MHD SUPPLY CHAIN
SUSTAINABILITY IN THE RETAIL SUPPLY CHAIN
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Raghav Sibal, Managing Director, ANZ, Manhattan Associates, explains the facts, figures, and trends regarding sustainability in retail supply chains – and what the options are to cater to customer expectations.
he importance of sustainability in the retail industry is now more prevalent than ever, and its within the industry’s supply chain that the most fundamental aspects of sustainability reside. Today, consumers expect the ability to choose sustainable delivery options, and retailers must work to accommodate these modern expectations. From quick delivery to split shipments, the current eCommerce boom has put supply chains to the ultimate test – but it comes at a great cost to the environment. To combat this, technology will always be a useful tool to innovate retail operations for the better, and for the greener. However, on top of this, new customer expectations for sustainability are proving that today’s consumers care more about sustainable delivery than retailers may think. The fast-shipping ultimatum With the eCommerce boom now fuelling the retail industry, quick delivery and shipping has quickly become the biggest force against supply chain sustainability. The emergence of two-day
shipping for “free” became mainstream in 2005, and with the release of Amazon Prime, and it has since started a chain reaction. For these major players, customers who paid an annual membership would be guaranteed two-day delivery for every order at no cost. This removal of shipping costs inadvertently hid the impact of the change in delivery timeframes from the customer, and as a result, behaviour began to change, as did expectations. Fast forward about 10 years, and the delivery expectations jumped to one-day delivery and included free returns, still without any real impact felt by the consumer. Today, half of all consumers expect not to be charged for “standard” two-day delivery, and 62% say free delivery is their top consideration, according to new research conducted by Manhattan Associates. However, in that same survey, 70% said they are prepared to pay extra for speed and convenience, such as one-hour, same day or Sunday delivery. During this shift towards quick delivery, the impact behind the scenes on the supply chain and on the planet has been staggering. Global parcel shipments
have grown from 44 billion in 2014 to 132 billion in 2020 and are projected to approach 316 billion in 2026. Then there is the resource capacity crunch — there simply are not enough trucks and drivers to deliver all of these packages and get them where they need to go on time. In fact, industry professionals rate the issue as the biggest challenge for supply chains in 2019. This has led to the rise of the gig economy, leveraging services like Uber and other courier-on-demand services, to fill the gap. But filling the need for capacity causes even more vehicles to be on the road, which leads to more traffic and more idling and even more carbon emissions.
GREENER DELIVERY OPTIONS FOR CONSUMERS Another impact of expedited shipments is the inability to consolidate at the distribution centre. When we place a two-day order for five items and all five are not available in the same warehouse, the retailer must source those items from multiple places around the country, creating multiple packaging, distribution, and delivery events for a
Transportation management systems with machine learning are needed to load vehicles more efficiently and optimise routes to drive fewer miles.
MHD NOVEMBER 2021 | 33
