That was the main appeal for top home furnishing retailer Lamps Plus Inc. to upgrade its order management system with Manhattan Associates Inc. to the Active Omni platform, Bill Gratke, senior vice president of supply chain, planning and reporting told Digital Commerce 360 at the Manhattan Momentum 2023 conference in Phoenix last week.

Instead of going through a major upgrade for any change it wants to make to its order platform, such as adding a new payment feature, the Active Omni platform is “version-less,” Gratke said. Manhattan Associates will continually update the software every 90 days with new features. If Lamps Plus wants a specific feature, it will have to wait until Manhattan adds it in one of its releases. It may not need every feature that the vendor will continually add, but it will be available to the retailer. A refresh of features every 90 days is a huge benefit compared with waiting for the company to do an upgrade, which could be seven years later, said Clark Linstone, president and chief operating officer.

Lamps Plus upgrades with Manhattan Associates

Lamps Plus has a good track record with Manhattan Associates, as it uses Manhattan’s older Distributed Order Management system, which it implemented in 2012. In addition, Lamps upgraded its point-of-sale system to Manhattan’s Active POS in 2018.

“Our success with Active POS has paved the way for us to move on to Active Omni,” Gratke said. “We have a high degree of confidence. The people who helped implement, they’re smart, and they delivered the product they said they would. And I can tell you, that’s the reason why we’re moving on to Active Omni.”

The cloud-based system also means Lamps Plus will have less physical hardware at its location.

“(The benefit) is it’s getting out of the hardware business, and basically having the ability to get more sleep at night because the system is not going down or you don’t have to reboot a server weekly or something like that. And those are all the things that happen with a hardware-based system in your own data center,” Gratke said.

The brand expects the store-side of the upgrade to go live in August 2023, and the online customer-service integration will go live in summer 2024. Lamps Plus decided to stagger the release dates in order to lower the amount of risk on such a critical system, Gratke said.

The implementation fee for the integration is more than $1 million and the annual subscription fee also is more than $1 million, Lamps Plus said.

Order management complexity

Order management, however, is a huge animal to tackle. Consider this: Lamps Plus takes orders from its website, LampsPlus.com, from its 36 showrooms and a handful of marketplaces, including those operated by Amazon.com Inc., Target Corp., Walmart Inc., eBay Inc. and Google Inc.

Lamps Plus supplies its products from 700 vendors, which Lamps Plus views as 700 additional warehouses with its products. It takes inventory feeds from all of them at least once a day to ensure its inventory counts are accurate. Lamps Plus has two distribution centers, its main one in California, which sprawls 784,000 square feet, a distribution center in Pennsylvania and a returns center in California. Lamps Plus ships about 70% of its products from its own distribution center and drop ships the other 30% from one of its vendors’ warehouse.

“The hardest install we’ll ever have is order management, because it’s the brains of entire order system,” Gratke said. “Every order in your entire company from POS to kiosk orders to marketplace orders to your own proprietary website — Lampsplus.com — all come through that same system and goes to the brains. And the brains, which is the order management system, decides where to place order: vendor, your own warehouse store or whatever it might be.”

More sophisticated rules

With the new order management system, Lamps Plus can implement more sophisticated rules about where to ship items from based on freight costs, shipping costs, speed, proximity to shopper among others. For example, the new system will allow the retailer to allocate sensitivities and thresholds with each of its priorities. As an example, if an order is $3 cheaper to ship from a vendor, but the customer would have to wait 10 more days, the new system may opt for a more expensive shipping source in order to have faster shipping, based on the rules the retailer set.

“It’s both speed and costs, and cost has gotten to be the bigger issues as oil price increase significantly,” Linstone said. “So the timeliness of how quickly we can get the product to the customer and how cost effective are the drivers behind this and trying to figure out the absolute best place to ship from.”

While the older system worked, it was “clunky” and tweaking the rules in the new system will be much easier, he said.

Lamps Plus is No. 109 in the 2023 Digital Commerce 360 Top 1000.

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Emily Newton

Many new ChatGPT supply chain applications are emerging as generative AI becomes more advanced. So how can industry professionals utilize this technology effectively? They can use ChatGPT in several critical ways, primarily communication and automation.

1. Supply Chain Customer Service

Customer service is one of the most promising applications for ChatGPT in the supply chain. The natural language processing capabilities of ChatGPT are among the most advanced ever developed for popular use. This makes it an ideal tool for navigating the complex communication required in customer service tasks.

Any developer can integrate ChatGPT into their apps today using OpenAI’s official API for the algorithm. ChatGPT’s language processing skills can be applied to any customer-facing application in the supply chain, whether B2B or B2C. For example, a supplier could create a ChatGPT app for its manufacturing customers to track shipments of materials and resources.

2. Translation and International Relations

Succeeding in today’s supply chain requires working closely with partners worldwide. Unfortunately, language barriers make this challenging, potentially hindering organization and efficiency. Luckily, translation is a great way to use ChatGPT in the supply chain.

