Meeting Changing Customer Demands with eos
As the customer becomes increasingly involved in the supply chain, the industry has to make exceptionally fast changes in order to keep up with the pace of demands. Not only is the pace of the customer satisfaction extremely fast, but industry leaders such as Amazon are ensuring customer demands are becoming more and more complex. We spoke to Raffaele Turturro, Head of Supply Chain and Operations for eos Europe, to discover how eos are dealing with meeting changing customer demands as well as how and why demands are changing at the pace they are.
How have customer behaviours changed in relation to Retail supply
“I am going to distinguish between general trends and trends that are more specific to the cosmetics sector and also eos. Generally, eCommerce is growing at a fast pace and is offering customers new tailored experiences that not every supply chain can currently provide. This is forcing almost every company to have a strong presence and eCommerce strategy and to move away from being simply brick and mortar retailers. Regarding the cosmetics sector, our customers are always looking to be surprised with new products. This has had a big impact on our organisation as it means our product life cycles are rapidly decreasing. Currently, every six to nine months we have to plan the launch of a new product as well as managing the phase-in and phase-out of the old collections versus the new collections. This customer demand is becoming a high challenge for many companies operating in the FMCG sector.”
How have eos structured their supply chain to meet these demands?
“At eos we have done three specific things to meet these demands. Firstly, we have ensured connectivity with our partners. Secondly, we have focused on making our supply chain as transparent as possible, ensuring that everyone involved has an end-to-end view of the chain. Thirdly and finally, we are establishing and creating new win-win situations. We are retaining business with our partners at a retail level while also exploring all synergies that we might have with our suppliers. By fully integrating different aspects of the supply chain and ensuring there is full transparency, there can be many benefits for all parties involved and the above demands can be met.”
How do you think that Retail supply chains can strike a balance between low costs and achieving customer satisfaction?
“At eos, customer satisfaction and the customer experience has to be delivered without compromise. This means that cost reductions should not come from reducing spend. Instead, cost reductions should be achieved by creating end-to-end transparency across the supply chain. When you have full visibility and an accurate understanding of your organisation, you can optimise all aspects of the supply chain, not just single isolated parts. For example, we established an open communication channel with our logistic partners to improve the warehouse procedures. Sometimes by adjusting simple elements like palletisation or how our goods are prepared for out customers, you can create significant savings.”
What specific technologies do you think can enhance end-to-end supply chains, and why?
“I think one of the biggest technology trends that we can look forward to enhancing supply chains in the future is Blockchain. This technology can reduce, or almost entirely eliminate, the amount of paper that is circulating across the chain as well as making the commercial relationship within the chain flawless and easier to manage with minimal administrative efforts. Another technology I think can enhance end-to-end supply chains is the Internet of Things. In the eCommerce industry, but also in delivery and distribution, it’s really important to have real time information regarding where your deliveries are. This level of information can become available with the Internet of Things. Finally, the third technology that I would like to mention is 3D printing. I think there will be a larger implementation of 3D printing technologies over the coming years. Instead of getting boxes and packaging delivered by external suppliers, this will provide an affordable way to produce supplies in the same warehouse, saving enormous costs on transport and storage and reducing the length of supply chains.”
What are the main three challenges Retail supply chains are currently facing?
“From a very general point of view, I would say that the tastes and preferences of customers and changing faster versus the past. We have larger customer groups who are now looking for novelties such as new products, new experiences and so on. The second main challenge is that the customer now has the ability to compare products and prices in the most transparent way. Thirdly, the customer is now shifting between online and offline stores more than ever before, even within the same company. This means that online and offline stores must now be able to deliver a consistent customer experience across a variety of platforms, as well as balancing delivering a consistent brand image so not to detract from the customer experience.”
Do you think that most of the challenges faced by Retail supply chains are centred on customer satisfaction?
“Yes, especially since customers are much more exigent than five or six years ago. Amazon has changed the customer experience space and has change what a customer expects in all aspects of the supply chain. The possibility to return your purchased items fro free is something that is now taken for granted by many consumers. If we look to the past, the possibility of free returns was rarely available. The big players that are disrupting the retail market are also deeply influencing the customer preferences and trends. I expect the big players will influence customer expectations even more in the future.”
Are you making any significant attempts to overcome these challenges at eos?
“One example is that we have recently reduced the time to market for our new products. Previously, products we launched would stay on the market for 24 to 36 months. Now, our product life cycle is typically no more than 12 months. Some cosmetic organisations are proposing that products should change every six months. Because of this we are looking to change our cross-functional cooperation and understand how all of our functions/departments can work together to ensure eos can launch new products at an even higher frequency than we are currently doing.”