The autonomous supply chain: How tech is re-imagining retail

For many, January is the time to dust off the trainers, dig out the low-carb cooking book and kick-start that healthy routine.

But for retailers, the new year brings a new challenge – returns. A recent survey by Barnardo’s found that 47% of people in the UK received gifts they don’t want and will never use.

Of course many of these will be given to charity or remain in the cupboard, but the Financial Times recently reported that US consumers are expected to send back a record $100bn worth of unwanted goods bought in the month before Christmas.

This represents a 6 per cent rise year on year, which is indicative of the wider “try-before-you-buy” trend, something that’s impacting this already complex supply chain and proving tricky to negotiate for the likes of ASOS and Amazon.

This is where technology comes in.

As we come out the other side of the busiest period in retail, I want to take a moment to highlight how the likes of the Internet of Things (IoT) and blockchain is transforming the retail sector, particularly the supply chain.

Unlocking the power of blockchain

Blockchain is having a huge impact on retail businesses, and the supply chain is one of its key applications.

Visibility is vital when managing supply chains. Monitoring contracts, letters of credit, various currencies, and regional regulations across multiple borders is, for human workers at least, a hugely time-consuming task.

Blockchain simplifies the whole process. By acting as a neutral party, all partners get complete transparency over the location and status of their goods, as well as visibility over associated documents.

This is particularly valuable for luxury goods, the segment hardest hit by returns. From the beginning of the supply chain to the point an item is sold or returned, blockchain can ensure that the item is genuine and verify the journey it’s been on.

Importantly, blockchain data is completely immutable. All parties involved can be sure their information is always secure and up-to-date, meaning shipments can arrive safely with as little human interaction as possible.

Big data, big opportunities

But it’s when blockchain combines with IoT that things get really exciting.

With global inventories increasing over the last five years, supply chains have spiralled in complexity. This is even more challenging when an increasing percentage of all the goods shipped are returned.

As supply chains scale, manual processes become less and less effective. Wasted stock and inferior quality products are the natural consequences as shipments become lost, delayed, or simply aren’t transported under the right conditions.

IoT can help. Both with the forward chain and the reverse supply chain.

Using connected devices, retailers can manage delivery quality. Seeing where goods are, how they are being stored and when they will arrive.

Sensors can even measure factors such as temperature, humidity and even G-force to detect potential breakages.

If conditions are not optimal, retailers can quickly step in and mitigate any risk of wasted stock. Equally, if sensors provide data around safe delivery, then fraudulent returns on damaged items is likely to be reduced.

The same technology can also bring order to the reverse supply chain allowing products to be quickly booked in, identified, sorted and repackaged for sale.

Predicting the future

Many think that technology doesn’t just hold the potential to reduce manual work, but rather replace it entirely. In other words, the future could be a supply chain consisting of complete, end-to-end automation.

How realistic is this? Well, that’s debatable. But when it comes to responding to market conditions and making smart, reactive decisions, there’s no question automation is adding a huge value.

Ocado, for example, is using advanced autonomous supply chain processes to predict outbound demand. Machine learning can make forecasts for over 50,000 products, enabling the company to react rapidly to any supply chain issues.

Beyond managing seasonal demand, such data could potentially be used to predict product returns based on historic shopping habits.

Will supply chains ever be fully autonomous?

If yes, it won’t happen anytime soon. Businesses are currently in the early stages of adopting digital processes, and only time will tell to what degree they’ll be able to fully utilise AI and automation.

Near-autonomy is a much more likely outcome. There will always be times when computers will come across problems they’ve never seen before – problems that only human experience can overcome.

The key for businesses now is to work out how, in the long term, they will be able to pivot their supply chains to that near-autonomous state. And irrevocably, that starts with examining their existing processes and working out where IoT, AI and automation can add the greatest value.

Retail is not the only industry benefiting from automation – learn more about how to prepare for this new technology here.