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Connected Retail
Supply Chains
Racing towards 2025
Stuart Harker
Partner
September 2016
Traditional supply chains as we know today
will be extinct by 2025 as various trends
and disruptive forces drive change an...
…the only consistency during this time will be
the accelerating level of change across
organisations.
There will be more c...
The ever changing retail landscape will see substantial
changes to global supply chains by 2025 due to…
Global
megatrends
...
Global
megatrends
5
Mega trends will progressively influence retail supply chains…
6
Climate change &
resource scarcity
Demographic shifts
Shi...
7
Consumer
& market
trends
The supply chain fundamentals will not change…
8
…but the competitive market and operating environment will require supply...
Consolidation
Customer
Government
Regulatory
Technology
Collaboration & Trust
Internet of Things
Consumer
personalisation
...
Consumer and major market trends are and will continue to drive
material change in future supply chains…
10
Customer
Techn...
11
Customer: Everchanging, complex and promiscuous
Shops
globally
Difficult to
engage and
complex
Shops
anywhere,
anytime
...
12
Strong customer value propositions will continually change and
be redefined
Customer
profiles
Personalised
serviceValue...
Customers now expect personalisation and curation
13
Image source: Company websites
Connected customers who are always on…
Connected
customer
Customer
focused with
transactions
anywhere
Social
media
Consume...
Online expenditure in Australia will continue to grow
15
Omnichannel
the seamless
integration between the online
and offli...
The impact of this growth of omnichannel on supply chain and
logistics has seen…
16
Greater complexity & cost to organisat...
The increased level of complexity, cost and pace of change will
require organisations to…
17
Containing or reducing costs
...
Globalisation & Consolidation
18
 Globalisation will continue
to drive transformation
and this will drive
industry consol...
19
• Technology infrastructure and integration
• Systems integration
• Internet of Things (IoT)
• RFID
• Big data and anal...
• Technology is the core enabler of the Customer driven supply chain
• Investment in CAPEX will be greater than before
• S...
The global cyber challenge extends beyond the
enterprise and now includes:
 All people, process, technology and extended ...
 Rapidly expanding in apparel across the world
 Now commencing in Australia
 Tracking inventory and assets across the S...
 More data in last 3 years than in last 30 years
 Personalisation and curation
 Impact on data warehouse and tools
 Da...
Where is the value potential of the Internet of Things?
24
Technology: IoT
Source: McKinsey Global Institute – The Interne...
Internet of Things (IoT): sensing and sense making
25
Technology: IoT
Image source: Cisco Consulting
Successful implementa...
26
Technology: Automation & robotics
Image source DHL Self-driving vehicles in logistics
27
Technology: Beacons, Wearables, Mobile
Image source:Forbes, DHL, zdnet
28
 Operating model changes
 Supply chain talent will require:
• Demand, skills, image, training
 Changing needs in nex...
29
Government &
infrastructure
trends
 Level of capacity at ports will continue as many organisations
have shifted sourcing offshore and congestion and delays
...
 Regulatory framework must be harmonised
 Agreements on standards to assist in shaping the digital future
re IoT, etc.
...
Future global supply chains will need to be constantly monitored to
ensure compliance and government charges are optimised...
What can you do?
In summary, supply chains in 2025 will be have the following
characteristics…
34
Customer Driven Supply Chain
Regulatory
&...
…which will drive the “connected and transparent” supply chain of
2025 and will be built around…
35
Global sourcingGPS
Con...
Thank you
© 2016 PricewaterhouseCoopers. All rights reserved.
PwC refers to the Australian member firm, and may sometimes ...
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Connected Retail Supply Chains: Racing towards 2025

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​Traditional supply chains as we know today will be extinct by 2025 as various trends and disruptive forces drive change and new connected models emerge.
There will be more change in the last 10 years than in the last 25 years, and at an increasing speed.

