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Editor’s note: This article is part of a series highlighting takeaways from the January 28 event hosted by Supply Chain Dive and Retail Dive. Register here to watch replays on demand.
Consumers’ proximity to a company’s distribution network will give retailers an advantage in an online shopping environment that is increasingly influenced by artificial intelligence, experts said at Supply Chain Dive and Retail Dive’s Jan. 28 virtual event.
Rupal Deshmukh, strategic operations practice partner at global management consulting firm Kearney, said convenience and speed remain key factors in shipping for online shoppers.
Deshmukh said AI service providers like ChatGPT developer OpenAI are also changing shopper behavior by enabling last-minute purchases. For example, ChatGPT can suggest ways to solve a user’s problem, such as getting rid of gnats on houseplants, leading to an immediate purchase.
“From a supply chain perspective, what this means is to bring the changes we are making on the supply chain side as close to the customer as possible,” Deshmukh said, advising companies to implement AI-driven shopping as an element of demand forecasting so that inventory can be placed where it is most effective.
Rick Jordon, senior managing director at FTI Consulting, said at the event that, with the exception of last-mile delivery, transportation costs have come down considerably over the past two years, allowing for cost-effective positioning at the regional level.
“It’s true that the strategy has changed a little bit, but all it takes is a few ticks up in transportation costs, and the inventory push will probably go back to more forward deployment rather than regional deployment,” Jordan said.
As inventory placement strategies evolve, companies are focused on reducing total supply chain costs per case through distribution center automation, Deshmukh said, citing Walmart as an example. More than 60% of Walmart’s U.S. stores receive some of their shipments from automated fulfillment centers, the retailer reported.
Overall, Deshmukh said supply chain strategies need to consider consumer preferences for speed and convenience.
“Supply chains cannot afford to lag far behind consumer changes these days, any more than they have in the past,” Deshmukh said.
