As it seems to happen every year, the holiday season seems to sneak up on my faster and faster. I do not know if it has to do with my getting older. Maybe Pink Floyd had it right when they sang: “And you run and you run to catch up with the sun but it’s sinking…Racing around to come up behind you again.” Of course these lyrics come from their wonderful song Time which is something that all retailers and CPG companies have very little of when it comes to the holiday season. The time of the year that is loosely book-ended by Halloween and New Year’s Eve is when many of these companies make the majority of their fiscal revenues. These companies are always looking for whatever technological or process advantage they can leverage to improve their top line sales as well as gain margin. One of the most influential technologies is mobile.
We don’t need to rehash the growth of smartphones globally nor the amount of connectivity and functionality these smartphones put in our pockets. While as consumers we have become tethered to their mobile devices, retailers and CPG manufacturers are all working feverishly to crack the code as to how to maximize our relationships with our smart phones.
Whether pushing promotions and coupons directly to our phones, allowing for payment via our phones or even allowing cross channel sales between the application and brick & mortar store, the usage of mobility remains high on the functionality Christmas list for these firms. When we start speaking of mobility it begs the question – what about IoT (Internet of Things)? Their consumers are already connected via their smartphones, but can or better yet, should retail and CPG integrate IoT into their businesses? And how?
IoT is a hot topic – one that has opened the door to what appears to be vast potential for new business models. But as with many new technologies, not all supply chains’ adoption rate are at the same pace. When it comes to retailers and CPG companies, IoT can offer value – but not the same impact across the retail and CPG sub-segments. For example, in the footwear and apparel sub-segment does IoT mean putting sensors on every pair of sneakers or winter coats? Not necessarily. But making the pallets smarter allows for better tracking of inventory, when does it ship, when is it received at a distribution center or within the retail channel? Better inventory tracking across the entire network would greatly improve these supply chains. However for those in the food and beverage space being able to do a more precise track and trace – via sensors – will mitigate the risk that arises when there is a food recall. Think of the recent problems faced by the likes of Mars Chocolate or Tesco, and one realizes what an impact better visibility and traceability would have for these firms and their supply chains. Rather than having to invoke massive recalls and spending valuable time to identify the root of the problem, leveraging more IoT would allow you to more quickly identify the root of the problem.
So next holiday season will we see a greater presence of sensors within our retail channels or attached to the side of Lego boxes? At early adopter firms I expect to see sensors and IoT being a greater presence, while I would expect a greater adoption of sensors for most of these firms through the back end of their supply chains. Both IoT and supply chain solution providers need to determine how they can assist and leverage this technology with their retail and CPG customers. As for CPG and Retail companies – determine how the usage of more sensors will impact your supply chain. Do not hesitate to work with your service providers to co-develop solutions. Look for more of our research in upcoming reports.