Research shows that users don’t need to specify the source language of a text passage for ChatGPT to translate it successfully. The algorithm can autonomously detect the source language and translate it in seconds.

ChatGPT’s performance is also on par or better than most digital translation tools available today. The fact that it can process natural language, including advanced technical terminology, gives it a major advantage over competitors. Its accessibility makes it ideal for supply chain applications, which rely on quick turnaround times and clear communication.

Using ChatGPT for translation can strengthen collaboration with international supply chain partners, improving efficiency and organization for everyone involved.

3. Automating Business Tasks

Businesses can use ChatGPT in the supply chain to automate various everyday tasks. For example, it can summarize a sales report, extract the highlights from a spreadsheet or draft an email. These tasks might seem small, but they help supply chain professionals work more efficiently.

ChatGPT can even be helpful for complex logistics tasks. AI is already making advances in logistics. For example, algorithms can automate order processing and help managers identify important insights in their data. This could include tasks like analyzing a list of suppliers to find those with the best rates or assessing various packaging options for the most cost-effective solution.

ChatGPT takes existing applications for AI in robotic process automation a step further. Advanced natural language processing helps it handle more complex content and user requests. Even integrating it into a larger automated system could improve performance.

4. Personalized Employee Training

ChatGPT is a great tool for improving employee training. This is especially helpful today since many supply chain businesses are adapting to new technologies and grappling with labor shortages. Surveys show 57% of supply chain leaders report hiring and retaining employees as their top challenge. Additionally, 41% have issues upskilling or reskilling existing workers.

Supply chain businesses can help alleviate these challenges by integrating ChatGPT into their training programs. It can serve as a multipurpose assistant for trainees by answering questions, explaining complex topics, and creating practice tests and flashcards. Employees can use ChatGPT to get a personalized training experience catered to their needs and learning styles.

Some trainees might quickly grasp a new technology, while others will want more time to explore definitions, technical terminology and other background information. ChatGPT can serve various training approaches, making it a versatile tool for providing more efficient employee training.

5. Data Analysis and Visualization

Data analysis and visualization is a lesser-known application for ChatGPT in the supply chain. Most people think of it as a language-specific AI, but it can also process numerical data.

Rapid and accessible data analysis tools are vital today. Data-driven insights and decisions are a cornerstone of Industry 4.0, which is rapidly reshaping the supply chain. ChatGPT makes basic AI analytics quick and straightforward. Anyone can paste a set of unstructured information into ChatGPT and ask it to summarize or organize it into a table.

Automating this task allows supply chain employees to have a more efficient workflow and leverage data more easily. ChatGPT can’t do complex data analytics yet, but it can handle many basic processes that are helpful for quickly getting an overview of a data set.

6. Idea Generation

Idea generation is a unique application for ChatGPT in the supply chain. Businesses need creative solutions to new challenges as things become more complex. Generative AI platforms like ChatGPT can be surprisingly helpful in the brainstorming process.

An AI might pinpoint unconventional solutions or ideas a human would not have considered. ChatGPT’s suggestions may not always be usable or feasible, but they provide a unique perspective that can spark creativity among team members.

Potential Drawbacks of ChatGPT

ChatGPT may be a powerful tool for certain applications, but it isn’t perfect. Business leaders should know about the drawbacks and challenges of adopting ChatGPT.

For example, ChatGPT has been known to give users inaccurate or completely made-up information. The AI’s language processing skills allow it to convey this false data convincingly, making it challenging to detect accuracy at a glance. Some groups, such as the coding help site Stack Overflow, are even banning ChatGPT due to the spread of misinformation.

This broadcast ofmisinformation is a huge problem in applications where users may be poorly equipped to verify that ChatGPT’s generated text is accurate. For example, using the AI for translating could lead to confusion if ChatGPT misunderstands the input or output language. Similarly, a new employee using ChatGPT for job training might learn incorrect information due to answer errors.

These issues may improve with time. The latest version of ChatGPT, GPT-4, is reportedly 40% more likely to give factual data, according to developer OpenAI. However, it will likely take years for ChatGPT to become a reliable source of information. Even then, there is always a chance the AI could “hallucinate” incorrect conclusions from the given data. ChatGPT’s output should always be fact-checked.

Adopting ChatGPT in the Supply Chain

There are many ways to use ChatGPT in the supply chain today, ranging from translation to employee training to logistics automation. Businesses can improve efficiency and productivity by integrating it into their workflows. OpenAI offers an API any developer can use to build ChatGPT into their app or website. In the years ahead, more supply chain applications will likely emerge as the technology advances.

About the author:

Emily Newton is an industrial writer reporting on how technology disrupts industrial sectors. She’s also the editor-in-chief of Revolutionized, covering innovations in industry, construction, and more.

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Eberhardt Weber

The B2B wholesale business is an essential part of the global economy, providing products and services to all kinds of customers. Despite its vast influence, however, the industry continues to face several challenges that impact its growth and success.