Published in: Retail
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Connected Retail Supply Chains: Racing towards 2025

  1. 1. Connected Retail Supply Chains Racing towards 2025 Stuart Harker Partner September 2016
  2. 2. Traditional supply chains as we know today will be extinct by 2025 as various trends and disruptive forces drive change and new connected distribution models emerge…
  3. 3. …the only consistency during this time will be the accelerating level of change across organisations. There will be more change in the next 10 years than in the last 25 years.
  4. 4. The ever changing retail landscape will see substantial changes to global supply chains by 2025 due to… Global megatrends Consumer & market trends Government & infrastructure trends 4
  5. 5. Global megatrends 5
  6. 6. Mega trends will progressively influence retail supply chains… 6 Climate change & resource scarcity Demographic shifts Shift in economic power Technology Accelerating urbanisation  Pop of 8.3b by 2025 ; 7.4b today  Infrastructure stretch on ports, airports  Mega cities outside of major cities  Electric vehicles  Scarce resources  Increased regulation & taxes  Sustainability  8.3b pop by 2025 will need:  50% energy  40%water  35%food  21% by 2050 over 60  Polarisation of haves and have nots  Talent shortages  New skills  Ageing  Gen Y individuals with digital shopping behaviour  Asia powerhouse  Shift in power to Asia  Increase in wealth  New markets & competitors  Changing operating models enabled by technology  New and more complex  Data – expected growth  Digital impacts  Consumers using multiple connected devices  Omnichannel to continue growth …and these will drive substantial changes in supply chain
  7. 7. 7 Consumer & market trends
  8. 8. The supply chain fundamentals will not change… 8 …but the competitive market and operating environment will require supply chains to fundamentally change due to consumer demands, increasing length, complexity, cost and growth Right products Right place Right time Right cost
  9. 9. Consolidation Customer Government Regulatory Technology Collaboration & Trust Internet of Things Consumer personalisation Analytics Value equation Sustainability & environment Automation Costs Complexity Offshore/onshore Sourcing Diversity Productivity Risk Talent Cyber security Globalisation Safety Operating model Digitisation Social networks Labour costs Transparency Connectivity Mobile Big Data Global Competition Disruptive technology Omnichannel growth
  10. 10. Consumer and major market trends are and will continue to drive material change in future supply chains… 10 Customer Technology Omnichannel Globalisation & consolidation Talent Disruption & risk
  11. 11. 11 Customer: Everchanging, complex and promiscuous Shops globally Difficult to engage and complex Shops anywhere, anytime Time poor More informed Connected and empowered Always connected and always on… Image source: Google Images
  12. 12. 12 Strong customer value propositions will continually change and be redefined Customer profiles Personalised serviceValue Price transparency Range Convenience Marketing & promotions
  13. 13. Customers now expect personalisation and curation 13 Image source: Company websites
  14. 14. Connected customers who are always on… Connected customer Customer focused with transactions anywhere Social media Consumer networks Market place Trust & privacy Integrated Supply chain In store Engagement Curation Experience Personalisation Insights Big data Productivity People Operations Merchandising Enablement Value proposition Technology Seamless In store ecosystem & experience Empowerment Analytics 14 Source: PwC Connected Retail
  15. 15. Online expenditure in Australia will continue to grow 15 Omnichannel the seamless integration between the online and offline world 7.3% Percentage of retail sales $18.1bn Total retail spending 11.4% Annual growth And projected to be 9% plus… in 2018 Source: NAB Online Retail Sales Index
  16. 16. The impact of this growth of omnichannel on supply chain and logistics has seen… 16 Greater complexity & cost to organisations due to:  Free and time driven delivery  Same day/one day delivery  Multiple delivery preferences  Returns options  Click and collect services  Global delivery points  Parcel points  Predictive purchasing  SKU proliferation  Order processing speed and accuracy And this complexity will continue and require a need for:  Inventory accuracy and visibility  Personalisation and curation Image source: DHL, Google Images
