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5th Annual European Life Sciences Supply Chain Summit

03/12/2014 - 04/12/2014, Mercure, Amsterdam City

The Life Sciences SCM Summit is the only event that brings together all segments of the life sciences supply chain. Every year, senior supply chain executives from pharmaceuticals manufacturers, medical devices manufacturers and hospital groups attend for elite, interactive peer discussions in an open environment.

The Pre-Cog May Be Sharp But How’s The Supply Chain Looking

Zen Yaworksy's first column for eft on developments in retail technology

Minority Report, for those of you who haven’t seen it, is a 2002 sci-fi film set in the future where certain human beings have developed the ability to have advanced knowledge of someone’s intention to commit serious crimes (precognition). Tom Cruise, dressed in a variety of black outfits and looking perpetually cross, is the detective tasked to deal with the imminent commission of a variety of murders, rapes, robberies etc. It’s all enormously tense.

 

In one of the scenes from the film, Mr. Cruise enters a Gap Store (in a black sleeveless vest), promptly has his retinas scanned and is regaled by a 3D Hologram greeting him by name and selling him something based on his purchasing history.

 

“Good grief,” we all thought, “imagine that!”

 

More recently I was reading the recent Retail Week Retail Innovation Report 2014 and two of the twenty or so bits of magical gadgetry that are being employed in or developed for retail looked spookily like something that would be quite familiar to Captain John Anderton (Tom Cruise’s character in the film).

 

Bluetooth Beacons can be used to send messages to a customer through their smart phone based on where they are in the store and, just like the film, use stored shopping behavioral information.  The customer could be met like an old friend, offered a ‘special’ on black socks, be told where they need to go to find the product and even, using the fingerprint security that their phone might carry, pay using contactless technology. Or perhaps, as the report imagines, you might walk into your favourite coffee shop and get a message that says: ‘Welcome back Brendan. The usual?’. Tapping ‘yes’ then lets Brendan pay for the drink and go straight to the collection point.

Facial recognition can be used for similar ‘precog’ type responses to a customer.  Facial recognition could alert the store to the entry of a customer and allow them to be personally welcomed by the assistant who is armed with knowledge of their preferences and purchasing habits.

 

(As an aside, when I travelled to New Delhi a few years ago I was picked up from the airport by taxi and as I was taken on the hair-raising journey through town the driver was babbling away into an ancient mobile phone the size of a house brick with one hand and managing to steer through the dense traffic, change gear and gesticulate with the other.  On arrival the splendidly dressed concierge greeted me with “Welcome to The Oberoi Mr. Yaworsky.  I hope that your flight from London was not too tedious and that the delay that you experienced at departure from Heathrow caused you no inconvenience!” Now being of the easily impressed variety I spent a good few minutes trying to puzzle how they had worked all that out before I realised the arrangement the hotel would have with the airport taxi companies. I hadn’t heard my name amongst the Hindi being shouted at the phone.)

 

The Retail Week report goes on to detail a whole host of technologies ranging from digital wallets to augmented reality, from virtual mirrors to wearable computers, all of them focused on the ‘sharp end’ of retailing, the interface between product and customer.

I looked hard and tried to find amongst the list of key innovations in retail something to do with the supply chain. There wasn’t any and that surprised me. The biggest transformation taking place is the evolution of the retail experience from a physical one into a virtual one; the relationship between a customer and the product is becoming very different and is going to become even more so.

The simple fact that the store is no longer a primary inventory location means that order fulfillment is taking place between a warehouse and the nominated collection point that the customer defines – their house, the local garage, a post office, an underground (subway) station, the workplace or the local mom and pop store.  There are even trials taking place where the goods are placed into the trunk of your parked car.

Add to that the fact that an awful lot of stock is coming back through reverse logistics and as a consequence inventory is off system for a scarily long time. Of last year’s US Black Friday sales of $57bn, $4.04bn was spent on reverse logistics; 7% of the sales value.

Of this $4.04bn some $3.7bn was inventory cost!

Inventory management has been and going forward will be relentless in the making or breaking of many retailers. It would be good to see the same innovation and focus being given to the supply chain from point of first and second tier supply, through production right into the hands of the customer and, importantly, back to stockholding.

Speed, accuracy and quality can be supported through smart technologies; smart visibility systems and business event management, RFID and code scanning, and intelligent forecasting and demand management to enable product availability and manufacturing responsiveness; smart technologies along, of course, with capable management.

Looking forward beyond the point of consumption or purchase, one of the fascinating and potentially unifying factors for supply chains in our modern lives is the wealth of enormous unstructured data contained in the supply chain and particularly in social media. All the blogs, Facebook, Twitter, Pinterest, Instagram, Google+ posts and many others contain opinion and preference, and if that opinion is topical and current then it could be translated into a demand picture, a picture far more accurate than something imagined at a planning stage.  There are technologies out there that can ‘scrape’ natural language from these posts, translate them into a demand picture and handle the big data volumes that this sort of activity involves.

Add all of this to supply chain visibility and outstanding inventory management of the committed stock position and supply chain optimization might take on a new meaning.

Message to Retail Week: “Look up and down the supply chain. Retail is an integral part of a series of aligned functions and innovation has to happen in every part not just the store and with the customer.”

It’s an vital point of view. If we don’t get it right then who knows?  Next time Captain John Anderton goes in The Gap, the annoying 3D hologram might just say, “Sorry John, stay with the dodgy looking black vest, we don’t have anything in stock we can help you with.”

5th Annual European Life Sciences Supply Chain Summit

03/12/2014 - 04/12/2014, Mercure, Amsterdam City

The Life Sciences SCM Summit is the only event that brings together all segments of the life sciences supply chain. Every year, senior supply chain executives from pharmaceuticals manufacturers, medical devices manufacturers and hospital groups attend for elite, interactive peer discussions in an open environment.