When you hit checkout on an e-commerce site, you're actually in the middle of your buying journey. First, you had to decide you wanted to order those shoes, figure out where they were in stock, the delivery window, and if they don't fit, you might have to return them anyway. Supply chain experts need to know, where does the supply chain start? Where does it end? And most importantly, how do we improve it? This is PS's guide to supply chain optimization. We're walking with Mike DeFabos through a warehouse operated by IDS, a third-party logistics company. 450,000 square feet, about 10 different customers within this operation. There are more than 20,000 fulfillment centers like this one in the United States alone that work with retailers. And it's more than just shipping labels and packing peanuts. Efficient operation requires a lot of coordination.
We are really just an extension of our customer's business. We are their warehouse behind the scenes. But really what that depends on is how fast is that product moving? How quickly are we needing to get to it? And what types of products? But how fast is that product moving? Not always so fast. In recent years, the supply chain has been under so much pressure, it's all over the news. This is causing headaches for logistical experts because these ships are arriving late for the foreseeable future. There's growing concern dock workers may not show up to work again. Because of supply chain disruptions, the retailer almost didn't get it here in time for the holidays. Getting products in time for the holidays is a complex process that involves seamless coordination across the supply chain. So how can supply chain managers make that coordination seamless? It's not really about enhancing one point in a company's full supply chain infrastructure. If you focus on improving your warehouse operations, great, you're going to be able to identify products coming in and products going out. But what about getting the product delivered to a customer?
Reva Bhatia is the head of industry marketing at Publicis Sapient. She also has a decade of experience working in supply chain. The data that underpins the ability for a firm to know how quickly they can get that product to somebody, know where that product is located, know where the customer is located, involves a lot more than any single point in the supply chain to be able to perfect. But a lot of this data is still in silos, not necessarily shared between, say, the retailer and the warehouse and the delivery partner. What you're really talking about doing is stripping away the layers that exist between all of these functional areas that typically exist in a supply chain organization and creating a CDP of sorts where data is shared amongst all of these key entities that have to do with planning for, delivering, and sometimes returning a product. And how quickly that data is shared matters too. An IDC report from December 2022 cited that 75% of all data-informed decisions need to be made within hours, not days, before data becomes obsolete. But there's more data that retailers and other companies should be sharing and thinking about. Consumer preferences. Now more than ever, we're seeing that supply chains can actually be leveraged as a mechanism to deliver compelling consumer experiences. I'm going to use my own example as a consumer. I prefer to receive all of my shipments all at once. That data is super compelling. In fact, they should never really offer me overnight shipping or same-day shipping because it's more expensive and onerous for them, and it's not something I prefer. So there's so much nuance in leveraging personalization, leveraging data to make sure your supply chains run both more efficiently and, frankly, sustainably and cost-effectively. Delighting consumers with the right supply chain optimizations can also mean a more sustainable supply chain. According to a 2022 survey, 63% of consumers agree that a low-impact delivery is important when making a purchase, and 77% of consumers would avoid retailers depending on their environmental impact. If I'm running a sustainable supply chain, I'm minimizing packaging. I'm minimizing the volume of shipments I'm running to certain geos every day. I'm requesting that consumers receive consolidated shipments. Eco-friendly packaging is very, very common, recyclable, and even the perception that things are recyclable, the limiting of plastic and things like that. So we're constantly going back with our customers, talking about how we can work with them to reduce packaging size, reduce costs in their packaging, and in turn, reduce how much waste is being handled within their packaging and within their supply chain. Taking all of this data we've been talking about and making it shareable across the whole supply chain, from consumer preferences to inventory to locations to transit times, can help make deliveries more efficient and make customers happier. Our customers are using predictive analytics to determine demand and ordering and forecasting and things like that, how they're going to promote which items they should promote, new SKUs and products they should come up with. Imagine a world where you have an artificial intelligence overlay that's automatically telling you when you're about to run out of a product as a retailer and telling you when you should order it. You have an artificial intelligence overlay that exists above all of your supply chain neural networks that's telling you what not only you should expect in the year ahead, but the five, ten years ahead by way of forecasting for a specific SKU. The supply chain may be complex, but it doesn't have to be complicated. I think in the future we'll see a lot more visibility on the functional area that is supply chain being, again, a key area to make concerted investments in, not just to cut costs. That still hasn't gone away, but also to drive revenue.