The single most crucial inhibitor to growth is the slower adoption of digital transformation in the B2B sector, especially when compared to businesses that sell direct-to-consumers. Without prioritizing digital transformation and modernizing to digitally-led sales processes, the long-term impact for B2B businesses will hit sales figures, profitability, and customer success. And the gulf between businesses that rely on legacy processes and those that adopt digital commerce strategies will widen, too. Moreover, companies will intensify this gap by introducing more automated tools to fast-track process enhancements.

Of course, change does take time. And it takes even more time when the day-to-day challenges always seem to take precedence over longer-term growth ambitions and digital transformation initiatives. As a result, many wholesalers get stuck in a cycle of troubleshooting to balance their margins and maintain customer satisfaction constantly, and this prevents them from moving to the next growth stage.

The fact that many digital commerce platforms were designed for B2C, with B2B features as an afterthought, makes it harder to overcome these daily challenges. The consumer ecommerce features are bent to try and fit a B2B proposition, but B2B sales journeys and business processes are often highly different and far more complex than their B2C cousins.

B2B digital commerce requires a digital solution that caters specifically for wholesaler needs and gives them the tools they need to use data and insights to their advantage. It’s worth taking a closer look at some of the biggest challenges specific to wholesalers — ones  that may be standing in the way of progress — and see how wholesalers can overcome them.

1–Inventory Shortage & Overstocking

Managing inventory levels is the trickiest task for any wholesale business. An inventory shortage can lead to missed sales opportunities, dissatisfied customers, and reduced order values. On the other hand, overstocking can result in increased expenditure due to the cost of holding excess inventory, which could also get damaged or spoiled if handled incorrectly.

Implementing an automated inventory management system will allow wholesalers to track inventory levels in real time and make informed decisions about when and how much to order. Alerts will not only be triggered as stock lines deplete, but these can be connected with other data, such as expected lead times for deliveries from different suppliers, seasonal changes in demand, or the frequency of repeat orders from large clients. In this way, inventory levels will work in harmony with customer demands so that products are not out of stock when the customer needs them, and not overstocked when they don’t.

2–Poor Visibility into Product Profitability

Determining which products are the most profitable and which ones are not may sound like simple business sense, but these details can often get lost when managing enterprise-level operations. In one scenario, siloed decision-making that varies from one department to another can lead to inconsistent strategies. Or, at the other end, giving equal importance to all SKUs can take the spotlight away from hero products that should otherwise have a greater share of sales to increase profits.

It is possible to create a more insights-driven strategy by collecting data on product profitability across different lines and then building the right product mix. With digital support, this product strategy can also create customer-specific catalogs. A digitized process will enable a far more sophisticated and dynamic approach to managing multiple lines and customers. Managers will no longer need to make all of the calculations and decisions manually. Using process mining technology, for example, the system will capture all the data for a holistic view and then provide insights on the most effective strategies. A platform designed for wholesalers will also make it easier to turn these insights into action by implementing the orchestration of the new rules.

3–Mismatch in Customer & Supplier Demands

The key to running a wholesale business successfully is balancing the demands of customers and suppliers. Wholesalers face a careful balancing act of keeping both customers and suppliers on good terms. Good supply chains will help protect margins, and good customer satisfaction is needed to protect revenue, but these are both on constantly shifting sands and require close attention.

Managing a supply chain using digital tools and insights will provide the analytics to know of any changes in real time so that these can be factored into the front-end customer experience. For example, a wholesaler may receive an order for a product that experiences unforeseen delays. Instead of having to apologize to the customer that delivery will be delayed and risk losing that relationship, an automated system can immediately identify suitable alternatives based on the customer relationship history and diffuse the situation. It could offer an adjustment to the order, for example, such as a discount or other promotional privilege, and keep the customer on good terms.

Or perhaps a manufacturer decides to change the price of its product, making it less competitive in the market, and a decision is needed on whether to continue to stock it. Again, process mining will help to identify the data relating to that product, such as popularity or profitability, and offer insights on the best course of action. In these examples, digitized processes speed up decision-making and minimize the impact of an issue on the end user.

4–Profit Margins & Cash Flow

Wholesalers must maintain the profit margins to remain competitive while also ensuring they have cash flow to meet maintenance and financial obligations and  experiment with new projects. Business owners need to carefully manage their pricing strategies and monitor their cash flow closely, taking steps to reduce costs and increase revenue wherever possible.

Dynamic pricing is increasingly coming into play to enable businesses to have more flexibility in their pricing strategies. In the same way that taxi fares increase when there are high levels of demand, and decrease at less busy times, so too can wholesaler pricing strategies.

At some points, it is worth changing prices to offer more promotions and bulk buying incentives to keep valued customers happy. But it is essential to protect margins when challenging new environments hit, a frequent occurrence in many wholesale industries. Wholesalers should make such adjustments on a customer-by-customer basis, too. By introducing dynamic pricing options, wholesalers can become far more agile in responding to market conditions. They are disadvantaged when facing changes outside their control if they don’t.

