We're going to discuss now what are the capabilities needed for a retailer that wants to navigate the digital transformation more broadly and specifically when thinking about their supply chain. I would like to introduce some foundational capabilities. These are capabilities that any retailer needs to have today in order to navigate the digital transformation successfully. These are also foundational because is where you can start building other more specific capabilities to you that can help in successfully differentiating from other companies that are doing this digital transformation process. So let's start with the first one, advanced analytics. Any retailer that is seriously dealing with the digital transformation of the company as a whole or specifically about the transformation of the supply chain need to think carefully about how to incorporate analytics to the daily operations. This capability is so important that I'm going to discuss this in detail in the next module. Another capability is what we can call smart forecasting. Forecasting is an activity that any retailer needs to do any time they embarked in the process of incorporating a new product and placing an order. But that's not exactly what I'm referring to when I say smart forecasting. Smart forecasting involves not only making the forecast of my own needs, but also what is going to happen when I placed that order or when I anticipate that particular demand all across the supply chain, why? Because in a digital supply chain like we discussed before, things are very interconnected. And assuming that they're going to be changes and orders that are going to be affecting just my own operation is not correct. I know that when I anticipated change in the future, I anticipate a big demand coming to my business. I anticipate placing the smaller order than I used to place. All these things need to be communicated and anticipated down the chain. So smart forecasting involved what I was doing before, when I was focusing on forecasting, but also what I need to do today to communicate and share those forecasts and the implications to the different partners in the supply chain. Another fundamental capability of a digital supply chain in retail today is network visibility. I cannot operate in the supply chain that I cannot see, and in the past, the goal was to map the supply chain to know what were the set of suppliers that I was interacting with on a daily basis. That is sometimes not enough. And I need to be aware of what are the suppliers of my suppliers, and by doing that and moving one step back in the supply chain. Also, the same process going forward, from the buying point, I want to see and have visibility on where the inventory is going to be placed, is going to be at the distribution center, is going to be at the retail location. Everyone in the supply chain today can benefit from visibility of information, products and payments in a real time fashion. So what in the past used to be the mapping of the supply chain today has transitioned into a visibility of the supply chain that will allow me to make decisions and changes as needed in a much more refined and detailed way than I used to do before. The last one of these fundamental capabilities is dynamic connectivity. We start with analytics, smart forecasting, having the visibility of the network. All this is not going to help a lot if I don't have a good connectivity with the different notes. If I cannot communicate and share that result of an analytics project I did all across my network. If I cannot dynamically adjust and come back with information flows from my forecast that I received or I share with one of my partners in the supply chain. So this connectivity is something that needs to happen dynamically and need to be reliable enough. Every player in the network should be aware of the value of the information flow in a dynamic fashion. This means that I am not going to make decisions based on information that come in batches, but I should be online to receive and adjust the information based on my own analysis and what someone else in the network is sharing with me. This can happen not only based on manufacturers that are giving me information about the position of products and disruption that could have happened in the supply chain, but also if I look ahead, I can see how the demand and the customers are giving me signals of what is going well and what is not going well in my different supply chain steps. This dynamic connectivity is going to help me about out of stocks, increase the service level, but more importantly make strategic changes to things that will allow me to compete in a more effective way. These changes can be price adjustments, react to promotions that the competitor is making. And all these things make sense only if I can do those in the dynamic fashion. Like we discussed before, a key characteristics of the digital stage is the speed at which information travels, and if I don't have a dynamic process set up for my supply chain, I'm going to be blocking the speed of communication and information flow that can be crucial to succeed. It will be hard to find a successful retailer today that can get away without having these four fundamental foundational capabilities in place. We want to make sure that the company has analytics, smart forecasting, network visibility and the capacity to dynamically adjust and make those decisions. Those are no negotiable. Next, this capabilities will allow me to build business specific capabilities, and in this case we need to be smart and thoughtful to find the match between the capability I'm pushing for and the need that my business required. This business specific capabilities are generally more complex or are dependent on the foundational capabilities and how well I have incorporated those. The business specific capabilities are going to be built on top of the foundational capabilities. And the relevance that this business specific capabilities will have will depend on the characteristics of the retailer itself. However, let me mention a few that I think are commonly used and very relevant in most cases. The first one is order fulfillment optimization. The order fulfillment optimization is capability that will allow you to have the possibility to place orders as fast as the demand signal is received. And not only that is going to suggest where in the supply chain you want to place the inventory, is this at the center workers, is at an intermediate workers or all the way down in the physical store. This order fulfillment optimization will allow you to minimize the total investment in inventory while keeping the service level at the highest possible. Once the order has been place, another set of issues that are relevant and can be managed with advanced capabilities is the delivery optimization. Like we mentioned before, nowadays many companies are involved in the process of moving the product from one point to the next. Well, this can be done in a casual way or in an optimal way, and there are decision tools that will allow retailers to move these products and deliver them on time in an optimal way. Another very relevant aspect for retailers is how to think about their workforce. The workforce has a massive impact on the retailer's performance. And dynamically adjusting the workforce to the demand through the week, through the day, or even within different hours during the day can be a critical capability that give the retailer's success and an edge against the competition. Another very relevant business capability is the cross-channel integration. Today, customers are seeing retailers across channels in the simplest way, and in order to succeed, retailers need to behave in the same fashion. And this is true not only when the retailer is trying to bring the product to the customer, but also when the customer returns something to the retailer. And so this capability is critical for those retailers that have the need to serve customers that use their channels interchangeably over time. Well, this concludes our first module. In this module, we saw how the supply chain, the traditional supply chain that retailers were using before might not be the right way to think about the supply chains today. The digital transformation that is affecting every company is also affecting retailers. And we have seen how to think and rethink how to set the supply chain for success. We saw that for one company, one supply chain might not be the right solution, why? Because retailers have different types of products, more functional products, more fashion, or more creative products that require different capabilities from the supply chain. We saw that it is important to find a match between an efficient and a responsive supply chain and how find this match is going to be a driver for success. We saw that in addition to the efficiency of responsiveness of the supply chain, it is important to consider how critical is for us to have a resilient supply chain and what resilience mean. Finally, we have seen the different capabilities that are required for a supply chain today in the digital environment. We saw that there are some of these capabilities that are foundational. One of those retail analytics is the one we're going to discuss in the next module but there are others. Things that you need to make sure you have under control in order to build on top of that, the business specific capabilities that are going to drive the success. I invite you to revisit this concept and now move to the next module, we're going to discuss analytics in depth.
