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Retail Technology Review:
Harnessing a composable enterprise strategy to alleviate supply chain disruption.
By Lila Dorato, Senior Director, Solutions Engineering at MuleSoft.
Few industries have been more exposed to the volatility of pandemic-era business than retail. In the early days of the crisis, supermarkets saw shelves repeatedly stripped bare by panic buyers, while other parts of the sector saw sales plummet after lockdowns forced store closures.
While things have improved since those early days, there’s still a great deal of uncertainty for both retailers and their customers. Rapidly changing circumstances and fluctuating demands continue to take their toll on global supply chains. Retailers are reducing on-hand inventory and placing smaller, more frequent orders with shorter delivery times to avoid being left with surplus stock. However, this puts their revenue at risk in the event they are unable to get the inventory needed to meet customer demand. Technology is becoming ever more critical to navigating this disruption, as retailers look to optimise their supply chains through data-driven decision-making and capabilities such as predictive analytics.
Visibility is paramount
As with many parts of the economy, technology helped retailers to quickly adapt during the early days of the pandemic. When consumers flooded online to find the items they needed, retailers responded by expanding their e-commerce capabilities. Online sales experienced four years’ worth of expected growth in just 12 months – rising from 12% to more than a third (34%) of total retail spend, according to research from Experian. Experts hadn’t predicted that level to be reached until 2025. If this continues, by 2025, online sales could be at levels not previously expected until 2035.
Digitalisation is key to enabling retailers to put themselves at the heart of this growth, by attracting more of today’s increasingly tech-savvy consumer base. They need to ensure both bricks and mortar and online customers get the seamless experiences they crave. That means being able to buy what they want, when they want it, without being exposed to the supply chain chaos that has frustrated the industry for much of the past two years.
Many retailers are also investing in automation to alleviate the challenges of operating as a low margin business. Automation can bring significant benefits throughout the supply chain, from fulfillment to check-out, helping retailers to maintain competitive pricing while still increasing their profit. To meet these objectives, retailers need real-time visibility into customer demand as it ebbs and flows across their entire supply chain. Only this wide-angled view will help them to detect early on the broader shifts in consumer behaviour that supply must adapt to, and enable automated decision-making to meet the demand quickly. Unfortunately, many are restricted in these efforts by siloed data and legacy processes such as manual restocking and batch ordering, which can be slow, inflexible, and error prone.
Unleashing innovation through integration
Improved integration is at the heart of retailers’ ability to overcome these challenges through technology and data-driven innovation. On average, only 28% of organisations’ applications are integrated, leaving data trapped in silos, where it is difficult to analyse and act on. These data silos are a formidable roadblock to supply chain visibility and innovative order processing capabilities such as “no touch” solutions, which automatically request more stock as it is taken from shelves.
By pivoting away from traditional point-to-point integration towards API-led connectivity strategies, retailers can more easily bridge the gaps between their systems and data. Exposing each service, process, or asset as an API means data and applications can be repackaged as reusable capabilities in a composable supply chain. These capabilities can more easily be picked up and used to link legacy and digital systems to power new digital initiatives such as advanced forecasting and predictive shipping, which drive competitive differentiation across the supply chain.
Building a supply chain on collaboration
API-led connectivity is also key to enabling retailers to collaborate with suppliers to ensure they can meet the demands of the market more effectively. By exposing data and insights in a secure, yet accessible way through APIs, retailers and suppliers can jointly create a more holistic view of customers and inventories to improve decision-making. This will help to ensure suppliers can fulfil retailers’ orders in a timely way and deliver the products consumers are looking for wherever and whenever they are most in demand. As a result, they can drive greater supply chain predictability to burnish the retailer’s reputation, and useful insight that can be used to plan promotions and in-store displays that have the greatest revenue impact.
The composable enterprise enabled by API-led connectivity can also help organisations across the supply chain forge new partnerships and collaborate more quickly to adapt to changing customer behaviour. For example, UK-based Clipper Logistics previously relied on custom coded integrations to onboard retail customers, which added cost, complexity, and time to the process of setting up new partnerships. By taking a reusable API-led approach for orders, addresses, and SKUs, Clipper Logistics has greatly reduced the time it takes to onboard new retailers. That means its retail customers can now seamlessly integrate their order management systems with Clipper’s warehouse management system in just weeks, rather than months, helping to scale up their logistics operations and get goods into the hands of consumers faster.
As more firms come to see the value of reusable APIs to streamline integration and accelerate time-to-value, we’ll begin to see some of the pressure placed on our supply chains over the last two years being alleviated. In a world where retailers are increasingly impacted by supply-chain disruption, those that are able to scale, innovate, and work more closely with their partners will see the greatest rewards in driving customer loyalty and bigger profits.