5–Slow Growth

In a highly competitive market with rapidly changing demands, dropping the ball on these challenges might mean management spends time troubleshooting, not on strategies that can grow the business. When executives manage operations inefficiently, it’s unsurprising that they hamstring growth.

Digital transformation is the fuel needed to accelerate growth. Neglecting to invest in it will mean losing a competitive edge over the long run. Key to this digital strategy is adopting a more data-driven approach that helps wholesalers maximize sales opportunities, reduce the cost of inefficiencies, and look after customer satisfaction.

About the author:

Eberhardt Weber is co-founder and CEO of Emporix, a cloud-native digital commerce platform provider for both B2B and B2C. He has been involved with digital commerce technology since 1997 and previously worked in management at ecommerce technology providers Hybris (now owned by SAP SE), Intershop, and Hewlett-Packard. In 2010, he founded Lieferladen.de, the first online supermarket in Germany.

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The report examined more than 40,000 SKUs between July 2022 and January 2023 to see these trends. Retailers include Dillard’s Inc., No. 103 in Digital Commerce 360’s ranking of the Top 1000 ecommerce retailers in North America, Macy’s Inc. (No. 17), Zappos and Nordstrom Inc. (No. 20). Amazon.com Inc. is No. 1 and owns Zappos.

Retailers and brands adjusted prices

Pricing competitively is especially important in times of high inflation, according to the ecommerce analytics software vendor. Many of the retailers examined in the report reduced prices between June 2022 and January 2023 to attract customers and drive sales.

Per the report, Nordstrom cut prices the most of the brands examined, by 19% in the period. Net-a-Porter, Saks Fifth Avenue, Neiman Marcus (No. 73), and Dillard’s also consistently reduced prices in that timeline by 14%, 8%, 6%, and 6%, respectively.

Lowering prices didn’t drive sales, according to Nordstrom’s annual report for 2022.

“During economic downturns or inflationary periods, including those resulting from the impacts of COVID-19, fewer customers may shop as these purchases may be seen as discretionary, and those who do shop may limit the amount of their purchases. Any reduced demand or changes in customer purchasing behavior may lead to lower sales, higher markdowns and an overly promotional environment or increased marketing and promotional spending,” the retailer said.

Individual brands also offered discounts during the period, according to DataWeave. The majority of brands examined had discounts of more than 15% across retailers that sold them. Joe’s Jeans had an average discount of 25%, Silver Jeans Co. offered 22%, and Mango came in at 19%. Nike (No. 9) came in a bit lower at an average discount of 11%.

Some retailers bucked the trend of reducing prices, per the report. Macy’s increased prices an average of 18% over the seven-month period, and Zappos increased by 6%.

Retailers focused on lower-cost products

An examination of merchandise in stock for different apparel retailers showed that supply chain pressures like delayed shipments could still be impacting businesses. However, some are faring better than others. Nordstrom maintained nearly 100% of merchandise in stock during the entire time frame. Macy’s, Dillards, and Zappos saw stock decline from 98%, 96%, and 85% in July, respectively, to 87%, 93%, and 80% seven months later.

Saks Fifth Avenue and Neiman Marcus seem to be far more impacted by supply chain issues, according to the report, with in-stock levels of 45%-55% and 35%-45%, respectively. Neiman Marcus also said in February 2023 that it would focus on the top 2% of customers that drove 40% of sales, which could impact inventory.

The report also shows retailers are differentiating which products they prioritize keeping in stock. DataWeave broke down the stock availability of premium products at retailers compared to availability of other products. Premium products are defined as in the top 20 percentile by price. In each month examined within the report, retailers had higher stock availability for non-premium products, with a breakdown of 72% of premium items in stock and 78% of other products in stock in January.

“It is clear that there is a greater focus by all retailers on the more affordable range of their assortment,” DataWeave wrote in the report.

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Within three years, the unit cost of moving goods will fall 20% as warehouse robots play a larger role in speeding goods to customers, Walmart said in an  April 4 statement. While the company reiterated its outlook for this year and the longer term, the opportunity to boost operating income “could be better than what we’ve outlined,” said chief financial officer John David Rainey.

The world’s largest retailer is trying to show off its long-term earnings potential to Wall Street after ramping up capital expenditures in recent years to keep pace with Amazon.com Inc. and other rivals. Walmart says its revamped supply chain will enable it to ease cost pressures tied to the rise of ecommerce and help end a decade of stagnation in U.S. operating income.

“The investments we’ve made have positioned us well and stand to generate steady and sustained growth at higher margins,” Rainey said in the statement, which Walmart released during the first of two days of meetings, store tours and warehouse visits with financial analysts.

Walmart is America’s largest overall retailer and is No. 2 in the Digital Commerce 360 Top 1000.

Warehouse robots are future of supply chain, retailer suggests

Walmart pointed to a blueprint for the future at a sprawling distribution center in Brooksville, Florida, about 40 miles (65 kilometers) northeast of Tampa. Inside, where employees used to manually unload cases of goods from truck trailers, autonomous forklifts now do much of the work while people step in to handle problems the machines can’t solve.

