Supply Chain Technology is the New Cool Kid on the Block

When it comes to retail technology trends, it’s easy to get excited about cool front-end innovations such as the voice-activated Amazon Echo, RFID-outfitted fitting rooms, Beacon-connected mobile apps and social media “buy” buttons.But for retailers, it is the technology that supports every step of the supply chain that is suddenly the new cool. Yes, you heard right: using the latest technologies to manage traditionally un-sexy, back-end functions such as inventory, procurement, shipping, distribution, logistics and warehouse management, supply chain has become the sweet spot for retailers looking to compete in both ecommerce and brick and mortar.

Technology that supports every step of the supply chain is suddenly the new cool.

These functions, hidden from the consumer, may have been under-appreciated in the past, but these days retail investment dollars in the supply chain are front and center. Why? Two words: Customer expectations. In today’s digital economy where every shopper carries a smartphone, social sharing happens in an instant, and Amazon, Netflix and Uber make buying goods and services a breeze, consumers want it all. They desire a shopping journey that is effortless and simple. Goods and services should be available anytime and anywhere. And when it comes to ecommerce, they demand quick delivery: next day, same day, or even in one hour.

Filling the gap in the retail supply chain

This is no easy feat, of course. Fast and accurate last-mile delivery has been one of the thorniest challenges for retailers looking to meet the e-commerce demands of today’s empowered consumer. Top retailers such as Amazon and Walmart have tried to tackle it through acquisitions and partnerships. Walmart purchased Jet.com to build on its e-commerce foundation and reduce supply chain and logistics costs, and partnered with Uber and Lyft on a last-mile delivery pilot. Meanwhile, Amazon has snapped up two European logistics companies and introduced AmazonFlex, an Uber-like service to deliver Amazon packages. From every angle, the biggest retailers in the world know that the way to stay ahead is to figure out how make getting products through the supply chain faster and more efficiently.

The top technologies to boost supply chain-driven customer service

So what are the coolest technologies emerging along the retail supply chain that improve customer service outcomes? These are three important trends:

1. Internet of Things (IoT)

Shoppers have become aware of IoT technology through consumer-facing, voice-activated smart home devices such as Amazon’s Echo. But connected devices that can bridge the physical and digital worlds are also working behind the scenes to help retailers manage their increasingly-complex supply chains. For example, Target has worked to install RFID-powered price tags to get a more accurate picture of their inventory and deal with loss prevention. Supermarket leader Kroger uses IoT-enabled temperature sensors to make sure frozen foods stay frozen. And at Walmart, salespeople use a smartphone app to get insights into real-time supplier data.

2. Robotics and automation.

A growing number of retailers are focusing on robotics and automation to transform everything in their supply chain from fulfillment centers to distribution. According to a recent survey by Deloitte and MHI, over half of supply chain managers expect robotics and automation to have a significant impact on their business. In addition, more than a third (35%) of survey respondents said they’ve already incorporated robotics into their logistics, and that number could rise to 74% in the next six to 10 years. Not surprisingly, Amazon is ahead of the game here, as well: Amazon’s use of robots for order fulfillment has grown to 30,000, including a pallet-moving robotic arm nicknamed “Optimus Stow to Prime” — Amazon CEO Jeff Bezos is said to be a robots buff.

Rent The Runway's reverse logistics process is “so efficient that it can send out 60% of returned dresses the same day they arrive at the warehouse".

3. Reverse logistics software.

Getting products into the hands of customers is, of course, a top retail priority in an era when customers demand quicker shipping and accurate delivery — so it’s no surprise that retailers have worked hard to streamline that process. But the other side of any retail business is dealing with returns and excess inventory, which often turns into another thorny challenge they struggle to solve. Software that deals with these “reverse logistics” has become an essential investment, especially for ecommerce companies that depend on a consumer’s ability to easily change their mind, keeping what they want and returning what they don’t. Personal-shopping company Stitch Fix feeds inventory data into an algorithm to send customers five personalized items each month. And Rent the Runway’s software algorithms keep track of over 65,000 dresses and 25,000 accessories. According to Multichannel Merchant, the company’s reverse logistics process is “so efficient that it can send out 60% of returned dresses the same day they arrive at the warehouse.”

Turning the retail supply chain into a customer experience powerhouse

With customer expectations rising sky-high, retailers in every category are looking to turn the retail supply chain into a customer experience powerhouse. Today’s consumers clearly want effortless commerce all the way through their shopping journey, from purchase and shipping to delivery and possible returns.Meeting those expectations isn’t just about front-facing retail operations, but also requires radical improvements on the back end. This can only happen if the supply chain is agile, connected and modern. By leveraging emerging disruptive technologies, retailers can make supply chain a customer experience advantage.We'll be talking about this and other cutting-edge topics with some of the best minds in retail at our invite-only Narvar Summit on February 9. Follow the conversation on Twitter at #narvarsummit.