Supply chain, forecasting, artificial intelligence and Spar International

An interview with Tom Rose, Head of International Operations, Spar International, who shares his vision of the future supply chain.

Interview by Symphony RetailAI’s Paul Hoffman. Tom Rose presented on Spar International’s supply chain journey at Xcelerate Retail Forum 2017.

Tom Rose

Supply chain has changed massively in the last few years. When you consider the vast complexity of supply chain in today’s global market, what do you think is the least understood area by supply chain professionals? How will an understanding of this area propel us forward?

As supply chain professional, I can say that we like the physical and have worked for years on the best methods of handling, picking, packing, and optimizing our operations based on what we know. The biggest opportunity is to understand the customer requirement. So, I think supply chain professionals gaining better insight into serving the ever-increasing – and sophisticated – demand of today’s omnichannel customer will be significant.

Forecasting and demand planning are mainly based on predictions of the future, but based on historical performance. They consider known events and factors that influence demand and supply, like weather, for example. However, in today’s market place, historical trends are not necessarily the best predictors of the future, as customer demands are changing – and rapidly

There are a lot of reasons why it’s key to understand the customer requirement. We’ve got the emergence of new offerings – “grocerants,” fresh, food service etc. These are evidence of retailers responding to the pressures of the consumer. Then, take the news about the Amazon Whole Foods acquisition. How is that going to impact the average retailer or distributor in terms of their customer requirement? It’s clear that grocery players need to get very serious about really understanding their customers, personally, and then must be able to distinguish their organizations by serving these personalized needs, and providing outstanding service.

What’s the next “big thing” for supply chain – be it an innovation in supply chain itself, or in broader technology outside of the discipline?

I think it will be customer personalization and the emerging use of Artificial Intelligence (AI) and machine learning systems and solutions to develop insight into the future of customer requirements. We need to plan for the requirement and use the tools we have in the most efficient way.

I view AI and machine learning as game-changers for retailers and suppliers, enabling much more effective assessment of future demand risk forecasting and optimization.

With the use of these approaches, people are aided by technology that can make better decisions than people alone, delivering better business outcomes. AI and machine learning can far out process we humans – there’s no competition there! I believe this will take our industry to the next level.

Some would say that the supply chain used to be a back-office function, often left out of strategy meetings and by no means at the forefront of most organizations. This has changed significantly. Can you tell us a point or two about why supply chain has become so much more critical?

It certainly has become more critical, as retailer and FMCG businesses have focused on driving sales, negotiating commercials and trading margin. When considering the profitability of the business, maximizing sales through availability, controlling costs through inventory, and operational optimization are being recognized as key functions of the supply chain.

Today, with the intense focus on customer personalization and relevancy, everything an organization delivers to customers is contextual. The customer wants the product, often, under very strict parameters. For example, consider someone driving to work in the morning thinking about what he would like for dinner that evening. He’s got a favorite hot meal at the local supermarket and his mind is set on that. But, when he stops by the store that evening to buy it, it’s not available.

I think we’ve all had an experience like this in recent years. You have lots of options for purchase and you finally decide, only to be let down by some issue that prevents you receiving your order how and when you would like it. This is largely unacceptable these days.

For those who didn’t attend Xcelerate, can you summarize a few main themes from your presentation?

I gave attendees insight into the emerging markets, described some of the challenges and opportunities comparing these to the development cycle in the more established markets. The maturity of the supply chain in established markets is much greater than in emerging markets. Emerging markets lack infrastructure and, generally, have a lower appreciation of their own maturity along the supply chain continuum.

Learn more about Xcelerate Retail Forum

Read how the best supply chains build customer loyalty by ensuring product availability