“Now I’m watching the robot unload the truck,” said Jose Molina, a veteran employee. He and colleague Allen Hala, who spoke with reporters accompanied by Walmart executives, recalled the old system of physically demanding labor and cumbersome paperwork to track merchandise.

“We used to be exhausted leaving here,” Hala said. “I actually go home and do a lot more now.”

One of Walmart’s 42 ambient-temperature regional distribution centers, the Brooksville building covers 1.4 million square feet (130,000 square meters), or the equivalent of about 24 American football fields.

Large robots sort cases and send them into a vast network of shelves. A dense storage system enables Walmart to keep more goods in the same floor area before they’re sent out to stores. And scanners record which items are where in an effort to improve inventory accuracy and respond to consumer demand more quickly.

Expanding automation

In Brooksville, the automated operation covers about 260,000 square feet, said David Guggina, Walmart’s executive vice president of supply chain. The robotic system will eventually expand to 800,000 square feet, at which point the warehouse’s throughput of goods will be double what it was before.

By the end of this year, about a third of Walmart stores will be serviced by automated distribution centers, Guggina said. Within three years, that will increase to 65%, the company said in the statement. In addition, 55% of volume at fulfillment centers will also move through automated facilities.

Walmart has been cutting jobs at ecommerce fulfillment centers this year, as automation picks up and stores handle more digital orders. But employment in the company’s supply chain is likely to hold steady or even grow a bit in the coming years as volumes rise, said Donna Morris, executive vice president of human resources.

Increased distribution efficiency is just one piece of the puzzle as Bentonville, Arkansas-based Walmart seeks to lift profit. But it’s an important element as e-commerce increases, since online orders are typically costlier to fulfill than in-store sales.

Those pressures, plus heavy investment in the e-commerce supply chain, are a big reason operating income at Walmart’s U.S. unit has largely hovered around the $20 billion range over the last decade even as sales grew by half.

In its statement for the investor day, Walmart reiterated its long-term financial framework, which calls for 4% in annual sales gains and growth in operating profit of more than 4%.

By the company’s own admission, it’s likely to miss the sales goal this year. In the long term, investors will be watching whether Walmart can meet — or exceed, as the CFO suggested — the profit target.

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The roster of industry thought leaders, movers and shakers is now nearly all set, and our latest speaker additions showcase even more that EnvisionB2B is sparing no expense in vetting and recruiting the best analysts and practitioners in the industry to give attendees helpful, useful, practical best-practice advice they can take and use now to help their organization achieve excellence in B2B ecommerce.

Meet our new speakers:

Our most recent update of industry thought leaders, in alpha order, includes:

Dan Banks
Founder
Domani Strategies

Gene Carbonara
VP, Ecommerce & Digital
US Foods

Kellie Casey
Manager, Aftersales Communications and Ecommerce
Hyster-Yale Group

Val DuVernet
Senior Director, Digital Strategy & Optimization
McKesson

Tom Funk
Ecommerce Director
Ann Clark Ltd.

Shep Hickey
Founder & CEO
Bryzos

Marylou Hornung
Director, Sales Operations
Bendix Commercial Vehicle Systems

Kyle Kaiser
Founder
Our Forest

Brooke Logan
Director, B2B Digital
NAPA (Genuine Parts Company)

Doug Novack
Managing Director, Business & Industrial Markets Practice
Google

Jordan Nussbaum
Chief information officer
Midland Industries

Nick Ostergaard
Senior Manager, Head of Digital Advanced Services
Toyota Material Handling

Stu Peterson
VP, Inventory Management & Supply Chain
RC Willey

Linda Taddonio
Founding Partner
IQ Acceleration Inc.

Joe Thomas
Sr. Product Owner, Catalog MDM
Genuine Parts Company

Barbara Winters
VP, Principal Analyst
Forrester Research Inc.

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Costas Xyloyiannis

In recent years, ESG (environmental, social, governance) was hoisted to the top of the board agenda. To manage it, business leaders had to ensure that compliance and readiness across multiple areas were captured, analyzed and reported.

This job needed an owner. When it came time to delegate, leaders assessed whether a single department with a clear responsibility across all suppliers for all these areas existed. Unluckily, in most cases it did not. So, management turned to the next best option: procurement.

The function’s leaders, chief procurement officers (CPOs), now had new mandates to meet and quickly sought to apply technology. “Point” solutions, software dedicated to tackling individual use cases, were implemented. Often these tools were standalones. Integrating them with established P2P (purchase-to-pay) and S2P (source-to-pay) software suites, used to manage sourcing and supplier relationships, emerged as a challenge.

Today, swapping between these old and new tools is a slow and painful experience for procurement teams — and all their suppliers. The impact of this digital struggle extends even further, to the greater business. So, how does this stack up, and what can business leaders do about it?

