6 Ways a Retail Manufacturing and Supply Chain Partner Can Improve Operations
From E-Commerce and Warehouse Automation to Fintech and Beyond
Over the past few years, we’ve seen the retail landscape shift as more companies started investing in e-commerce and technology integration. The shift to a more digitally integrated retail experience has been brewing on the horizon for years, but COVID-19 has accelerated this trend by 5-10 years. That’s why traditional original equipment manufacturers (OEMs), large retailers and (more recently) warehouse automation integrators in the online grocery and e-commerce industries have been turning to manufacturing and supply chain partners to improve their manufacturing operations, supply chain efficiencies and product innovation.
The benefits of working with a retail manufacturing and supply chain partner providing end-to-end solutions are numerous and can be game-changing. Here are six of the biggest advantages:
1. Reduce Time-to-Market
The desire—and expectation—for “trendy and fast” has accelerated in the past 60 years. Consumer electronic companies have conditioned consumers to expect updated products with clockwork regularity. Thanks to Amazon’s two-day and same-day delivery, consumers expect the latest gadget to be sitting on their doorstop in a matter of days, if not hours. It’s no exaggeration to say that a quick time-to-market is a key differentiator in retail.
Unfortunately, there are many factors that can prevent companies from pushing out new products as quickly as they’d like to, and when you have to launch a new product, time is key.
At Jabil, we don’t think of ourselves as just a manufacturer; we’re a full-solution technology partner. We can work with you through every step of the value chain. We help customers with design, new product introduction (NPI), testing and end-of-life management—we’re there from design-to-dust™.
This consolidation streamlines the creation process, thus pushing out new products faster. Moreover, a partner can aid in resolving supply chain challenges, sourcing and logistics operations and providing an end-to-end solution.
Ever since manufacturing started migrating to Asia in the 1980s, the retail supply chain has taken months to deliver a new product from initial concept to store shelves. For highly technical products, the product development cycle can take over a year to complete; even for a simple product (like most apparel), the cycle is at least six months. When consumers are buying as quickly as they can point and click, supply chains need to stay quick, adaptable and nimble.
In Jabil’s Supply Chain Resilience in a Post-Pandemic World report, 100% of decision-makers in the retail space said they are investing in supply chain technologies and services following COVID-19. After all, a full-solution manufacturing partner with supply chain expertise and resources can help you navigate potentially production-halting challenges. For instance, a partner with a global footprint can assist with regional manufacturing, bringing production closer to the end-user. Predictive analytics, a digital supply chain, logistics management and other risk-mitigating supply chain capabilities can shave off significant time from ideation to placing the product on store shelves.
2. Scale Efficiently
Ask any company that manufactures its own products and they will tell you: increasing production capacity with existing resources is no easy feat. It takes substantial capital and labor investments while putting immense pressure on the whole company. A manufacturing partner—especially one with a global footprint—can ease the pressure of increasing production capacity for your retail solutions.
We’ve proved this over the course of our multi-year partnership with Ingenico Group, a retail industry pioneer that provides merchants worldwide with innovative and reliable payment solutions. After transitioning all manufacturing to Jabil as part of its sole-source manufacturing strategy, Ingenico embarked on a major uptick in production to meet increased market demands. “We decided to double our production capabilities in Brazil, because we are enjoying a very dynamic market there,” Julien Mater, head of operations for Ingenico Group, stated. “Jabil has supported this very important investment.”
Ingenico Group and Jabil accelerate delivery of seamless payment solutions
Additionally, Ingenico more than doubled its production capabilities at Jabil’s Vietnam manufacturing facility over a three-month timeframe. “We increased product capabilities from 200K per month to 500K per month as well as refined the full footprint of our operation,” Mater shared. “It’s also important to recognize the support of the local team in Vietnam as they worked hard to manage the capacity increase successfully.”
3. Engineering Support
Fifty years ago, “retail” was equivalent to a storefront. If customers wanted to shop, they would have to physically go into a store, grab the items they wanted and check out. That’s it.
Today, the transaction is not as straightforward.
The retail experience is becoming increasingly omnichannel. When we asked more than 300 retail decision-makers about their investment plans in our Future of Retail Technology survey, 55% said that they are focused on taking an omnichannel approach. The urgency to offer omnichannel solutions has only increased since COVID-19 shut down stores and forced social distancing.
“For us, some e-commerce priorities that were previously five years out are now more of a three-year horizon,” Todd Vasos, CEO of Dollar General, stated. “We need to more quickly understand how to satisfy that consumer and accelerate our timelines accordingly.”
In addition to e-commerce options, in-store retail analytics technology helps improve the customer experience. For instance, as consumers walk through the store, sensors track their path, converting this into data retailers can use to improve the store layout to optimize their planograms.
Automation is also becoming a stronghold of the retail environment. Retail automation solutions like self-checkout kiosks are improving the in-store customer experience. Furthermore, retailers are using autonomous robots to check shelf inventory gaps, monitor for spills and other obstructions on the floor, gather data, operate warehouses and improve the overall customer experience.
