How Hyper-Networked Supply Chains Help Retailers

Retailers often have to choose between the costly privilege of supply chain independence or a great deal of reliance on retail giants.

However, opening up the supply chain for co-operative capacity and infrastructure sharing promises independent efficiency. Collaboration logic platforms such as Quiet give retailers a more collaborative “third way” to supply and deliver goods.

The new co-operative supply chain model could pave the way for the future of hyper-networked supply chains, stuck between the costly privilege of supply chain independence and a great deal of reliance on retail giants. This is the third method for retailers who are doing it.

Amazon, Wal-Mart, and Target have demonstrated how important retailers are in choosing both consumers and their logistics economies of scale.

Small retailers are now facing increasingly tough choices. Brings or continues supply chain independence, but with lower costs, lower resilience, and less potential customer experience.

“The essence of flexibility lies in the commander’s mind. The essence of flexibility lies in logistics,” said Maj. Gen. Henry Eckles, a well-known US Navy planner. For the past two years, we have demanded every ounce of agility and creativity from retailers to address the dual challenges of COVID-19 and the relentless rise in online sales.

In 2021, 19.6% of global retail sales were online.

According to research firm Statista, 19.6% of global retail sales in 2021 will increase from 13.8% in 2019, and 24.6% of global retail sales are projected to be online by 2025. increase. -Demand delivery. Competitiveness in logistics is fundamental to both the sustainability and agility of retailers’ margins.

Customized supply chain models have limitations

Retailers typically aim to build a supply chain using a network of service providers, warehouses, and distribution centers. However, the tuned infrastructure is limited, and while outsourcing parts can provide flexibility, it also increases marginal costs.

Wal-Mart’s supply chain processes an estimated 200 times the next level of retailers moving 200 to 300 million units annually within the system. Due to the difference in quantity, some retailers have an estimated cost penalty of between $ 0.50 and $ 1 per unit.

Meanwhile, Wal-Mart’s volume continues to grow. While the economy of size players continues to improve, subscale retailers are facing a decline in investment capacity and a widening competitiveness gap.

Currently, some retailers have determined that there is a third option. Just as Airbnb and Uber mobilized the value of utilities fixed to disposable properties and vehicles, opening a supply chain for collaborative capabilities and sharing of infrastructure is efficient without succumbing to platform superpowers. Promises a model of.

Collaborative supply chain for efficiency

Apparel retailer American Eagle is at the forefront of this new way of thinking that breaks the boundaries of traditional models. Chief Supply Chain Officer Shekar Natarajan has turned the American Eagle supply chain inside out.

The company acquired the logistics businesses AirTerra and Quiet Logistics in 2021 to increase capacity far beyond American Eagle’s own item throughput demand. Natarajan and his team are now joining more than 50 other retailers, including saxophone, fanatics, and perotons, on the Quiet platform, each increasing the amount of items and providing virtualized access to infrastructure on the Quiet network. I am adding to.

As a result, the “co-competitive” supply chain expands, regaining $ 0.50 to $ 1 per item, leveling the competitive arena.

The key to collaboration in a quiet supply chain model

The algorithm-tuned Quiet model does not require participants to relinquish ownership of the infrastructure, but it does require the infrastructure to be open to others and interconnected.

When the package arrives at the customer, it may go through multiple different participants’ warehouses and delivery services. Quiet can also leverage the collective purchasing power of the co-operative community to source services from FedEx, UPS and more.

Obviously, the success of a new collaboration model like Quiet relies heavily on trust between collaborating organizations.

Everyone is ready to contribute to the infrastructure when they have capacity, but they play the ball when under pressure and warehouses and distribution centers challenge their packages and other packages in the network. Is there a possibility? This model also requires state-of-the-art traceability technology and data sharing protocols.

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