We are living in a VUCA world – a place that is Volatile, Uncertain, Complex and Ambiguous. The new waves of change are rapid and innovation is faster than ever. The new waves present both opportunities and threats and can be both creative or destructive. This is one of the key messages presented by author and business transformation expert Sean Culey during a recent webinar hosted by the Chartered Institute of Logistics and Transport (CILT).
During the session Culey said that the changes were circular that these Waves of Creative Destruction were getting stronger and faster and had greater impact.
“We are living in the Sixth Wave – this is a time of power battles and paradigm shifts,” said Culey. Some of the fundamental paradigm shifts in the supply chain were that we had moved from:
Then
Now
Company in control
Consumer now in control
Single channel
Omni-channel
Consumer travels to retailer
Retailer delivers to consumer
Linear push supply chains
Cyclical pull value chains
Products
Services and experiences
Ownership
Access
“The problem of this for supply chains is that this creates far more complexity,” said Culey. “This new business model increases the complexity exponentially. In the past it was a push supply chain: we now have consumer-centric networks.”
In the Sixth Wave, retailer deliver wherever the consumer wants. The supply chain is no longer about bulk delivery to a store, but rather about many deliveries of smaller units. Returns/reverse logistics has soared: According to Gartner, two thirds of e-commerce customers check their returns policy before making a buying decision and 30% of e-commerce sales are returned.
Retail Apocalypse
As a result of this, the Retail Apocalypse is accelerating: researchers estimate that up to 25 000 retail stores could close in 2020. Fashion store Zara has closed up to 1 200 fashion stores around the world. More than 13 200 stores had closed in 2020 so far.
The Consumer Experience
“New retail malls have to offer more than just shopping,” continued Culey. “They need to focus on building consumer experiences and creating the ‘wow’ factor. People don’t go to a mall anymore just to buy things!”
Opportunities
This massive shift has created opportunities – Culey highlighted just a few:
Personalisation (differentiated consumer offerings, increased focus on experiences and convenience, combined experiences – eating, entertainment, shopping, personal experiences and offers
Automation – fully automated warehouses in urban locations
Localisation
Sustainability – servitisation – space as a service, sharing business models – shared occupancy/flexible space, green buildings with renewable power sources, eco-parks/smart cities
Culey warned that the disruption had only just begun and would have a massive impact. But along with this came opportunities.
“Successful digital transformation is not actually about technology,” he concluded. “It’s about transforming the mindset, culture and strategy of the organisation. The ‘what’ and ‘how’ of technology only makes sense when it is applied to a compelling ‘why’”.