But beyond in-store retail technology solutions, warehouses and fulfillment centers are undergoing a technological revolution that will require engineering support.
In 2012, Amazon started a “Big Bang” in Goods to Person (G2P) robotics when it acquired Kiva Systems. At the time, Kiva’s robots and inventory management system were reinventing the picking and packing process at large warehouses. Now, Amazon leads a fleet of 80,000 autonomous robots, an essential component of their e-commerce strategy. More retail players are following suit. Our survey shows that retailers are shifting toward automated technology, with nine out of 10 retail decision-makers agreeing that automated technology is needed to increase their efficiencies and improve customer experience.
Many companies rushed to fill the gap Kiva left in the market, creating three categories of “behind-the-scenes” autonomous retail robots:
- Pick Assistant with Autonomous Mobile Robot (PA-AMR): These are deployed as human-collaborative robots in existing warehouse infrastructures. The AMR base often includes vision and light detection and ranging (LiDaR) for navigation.
- Autonomous Mobile Robot (AMR): Like the PA-AMR, these are predominantly used in existing warehouse infrastructure. They move pods (shelves) to a pick and pack station.
- Automated Storage and Retrieval System (ASRS): These are primarily deployed in new warehouses and include high-speed shuttle systems. They are excellent for retrieving medium- to high-density goods.
As retailers continue to integrate technology into their regular operations, they will need engineering support to develop better solutions and keep the ones they’ve already implemented running smoothly and efficiently.
4. Cost Reduction
When COVID-19 hit, many businesses were forced to close – including gyms. Stuck at home and anxious for exercise, people began flooding fitness company Peloton for orders for its stationary bike.
Unfortunately, like everyone else in 2020, Peloton had no way to predict this dramatic surge in demand. They were unable to keep up with the multitude of orders. Consequently, thousands of people canceled their purchases, some even starting or joining Facebook groups to rant about the experience. Not only did the company lose money from disgruntled almost-customers, but it recently had to invest $100 million in an attempt to clear their backlog.
I’m not saying that a partner would have eliminated all of those issues, but it could have helped resolve or mitigate challenges sooner, preventing the company from hemorrhaging money.
A partner that provides end-to-end solutions can help shave off extraneous costs in multiple areas. Let’s start with the beginning: sourcing and procurement. Manufacturing partners can help you navigate turbulent supply chain conditions to ensure rapid access to the best possible components at the lowest possible prices. Furthermore, large, global partners like Jabil tend to buy components at scale, giving them more leverage with suppliers.
In production and logistics like delivery, a manufacturing partner can help improve and streamline your processes to avoid wasting time and materials. For instance, a manufacturer that effectively utilizes automation can dramatically cut production costs and improve efficiency.
5. Global Footprint and Network Optimization
Over the last few years, tariffs have been on the rise, and there are no significant changes on the horizon. As a result of this geopolitical instability, numerous industries have reconsidered their approach to supply chain management.
It’s no exaggeration to say that national policy changes disrupt the ability to import finished consumer products, key components or parts. Tariffs can jeopardize the value propositions of local businesses. This is especially true in the retail industry.
The crux of network optimization is contemplating every possible obstacle and developing a subsequent strategy. This requires a combination of extensive data and sophisticated supply chain analytics that provide an end-to-end, quantitative snapshot of a company's supply chain. It takes a resources, tools and specialized knowledge to accomplish this. But this insight is useless without the ability to turn it into action.
The ultimate goal is to empower better collaboration, visibility and decisions. A partner with a global footprint can help you mitigate or avoid negative effects of tariffs and other disruptions by modifying the supply chain and shifting production locations.
6. Logistics and Transportation Services
More than half of our survey participants said that they are focusing on building an integrated, omnichannel solution. This change will make last mile delivery a key differentiator for retailers. Because consumers can easily shop for alternative products, retailers and their supply chain partners must provide exceptional service to gain market share and build brand loyalty.
At Jabil we pride ourselves for providing our customers logistics services leveraging our $350+ million logistics expenses. The customers enjoy competitive rates as we are forwarder agnostic, while they get a full suite of digital solutions and analytics to better manage their network moving products from point A to point B at the right speed and SLA. Jabil can help you adapt to the ever-changing retail landscape and ensure your products arrive at their location quickly and safely.
It’s a well-documented fact that customers no longer just buy products; they buy experiences. In fact, experts have dubbed this period as the “experience economy.” How a company brands itself defines its experience, which determines what kind of customers it will attract and how well it will drive sales.
Those who embrace the challenge and the technology have the best chance of being on the right side of this battle for the customer's hard-earned dollars. As retailers investigate the best technology fit for their stores and operations, retail solution providers must also focus on their own manufacturing operations, supply chain efficiencies and product innovation. Whether your retail solutions are in intelligent vending, smart payments, autonomous robots or other emerging retail technologies, a manufacturing partner can be key to a concerted team effort to ensure unparalleled product quality and an optimized bottom line.
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