Get to the heart of the problem

The digital environment which plagues procurement teams must also be navigated by suppliers. According to recent research, if a supplier wants to serve a single customer, they have to navigate around eight different tools, each with a unique login. The time loss to these, often smaller, businesses is a concern. Another is that behind each password, many of these solutions produce and then store data from suppliers using it.

So, the way in which each supplier works with the business results in their data being stored in an average of eight databases. Viewed as a whole, the supplier’s data is unreliable. It will be riddled with duplicates, gaps, errors and inconsistencies.

Now take this data pool scenario and multiply it by hundreds of thousands of suppliers. The millions or billions of entries that result in a murky view of supply chain activity. A consequence is that ESG reporting suffers. And so does the supplier relationship. Apart from the disjointed tech landscape, the experience suppliers have in communicating with procurement is also unsatisfactory, which for the most part stems from bad data.

All considered, can procurement teams really expect to receive the best work from suppliers? What about trustworthy data? If “no,” then how will the function progress? It has reached an evolutionary sticking point, and CPOs have a choice; they can accept things the way they are or find a way forward. Business executives can give their counterparts in procurement a hand, but first they should know the risks and rewards of progressing the function.

Resolve whether the reward is worth the risk

It’s one thing for management to see the problem for what it is, but deciding to address it cannot be taken lightly. Let’s start by envisioning what could be.

Encouragingly, a reality exists in which suppliers and procurement teams work together seamlessly, like partners in the same ecosystem. Suppliers are happy, their work is good, their data is pure. In this environment, procurement can thrive. Not only can the team deliver on traditional cost-saving metrics, but they can also generate accurate ESG reports. Further, the function is set up to contribute opportunities in areas that span the business — such as diversity and inclusion, sustainability and product innovation.

Behind this utopia, there is a movement which I like to think of as “supplier experience management.” As the name suggests, the idea is to manage an experience for suppliers, in which everyone is empowered to succeed — from the supplier base right through to the board.

As attractive as this environment is, the journey to reaching it is not easy or risk-free. The first challenge lies in people management: the entire business, from management to every employee, will have to reform how it views suppliers. Next, procurement will need to transform its digital setup. This transformation will require the CPO to radically rethink the architecture of the digital landscape, and then to embark on a rebuild. Expensive tools and teams will be needed to progress this plan, which raises the stakes. No doubt this is a momentous task.

But business leaders who refuse to stagnate won’t be alone. Many enterprises have transformed the status quo and are enjoying the fruits. For example, in 2013 an early adopter, BAE Systems, started to manage supplier experience. This led their procurement team to remove process friction for suppliers and enabled them to consolidate data from 50,000 suppliers across North American. The resulting “single source of truth” was incredibly valuable to the broader business in 2020 when COVID-19 hit. When leaders needed it most, they could access a clear and accurate view of the supply chain. This visibility, coupled with the zero-friction supplier environment they had established, meant that every department could respond to the crisis with agility.

The benefits of the agility gained through supplier experience are being enjoyed by many other companies, including the likes of Mondelēz International, Baker Hughes, Lenovo, and more. A wave of globally recognized CPG brands such as Unilever, Mars and Heineken have also joined the supplier-centric movement in the last 18 months.

Take inspiration from the pioneers and drive change

Trailblazers of the supplier experience principle follow a proven method. Four steps stand out, by which the broader business, procurement and all suppliers can achieve mutual success. For business leaders to reach this point, here’s a plan of action:

• First, work with the CPO to assemble a legion of loyal leaders. Their support will be invaluable. Attaining it, however, might push your persuasion skills. Some executives, particularly those who still view procurement a transaction center, will resist working with suppliers beyond the boundaries of cost savings. So, show them the value. Look at the virtues of “experience” management in other areas, such as with employees and customers. Can parallels be drawn to suppliers? Showcase the woes of a fractious supplier environment. What risks arise? Were major opportunities missed? Explore what a more harmonious setting will yield.
• Next, with the c-suite on board, it’s time to gain ground. The key move is to abolish 100% of the barrier to supplier success: friction. Before that, you need to know what all the process pain points are. Unearthing these insights will require curiosity. What do these obstacles look like to suppliers? How are they removed? Getting immersed in their world — caring, stepping into their shoes, doing surveys — is key.
• Now from this vantage point, work with procurement to craft a friction-free digital environment. Other pioneers follow a data-first approach, in which a central platform is used to consolidate, host and govern all supplier data. Once the landscape is engineered to prioritise master data, procurement can automate. Apply routines for transactional jobs and then use the saved time to introduce digital workflows that make the supplier experience even better

Finish strong

At this stage, the business has helped procurement to digitally transform. In doing so, the function — and the business — have gained two assets: a single source of truth in supplier data and a supplier network whose needs are better met.

It would be easy to stop at this point, but a crucial step remains. The supplier experience which has taken so much to improve, must be maintained. For this maintenance, we need human collaboration. Everyone who engages suppliers (most of the company) must view them as equal, valued partners in a shared ecosystem — and treat them as such.

