Executive Briefings

Emerging Technologies Transforming the Retail Supply Chain

A conversation with Britt Dayton, director of Deloitte Consulting.

Emerging Technologies Transforming the Retail Supply Chain

It's no secret that technology has empowered the customer; anyone with a smartphone or internet-connected device in their hand can place orders, make payments or return merchandise. And, of course, the immediacy in delivery that customers have come to expect means that retailers have to fulfill orders right away. But the power of the consumer is about to increase immeasurably. In fact, new technologies may turn some retailers into little more than brokers for designers and manufacturers, says Britt Dayton, director of Deloitte Consulting. Speaking with SupplyChainBrain in Orlando at the annual conference of the Retail Industry Leaders Association, Dayton said that for retailers to survive, they not only need to stay abreast of the developing technologies but recruit employees who are entirely comfortable with disruptive technology and innovation.

Q: Perhaps the threshold question should be, just what's fueling these changes, and  increasing their rate of adoption?

A: Dayton: Just like consumers now have digital power in their hands, more than ever before, that same underlying computational power drives these new emerging technologies.

Q: Let's establish just what these disruptive technologies are.

A: Dayton: There are three that we talk about: digital manufacturing, augmented and virtual reality, and advanced robotics driven by artificial intelligence. We're seeing a convergence of these different technologies, and we're seeing companies starting to develop applications for them that were only imaginable in the past and are now reality.

Q: So, let's walk through them. What do retailers need to know about digital manufacturing?

A: Dayton: Digital manufacturing encompasses several different aspects, from digital design of products to the digital display of the products to consumers. But what's most prevalent is the actual digital fabrication or what some call 3D printing. This technology really builds products up from the ground up, if you will, versus taking material away, which is the historical manufacturing process. This opens up opportunities to have very complex and personalized designs, almost a customization of one. It's really fundamentally changing some of the manufacturing economics that we historically worked with. It's starting to open up some new areas of business. There are actually new businesses being built on this technology that weren't possible previously.

Q: But what's the retailers' concern with this new manufacturing process?

A: Dayton: This really challenges what a retailer of the future is. What a retailer offers today is an assortment of products. So you as a consumer come in the store and see things. But in the future, a retailer may be more of a broker between consumers and makers. Maybe the future retailer will just offer a catalog of designs even though there could be almost unlimited products available. Or, replacement parts of things you own today could be digitally produced, either at the store or in your home. So we could fundamentally change just what it is that a retailer means to a consumer.

Q: It isn't clear to me if augmented reality and virtual reality are two separate things or not. Just what is the difference, if any, and how might that technology, or technologies, impact this vertical?

A: Dayton: Well, there is a difference between virtual reality, where you are totally immersed in a virtual world, and augmented reality, which places images in your field of view. So you still are looking at a real world, but you have virtual images placed there.

We see virtual reality out there for gamers, and that could change how to interact with a retailer as you immerse yourself in virtual world. But we see augmented reality as having the most immediate impact for both the consumer shopping experience as well as for internal operations.

Q: How so?

A: Dayton: For consumers, it's quite possible today to have an iPad or iPhone or digital device and have 3D representation of products that you can literally explore in your hands, so that augmented reality really changes how a consumer may shop for certain products. Internally facing, we see clear applications in places like the distribution centers, which have used RF picking or voice picking. Now they have the opportunity to do visual picking. So with a combination of wearable devices, such as smart glasses, and augmented reality, you start to create a new way to train staff and also to drive productivity. That can happen in both distribution centers and in the stores.

Q: Speaking of DCs, robotics is already a part of that environment. Let's amplify on the role of that technology, and of artificial intelligence.

A: Dayton:  Advanced artificial intelligence covers a range of different disciplines or technologies, from machine learning to visual recognition to advanced algorithms. So computers can start to at least mimic how humans perceive and think their way through the physical world. When you combine that with advanced robotics, you're now starting to develop advanced applications that were only dreamed of several years ago. We've got a convergence with advanced robotics in the form of increased sensor capability, so they can sense what's happening around them in the world. We have advanced algorithms from artificial intelligence that allows them to deal with some ambiguity, to make decisions and learn from environments. You've got big data out there on the internet that they can draw on to increase their statistical algorithms. So this convergence of AI and robotics is starting to open up very interesting applications.

Q: How so for retailers?

A: Dayton: Some retailers are starting to experiment with robotic customer service associates in their stores. Consumers can actually interact with a robot, tell it what they want to see, and the robot can take them where that item is in the store.

There are applications in the retail supply chain as well. If you think about your DC, robots have been good at highly repetitive tasks in the past. Now they can deal with non-repetitive piece-picking. So, robotics combined with AI really is starting to challenge the workforce of the future. That combination looks like it will challenge some of the skill sets of the people you need to hire.

Q: What do I, as a retailer, need to do to prepare for these emerging technologies?

A: Dayton: There are several key points. First, you need to stay aware of what's happening with new technologies. There's a lot of activity around omnichannel, and that's driving attention in the retail supply chain. But you have to stay aware of these technologies because they are advancing at an exponential rate. Before you know it, they will be the next wave of change. Partner with other companies, service providers and vendors to stay aware.

Second, start doing some test-and-learn. Find some areas of your business where it makes sense to make small tests, where if you fail, it won’t impact your business. Dip your toe in the water.  Along with that, we're saying, companies need to get better at adopting these technologies and being innovative.

And the last point, you need to rethink your talent strategy and the skills you're looking for. Future workers in the supply chain need to be comfortable with these technologies, with innovation and with risk taking. You must think about these skill sets now as you recruit for the next wave of supply chain professionals.

