COVID-19 has brought about profound changes in consumer behavior. Not only are these new expectations going to become permanent, but they likely will intensify, even in a post-pandemic world.
According to a September 2020 report by management consultancy Oliver Wyman, about one-third of grocery customers who began shopping online in response to the virus now plan to continue, even after the pandemic passes. The data also points to a rise in online penetration beyond grocery, including household goods and health and wellness.
Over the past few months, fulfillment speeds have gone from two-day to one-day to by-the-hour. This new e-commerce landscape demands companies develop proficiencies that enhance the customer experience while protecting the bottom line through efficient, digitally integrated, omnichannel supply chains. Achieving these light-speed delivery times while preserving margins requires a combination of people, process, and technology.
E-commerce demand is volatile demand, which means supply chains need visibility, transparency, and proactive information sharing. In order to build resilience by effectively monitoring upstream risk, strong partnerships must go beyond immediate suppliers out to tiers 2 and 3. Communication, coordination, and collaboration will be paramount.
E-commerce demand also involves smaller order sizes, dispersed deliveries, and a large number of returns. In addition to accurate forecasting, supply chains must optimize inventory management, transportation, and last-mile processes. Optimally locating facilities will be essential, with many companies choosing to insource. Expanding the number of available fulfillment centers will also position businesses better to meet customer demand.
Lastly, data analytics, the internet of things, robotics, machine learning, and related digital capabilities will be required. Embracing digital supply chain should be top priority for any company hoping to drive efficiency and maximize e-commerce opportunity going forward.