prioritize? and which customers order should I fulfill myself and which customers order should I fulfill follow up third party, so straightforward Decisions, decisions and cost you can take easily without AI, but, predicting what would happen tomorrow and using that and making a decision of today, that's where AI is most useful.  

Hands-on AI experiences for consumers                                                                   

28:14                                                                                                                                   

TM: if you notice, the consumer got a hands-on AI experience previously, the technology, say, is built on AI, that AI based decision making are all the same, but now, consumer and user, they can see, how the AI works. Is this just hype or is it going to grow?

28:40

RA: There's been a lot of debate, a lot of people think it's going to continue to grow, I feel the same way. There are certain areas and certain scenarios where AI will take longer to penetrate. But in certain areas, it would be much faster, especially, like I said, predicting, and then decision making is based on that prediction, that's probably where we're seeing a lot of adoption, even now, and that's where it would be much faster.