It doesn’t seem all that long ago when businesses in the consumer industries took on the challenge of the two-day standard for great service. Fulfilling customer orders to be delivered within two days required plenty of supply chain innovation. Now, the bar has been raised even higher—instead of two days, the standard of service is becoming two hours.
Related: Listen to the Consumer Goods Forum podcast “Emerging Trends and the Intelligent Enterprise.”
Where this two-hour trend is most evident is the grocery industry. When people order groceries, they have an expectation of getting their orders within a similar timeframe as it takes to do the shopping themselves—we all want our food to be fresh. Gaining the ability to meet that expectation makes online ordering more appealing—online food and beverage sales are expected to grow from 2% of the market to 15-20% by 2025, according LEK Consulting.
Meeting that two-hour timeframe takes logistical and infrastructural commitment. Different companies have taken different approaches to reach the same goal. Amazon bought Whole Foods—giving it an instant footprint of what are essentially warehouse centers. Target purchased a same-day delivery company called Shipt. Walmart has taken a different tactic—they’ll offer a lower price if you come and pick the order up yourself, and they have tried to make that more appealing with retrieval towers that speed up the process.
Those two-hour windows may become even smaller—Kroger is testing a program that allows customers to order online and receiver their groceries in 30 minutes or less. When you consider your own trips to the grocery store, it is pretty difficult just to grab all your necessary items within 30 minutes.
Meeting these lofty delivery standards requires dramatically faster supply chains, it also means procurement requirements are going to change. This will require new technology—real-time processing and shipping capabilities are essential. It will also require new training and skillsets in your employee base.
With this race to the faster service standard, it means a rethinking of the way companies in the Consumer Industries approach supply chains—a movement to the Intelligent Enterprise. Two days or less was a challenge, but innovation in the enterprise technology space has now allowed for two hours or less to be a reality—and a consumer expectation. The question becomes: Do you have the process and infrastructure in place to meet that two-hour window?
Meet Rizing at NRF 2020
Talk to Rizing at NRF 2020 in New York City, January 12th-14th . We are in booth 4636 next to SAP’s booth. You can request an NRF meeting time with us at this link.