With both interpersonal and operational barriers removed, the business can partner with all its suppliers. In this scenario suppliers are happier, and procurement can deliver its mandates, the benefits of which extend well into the business.

About the author

Costas Xyloyiannis is co-founder and CEO of HICX, a supplier experience management platform.

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“The data our report uncovers confirms the growing discrepancies between what consumers want and what ecommerce merchants are delivering,” Shippo CEO Laura Behrens Wu said in a press release. “It’s clear the economy is the primary driving factor for these concerns, as supply chain disruptions, decreased capacity and labor constraints take a backseat.”

Results are based on a survey of 1,191 ecommerce retailers across apparel, food, jewelry and electronics, and responses from 1,000 shoppers in November and December 2023.

Prices are the biggest factor

The cost of shipping remains a key factor for both consumers and retailers.

62% of shoppers said they won’t consider purchasing from a retailer that doesn’t offer free shipping. Another 35% said they prefer it, and just 3% of consumers said they don’t care about shipping costs. Digital Commerce 360’s August 2022 consumer poll had similar findings. 76% of the 1,116 consumers surveyed ranked free shipping one of the three most important factors in online shopping, more than any other option. Delivery speed was a distant second place at 43%. 

Customers are willing to make concessions to reach free shipping. According to Shippo’s data, 42% are willing to join a loyalty or membership program to get free shipping. Nearly half, 47%, said they would add products to meet a minimum cost threshold for free shipping. 

Shoppers overwhelmingly prefer free shipping to fast shipping, at 75% versus 25%. They ranked shipping cost as the most important information a retailer should share, over average shipping time, when the item will ship, and when it will likely be delivered.

Retailers cited the cost of shipping, too. 41% of respondents said shipping cost was their biggest challenge in 2022, more than any other response. About a third said it would be the most pressing challenge in 2023, while another 20% were more concerned about decreased consumer spending. Despite the costs, retailers largely offer free shipping.

Nearly three-quarters of retailers that rank in Digital Commerce 360’s Top 1000 database offered free shipping in 2021, though 45.1% of those retailers required customers to reach a minimum purchase threshold for the perk.

Consumers still value online shopping

Consumer survey responses indicate online shopping is still valuable for its convenience, according to Shippo’s data. 60% of respondents said they do at least half their shopping online, a significant increase from just 41% in 2021. 

61% of shoppers prefer online shopping over visiting a store when they have the choice.

Consumers want as much information as possible

Survey results show ecommerce customers want as much data as retailers can share about their orders. 68% of surveyed customers want to be notified when a purchase has shipped, and 45% also want to know when an item is delivered. 

Shoppers want to keep tabs on their purchase while it’s in transit. 59% of consumers say they want to receive shipping updates, and 39% track their orders once per day. Retailers largely comply with this desire from customers. 85% share some kind of tracking information, either through a branded link or through the shipping carrier’s service.

Consumers responding to the survey valued up-to-date information on their orders over fast shipping times. Just 10% of shoppers want same-day or next-day delivery, down from 18% in 2021.

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The new hubs will be operating by the end of 2026, Target said in a Feb. 22 statement. Target already has nine sorting centers, which are located in Colorado, Georgia, Illinois, Minnesota, Pennsylvania and Texas. Target opened its three most recent sorting centers in Chicago and Denver in 2022 as part of an expansion since the first center opened in 2020. The company is still selecting sites for the new ones.

Target delivery investment in sorting centers

The sorting centers are designed to further Target’s strategy of using its stores to handle online orders as it vies with Amazon.com Inc. and Walmart Inc. for sales. Amazon is No. 1 and Walmart is No. 2 in the 2022 Digital Commerce 360 Top 1000. Each hub typically retrieves packages from 30 to 40 local stores, then gets them ready for delivery to local neighborhoods. Target said shipping from these sorting centers is usually up to 40% cheaper than shipping them from big distribution centers. 

“I bring it back to our stores-as-hubs strategy,” Gretchen McCarthy, Target’s chief global supply chain and logistics officer, said in an interview. “The sortation centers are pulling that work out of the back rooms of the stores.” Target store employees can then focus on packing pickup orders for customers, the company said.

Target’s sorting centers delivered 26 million packages in 2022, the company said in a press release. The existing hubs are expected to double their delivery volume to more than 50 million packages this year, with a growing number of items being delivered to shoppers the day after they place an order.

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Alexis Normand, CEO, Greenly

Given mounting climate issues, and increased public interest in supporting sustainable brands, the ecommerce world is experiencing a huge shift in how it approaches its operations. Companies are well aware of the massive impact that environmental, social, and governance (ESG) policies have on consumer behavior and stakeholders, and as such more than 88 of them have introduced ESG initiatives in the workplace.

Part of a successful ESG strategy involves monitoring a company’s carbon footprint. And such a mammoth task faces plenty of challenges along the way.