  17. 17. The increased level of complexity, cost and pace of change will require organisations to… 17 Containing or reducing costs will be a priority Technology systems and integration will be the key enablers and drive innovation Agility, flexibility, efficiency will be key to success Inventory visibility, traceability and accuracy will be essential for customers and brand reputation Data management and Analytics will need to be core competency and high priority if customer insights and understanding are to be obtained in a timely manner Collaboration and integration with suppliers will be critical; collaborative warehousing will become core to efficiency and lower costs Increase investment in supply chain Sustainability and ethics will be fundamental to future supply chains Source: Retail Week -Supply Chain Trends and innovations in retail 2014-2015
  18. 18. Globalisation & Consolidation 18  Globalisation will continue to drive transformation and this will drive industry consolidation  Large transactions will continue – global and local. Scale and capital are the drivers to invest and grow
  19. 19. 19 • Technology infrastructure and integration • Systems integration • Internet of Things (IoT) • RFID • Big data and analytics • Cognitive insights • Mobile and digital • Payments • Wearables • Cloud Technology
  20. 20. • Technology is the core enabler of the Customer driven supply chain • Investment in CAPEX will be greater than before • System integration is critical to success for visibility across supply chain – supply & demand; single view of customer and products • Data warehousing and analytical tools are vital; RFID impact • Integration and collaboration/partnership with all stakeholders; mitigating risk • Mobile, cloud, etc. • Old metrics and ROI are no longer relevant • Disaster recovery becomes critical • Uber impact • Cognitive ecosystems drive enhanced customer experience • Connected distribution ecosystems • Cyber security increasingly important as supply chains become larger and connected across the world 20 Technology
  21. 21. The global cyber challenge extends beyond the enterprise and now includes:  All people, process, technology and extended ecosystems: • The extended supply chain has and will have numerous partners • Various data flows • Connectivity and collaboration with known and unknown partners • Supply chains in the future will increasingly be interconnected, integrated and interdependent • Cyber risks cannot be viewed in isolation • Supply chains will have material risk • High ethical standards 21 Technology: Cyber Enterprise Consumer Suppliers JV/ Partners Service Providers Industry/ Competitors Customer Technology Environmental Economic Image source: PwC Cyber
  22. 22.  Rapidly expanding in apparel across the world  Now commencing in Australia  Tracking inventory and assets across the Supply Chain  Data quality and accuracy  Analytics  Visibility across supply chain  Industry collaboration required in some industries such as CPG & retail to make it successful  Technology impact 22 Technology: RFID Image source: Company websites
  23. 23.  More data in last 3 years than in last 30 years  Personalisation and curation  Impact on data warehouse and tools  Data visualisation critical for success  Data flows – complex, numerous and quantity of data, i.e. IoT  Potential impact on: • Productivity & operational efficiency • Visibility • Customer experience • Supply chain risk management • Business model innovation • Talent 23 Technology: Big data & analytics • Product traceability • RFID • Quality and warranties • Insights across supply chain
  24. 24. Where is the value potential of the Internet of Things? 24 Technology: IoT Source: McKinsey Global Institute – The Internet of Tings: Mapping the value beyond the hype Retail environments Automated checkout $410bn-1.2tr Factories Operations & equipment optimisation $1.2tr-3.7tr Offices Security & energy $70bn-150bn Home Chore automation & security $200bn-350bn Vehicles Autonomous vehicles & condition based maintenance $210bn-740bn Cities Public health & transportation $930bn-1.7tr Worksites Operations optimisation / health & safety $160bn-930bn Outside Logistics & navigation $560bn-850bn Human Health & fitness $170bn-1.6tr 9 settings Gave us a cross-sector view of a total potential impact of $3.96trillion-11.1trillion per year in 2025 2x more value From B2B applications than consumer Interoperability required to capture 40% of total value Developing: 40% Developed: 60% <1% of data currently used; more can be used for optimisation & prediction Types of opportunities: Transform business processes Predictive maintenance, better asset utilisation, higher productivity Enable new business models
