Covid-19 : The Digital Solution to the rescue of transport purchases
Even if the second lockdown allows for significant economic activity, the repositioning of purchases to ensure that products are distributed under conditions compatible with the restrictions turns out to be a headache. Processes are compelled to become more innovative.
This article was originally published by Mathieu Neu.
2020 shall forever stay engraved in our memories in many ways. Among the many unprecedented effects we are witnessing as the year draws to an end is the skyrocketing volume of parcel shipments, a direct consequence of the lockdown and concentration of trade flows on e-commerce and drive activities. The shipping specialist Sendcloud predicts a 21% growth in parcel shipments in 2020 compared to last year. The last few weeks have been characterized by a doubling of volumes in comparison with 2019.
But not everyone can boast of an ability to adapt a global strategy in record time, in which physical businesses play a leading role. "Unless we have anticipated a change that allows us to adapt quickly, such a transition cannot be made in a short time. Possible and available means of transportation are needed. You need compatible processes, you need to have anticipated the constraints of the distribution channel...", says Jean-Michel Garcia, delegate for international transport within the Freight Transport Users Association.
We must admit that innovative transport offers play a valuable role, such as Fretly's proposal to optimize transport plans in just a few weeks by digitizing purchasing processes in this area and the fine analysis of the associated data. The aim is to guarantee an available carrier while making savings through negotiated terms and conditions as part of a sustainable relationship. The King Jouet company, a customer of this offer, thus benefits from the use of numerous data resulting from a complete mapping of flows at all times, which it was not able to deploy internally on its own. The performance measurement made possible by the Fretly platform provides explicit information on deliveries by period, by site, in terms of both volume and value. This data is also of interest to management control. It is easy to find out the cost of a delivery per point according to a multitude of criteria and details (cost of diesel tax, information by region, by department, etc.).
Patrick Jocteur Monrozier, director of the Customer Center of King Jouet, reports that the e-commerce activity of the brand has already exceeded "10,000 orders per day, compared to 5,000 last year at the same period. Our organization and the control of our network have enabled us to ensure that the many physical stores in the regions are transformed into as many local warehouses capable of receiving orders, processing them and reshipping them. This configuration allows for an additional 10,000 sales per day". At the same time, processes for a contactless drive offering were also implemented. In total, remote sales thus represent 30,000 products per day.
Levers to manage the unpredictable
Many analysts note that if the first lockdown in the spring resulted in an astonishing effect, synonymous with the cessation of activities, the current period is rather characterized by a resurgence of initiatives in terms of digitalization of purchasing processes to better adapt and develop flexibility. Organizations with a certain maturity in terms of technological integration seem to be in a better position to cope with the current upheavals. "We benefit from different solutions to manage the entire business. They enable us to optimize operations, carry out simulations, and are a valuable aid to decision-making. Being able to interface easily with the different players in our ecosystem is a major challenge. The integration of new carriers to cope with sudden changes linked to the lockdown can be done in 15 days, thanks to this aspect. Previously, an identical operation required a month," explains Pierre Soler, Transportation Director at Fnac Darty.
From a logistical standpoint, the group is backed by Darty's distribution network. However, it was necessary to quickly switch to service providers more suited to global demand. "Our fleet is rather intended for deliveries of large household appliances. Of course, we don't transport books in this type of vehicle," he explains.
Like many retailers, a total new containment is one of the proposed scenarios. "Of course, we hope that the context is not even more stringent, but the plans under consideration are evolving from day to day. Based on the data analysis, desired procedures are identified over time, as appropriate". On the web activity, forecasting capabilities play a leading role, both for purchasing and for the organization to be set up. "They are also very useful for the warehouse component, to staff the warehouses as efficiently as possible," adds Pierre Soler.
Success under specific conditions
Even with a host of components to make a quick adjustment, "it's not a cure-all. The figures that will close the year 2020 will despite everything be marked by a very significant drop," Patrick Jocteur Monrozier says. The digital solutions implemented must also evolve. "To be fully effective, we currently do not have enough consistency in our ecosystem of tools. It is not always easy to manage a wide variety of solutions that are not connected to each other. We need to achieve more uniformity," says Alizée Goumi, Purchasing Manager in the Indirect Purchasing Department of Fnac Darty. Developments integrating artificial intelligence are another convincing commitment. "We are already using AI for the analysis of our own costs on the panel of first or second tier carriers," she continues.
The larger the organization, the more challenging it is to rapidly evolve its model. "Many retail companies have already evolved their sales channels in the wake of the Amazon wave. For others, it's an equation that is impossible to solve in a few weeks. Taking such a turn in the short term is probably simpler for small organizations, as shown by restaurants that have switched to home delivery," says Jean-Michel Garcia.
Some markets do not allow to turn towards online business ventures. "As in the past, many brands are turning to e-commerce too hastily, even though it is not necessarily adapted to their product categories. We have observed a migration of these companies that are turning back and turning to the "Where to buy", which aims to integrate a "Where to buy" where to find" button into digital communication media, allowing the consumer to be geolocated and oriented towards the best solution nearby (sign, drive or delivery). It is therefore an interesting compromise for these business profiles," underlines Guirec Tiberghien, CEO of the company Click2Buy, found in this niche.
In highly tense contexts, the use of freight exchanges can also be a relevant solution to find the right carrier at the right time. Innovations based on intelligent algorithms providing information on the best means of transport and itineraries according to the context are also an essential decision-making tool. But despite their unquestionable value, "digital transformation projects cannot do everything," he continues.
The boundaries of technology
A multiple-channel model does not necessarily guarantee the flexibility of a transition. Each channel has its own processes, terms and conditions, partners and constraints. "If take-away sales increase, the transport solutions involved become more limited due to insufficient means in the short term," says Jean-Michel Garcia. For example, a Pizza Hut brand may not be able to increase its number of scooters, even if the staff and raw materials available are sufficient. "But this type of readjustment cannot of course be made overnight." In the same way, a supermarket will not necessarily be able to develop a drive offer which assumes a capacity to receive the public, infrastructures in accordance, or an organization of separation of flows.
While digital tools are an unquestionable support, their help can be reduced if there are no appropriate logistics partners to match its priorities. Not all the players are in a situation where they are able to respond to strong requirements in terms of sustainable development criteria, costs, or deadlines. The relevance of technological innovations thus depends on a global approach and integration, where tools must be able to be connected to each other.
The Covid crisis and its consequences have also highlighted new features such as tracking and real-time predictive visibility functionalities made available to shippers, such as the recent partnership between the Fretlink transport optimization platform and Project44, a specialist in supply chain visibility. However, the use of such offers seems far from being widespread.