An ecommerce company’s supply chain – anything from raw material sourcing to distribution – can make up a huge bulk of its operations and thus account for an enormous portion of its carbon impact. However, this is seldom the biggest priority embedded within business goals, so the supply chain often goes largely unchecked.

As a result, ecommerce businesses can easily overlook the carbon footprint of their supply chains, which can be 11.4 times larger than operational emissions. What’s even more troubling is that online purchasing is set to balloon in coming years, which should make the problem even worse.

Increasing public scrutiny and calls for greater sustainability are becoming impossible to ignore. Ecommerce companies must therefore look at their supply chain emissions as part of any net-zero strategy. While the carbon footprint from a company’s supply chain can be difficult to monitor, the good news is that it’s often considerably easier for companies to take action against these emissions.

Monitoring Scope 3 emissions

Carbon emissions are so complex that they’re separated into three different sections that form part of the Greenhouse Gas (GHG) Protocol: Scope 1, 2 and 3 emissions. Scope 1 refers to a business’s direct emissions, while Scope 2 deals with indirect emissions from purchased energy, such as electricity.

Scope 3 emissions are those indirectly produced by other businesses and functions in a company’s supply chain. Scope 3 can account for up to 80% of a company’s carbon footprint. However, since these emissions are often the province of other organizations, they are notoriously hard to monitor. Although Scope 3 emissions are considered a big risk indicator in GHG monitoring, few effective frameworks have emerged to help companies monitor Scope 3 emissions effectively.

In the ecommerce supply chain alone, there are many moving parts that make up business processes. For example, a clothing ecommerce company will need to design garments, source materials, ship them to a factory for manufacturing, package items, ship purchases to customers, and so on. If a customer then decides to return a purchase, a similar reverse process comes into effect. It’s not unheard of for some fast fashion companies to send returned garments straight to the landfill rather than engage in the costly process of shipping, checking, and repackaging garments.

Some of these steps also tend to be outsourced to other companies. For example, an ecommerce business may work with suppliers and subcontractors to manage logistics, transport and shipping, or oversee warehouse spaces. With so many other parties involved, monitoring indirect emissions can be tricky, to say the least.

Much of these indirect emissions aren’t currently being accounted for. According to McKinsey, only 25 percent of ​​reporting companies engage with suppliers to try to reduce emissions. Failing to monitor Scope 3 emissions, or even communicate about this with partners. This means that companies simply aren’t able to measure, manage, and reduce their overall emissions.

Taking control

It doesn’t have to be this way. The first step to overcoming the profound challenges of Scope 3 emissions is to recognize the sheer scale of the problem. To do this, companies should develop an overview of every step of their supply chain processes. Luckily, the EPA has created a Scope 3 tool to help companies gain an initial understanding of their supply chain emissions. With this, business leaders can begin mapping supply chain emissions.

We also need to face the challenge of previous monitoring processes becoming outdated. Most carbon reporting processes used in the past are not up to current standards. Plus, they’re overly labor intensive and require business leaders to complete multiple spreadsheets and crunch many numbers in the process.

A new generation of carbon reporting tools is finally changing this, and they can help with Scope 3 reporting, too. For example, the GHG Protocol offers guidance to businesses on how to measure Scope 3 emissions. Also, the Sustainability Consortium has created multiple tools to help businesses develop and track key performance indicators related to supply chains.

Increasing supply chain efficiency

After you’ve mapped and gained a better understanding of supply chain emissions, you can then take steps to reduce them.

According to McKinsey, businesses could instantly cut a whopping 30% of supply chain emissions  through simple operational changes like the procurement of low-carbon energy. Other minor adjustments such as rearranging the way items are packaged in order to fit more into delivery trucks can go a long way. Taking each of these steps – one by one – is the most impactful way to build a sustainable, scalable strategy moving forward.

There are now plenty of supply chain management tools available that can also help provide better oversight and accountability, albeit through a lens of sustainability. These tools are often integrated with smart devices that can monitor, for example, the temperature of warehouses and turn off lighting when no-one is around.

Working with third-party suppliers always takes a great deal of collaboration, and this is also the case with reducing emissions. Ecommerce partners can leverage their influence and open a dialogue with suppliers to shift toward an emission-friendly strategy. You might even share your reporting tools with suppliers and offer support.

At the very least, the above pointers might inspire ecommerce businesses to start thinking about the supply chain impacts and how to reduce emissions. However, it’s not their mission alone to drive down GHG emission levels.

A dual approach to Scope 3 reporting is necessary in order to encourage the much-needed change. In this dual approach, the government would create policies that demand Scope 3 reporting from businesses, while also providing solutions to facilitate easier Scope 3 reporting in the first place.

Imminent government regulations concerning the monitoring of GHG emissions suggest that the gates are closing in on those who fail to accurately monitor their emissions. If anything, the time is now for ecommerce companies to finally address the full range of their carbon emissions.

Alexis Normand is the co-founder and CEO of Greenly, a carbon assessment and accountability solutions provider for small to large companies.

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