  25. 25. Internet of Things (IoT): sensing and sense making 25 Technology: IoT Image source: Cisco Consulting Successful implementation of IoT will require a clear vision, strong collaboration and trust by all stakeholders within the supply chain, standardisation of systems/components, and also the ability to invent as required. • Inventory management via RFID • Fleet & asset management • Risk mitigation • Health & safety • Infrastructure sensors • Real time routing • Connected workforce • Pay as you go • Autonomous vehicles • Predictive asset lifecycle management
  26. 26. 26 Technology: Automation & robotics Image source DHL Self-driving vehicles in logistics
  27. 27. 27 Technology: Beacons, Wearables, Mobile Image source:Forbes, DHL, zdnet
  28. 28. 28  Operating model changes  Supply chain talent will require: • Demand, skills, image, training  Changing needs in next 10 years will require different: • Leadership • Executives and team skills • Skills – technical, analytical, commercial and collaborative  Acquire, retain and develop Talent
  29. 29. 29 Government & infrastructure trends
  30. 30.  Level of capacity at ports will continue as many organisations have shifted sourcing offshore and congestion and delays will continue  A government review is underway; privatisation will assist development  Increase congestion zones and additional tolls/charges likely  Increased investment required in rail but unlikely due to capital required (approx. $3-13bn)  Antiquated rail, road and sea infrastructure is costing the Australian economy an estimated $9bn per year  Government economic situation unlikely to change re budget deficit  Substantial impact in productivity and cost of doing business 30 Infrastructure
  31. 31.  Regulatory framework must be harmonised  Agreements on standards to assist in shaping the digital future re IoT, etc.  Regulatory environment will only increase and compliance critical re. chain of responsibilities  Tax and duties optimised to be competitive in a global market place 31 Regulatory & tax
  32. 32. Future global supply chains will need to be constantly monitored to ensure compliance and government charges are optimised… Free trade agreements Export controls or sanctions Export rebates Bio security obligations Product standards Free trade zones Customs duty Trade facilitation schemes Border interventions, eg Quarantine Environment levies and discriminatory taxes Customs Reporting Bonded warehouses & Indirect tax deferral Tax exposure Regulatory exposure Concept Offshore Factory Offshore Warehouse Haulage HaulageExport Wharf Import Wharf Overseas freight Local warehousing & distribution Retailer Customer 32 Excise duty & returns Packing standards Trading terms with vendors Labelling Requirements GST/VAT imports Supply chain security Ethical sourcing assurance Tax incentives R&D incentives Fuel tax Chain of responsibility regulations Government incentives Truth in labelling GST/VAT optimisation E-commerce and Low value threshold
  33. 33. What can you do?
  34. 34. In summary, supply chains in 2025 will be have the following characteristics… 34 Customer Driven Supply Chain Regulatory & Tax Digital Transformation People & Leadership Technology Strategic Alignment Risk Privacy & Cyber …and will need to be agile, transparent and connected if retailers are to be efficient, competitive and relevant to their customers
  35. 35. …which will drive the “connected and transparent” supply chain of 2025 and will be built around… 35 Global sourcingGPS Control tower analytics Social network Safety RFID Portals Returns Automation Data based routing 3D printing RoboticsProcurement Environment management Predictive Analytics Big data Optimisation tools Technology infrastructure Risk management & analytics Dynamic reporting Data analytics IoT Wireless Cloud computing MobileConnectivity Collaborative partners & suppliers Digital media duplication @ Vendor managed inventory Logistics Management Predictive ETA’s Retailer
  36. 36. Thank you © 2016 PricewaterhouseCoopers. All rights reserved. PwC refers to the Australian member firm, and may sometimes refer to the PwC network. Each member firm is a separate legal entity. Please see www.pwc.com/structure for further details. Liability limited by a scheme approved under Professional Standards Legislation

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