Resource Link:
Deloitte Consulting

It's no secret that technology has empowered the customer; anyone with a smartphone or internet-connected device in their hand can place orders, make payments or return merchandise. And, of course, the immediacy in delivery that customers have come to expect means that retailers have to fulfill orders right away. But the power of the consumer is about to increase immeasurably. In fact, new technologies may turn some retailers into little more than brokers for designers and manufacturers, says Britt Dayton, director of Deloitte Consulting. Speaking with SupplyChainBrain in Orlando at the annual conference of the Retail Industry Leaders Association, Dayton said that for retailers to survive, they not only need to stay abreast of the developing technologies but recruit employees who are entirely comfortable with disruptive technology and innovation.

Q: Perhaps the threshold question should be, just what's fueling these changes, and  increasing their rate of adoption?

A: Dayton: Just like consumers now have digital power in their hands, more than ever before, that same underlying computational power drives these new emerging technologies.

Q: Let's establish just what these disruptive technologies are.

A: Dayton: There are three that we talk about: digital manufacturing, augmented and virtual reality, and advanced robotics driven by artificial intelligence. We're seeing a convergence of these different technologies, and we're seeing companies starting to develop applications for them that were only imaginable in the past and are now reality.

Q: So, let's walk through them. What do retailers need to know about digital manufacturing?

A: Dayton: Digital manufacturing encompasses several different aspects, from digital design of products to the digital display of the products to consumers. But what's most prevalent is the actual digital fabrication or what some call 3D printing. This technology really builds products up from the ground up, if you will, versus taking material away, which is the historical manufacturing process. This opens up opportunities to have very complex and personalized designs, almost a customization of one. It's really fundamentally changing some of the manufacturing economics that we historically worked with. It's starting to open up some new areas of business. There are actually new businesses being built on this technology that weren't possible previously.

Q: But what's the retailers' concern with this new manufacturing process?

A: Dayton: This really challenges what a retailer of the future is. What a retailer offers today is an assortment of products. So you as a consumer come in the store and see things. But in the future, a retailer may be more of a broker between consumers and makers. Maybe the future retailer will just offer a catalog of designs even though there could be almost unlimited products available. Or, replacement parts of things you own today could be digitally produced, either at the store or in your home. So we could fundamentally change just what it is that a retailer means to a consumer.

Q: It isn't clear to me if augmented reality and virtual reality are two separate things or not. Just what is the difference, if any, and how might that technology, or technologies, impact this vertical?

A: Dayton: Well, there is a difference between virtual reality, where you are totally immersed in a virtual world, and augmented reality, which places images in your field of view. So you still are looking at a real world, but you have virtual images placed there.

We see virtual reality out there for gamers, and that could change how to interact with a retailer as you immerse yourself in virtual world. But we see augmented reality as having the most immediate impact for both the consumer shopping experience as well as for internal operations.

Q: How so?

A: Dayton: For consumers, it's quite possible today to have an iPad or iPhone or digital device and have 3D representation of products that you can literally explore in your hands, so that augmented reality really changes how a consumer may shop for certain products. Internally facing, we see clear applications in places like the distribution centers, which have used RF picking or voice picking. Now they have the opportunity to do visual picking. So with a combination of wearable devices, such as smart glasses, and augmented reality, you start to create a new way to train staff and also to drive productivity. That can happen in both distribution centers and in the stores.

Q: Speaking of DCs, robotics is already a part of that environment. Let's amplify on the role of that technology, and of artificial intelligence.

A: Dayton:  Advanced artificial intelligence covers a range of different disciplines or technologies, from machine learning to visual recognition to advanced algorithms. So computers can start to at least mimic how humans perceive and think their way through the physical world. When you combine that with advanced robotics, you're now starting to develop advanced applications that were only dreamed of several years ago. We've got a convergence with advanced robotics in the form of increased sensor capability, so they can sense what's happening around them in the world. We have advanced algorithms from artificial intelligence that allows them to deal with some ambiguity, to make decisions and learn from environments. You've got big data out there on the internet that they can draw on to increase their statistical algorithms. So this convergence of AI and robotics is starting to open up very interesting applications.

Q: How so for retailers?

A: Dayton: Some retailers are starting to experiment with robotic customer service associates in their stores. Consumers can actually interact with a robot, tell it what they want to see, and the robot can take them where that item is in the store.

There are applications in the retail supply chain as well. If you think about your DC, robots have been good at highly repetitive tasks in the past. Now they can deal with non-repetitive piece-picking. So, robotics combined with AI really is starting to challenge the workforce of the future. That combination looks like it will challenge some of the skill sets of the people you need to hire.

Q: What do I, as a retailer, need to do to prepare for these emerging technologies?

A: Dayton: There are several key points. First, you need to stay aware of what's happening with new technologies. There's a lot of activity around omnichannel, and that's driving attention in the retail supply chain. But you have to stay aware of these technologies because they are advancing at an exponential rate. Before you know it, they will be the next wave of change. Partner with other companies, service providers and vendors to stay aware.

Second, start doing some test-and-learn. Find some areas of your business where it makes sense to make small tests, where if you fail, it won’t impact your business. Dip your toe in the water.  Along with that, we're saying, companies need to get better at adopting these technologies and being innovative.

And the last point, you need to rethink your talent strategy and the skills you're looking for. Future workers in the supply chain need to be comfortable with these technologies, with innovation and with risk taking. You must think about these skill sets now as you recruit for the next wave of supply chain professionals.

Resource Link:
Deloitte Consulting

Emerging Technologies Transforming the Retail Supply Chain