Peter Pernot-Day, Head of Strategic and Corporate Affairs for North America and Europe at Shein, talked about how its business model of partnering with SMEs to fulfil orders that it gets on its e-commerce platform, without having to keep excessive stock, was beneficial during the Covid-19 lockdowns and shock to the world economy.
“We didn’t plan that ten years ago obviously,” said Pernot-Day. “But it was an unexpected benefit of the vertically integrated model that we developed to take advantage of the digital technologies that were then emerging.”
“We focused on digitising the supply chain and knitting together a chain of SME manufacturing partners to give us flexibility. The dynamic model allows us to avoid understocking as well.”
Shein’s model involves factories in South China, but also in Turkey, South America and increasingly in Poland and other markets around the world, as it seeks to embed its global growth. It also wants to avoid some of the geopolitical tensions and threats to world trade and globalisation that were discussed earlier in the conference session.
Data
Data is crucial in Shein’s business model and indeed in all retailers’ supply chains and operations these days.
“The modern internet [and data mastery -Ed.] lets us organise a large supply chain to deliver consistent results across a geographically diverse area,” said Pernot-Day.
Data mastery also, of course, allows for better personalisation for consumers and easier identification of what clothes or goods they may want to buy, driving trend identification at Shein.
According to Unilever’s Cuthbert: “Data unlocks value. It’s critical we understand and master it in real-time to deliver effective results.”
“We’ve already unlocked the power of data by bringing together our IT and supply chain teams into one unit,” she added. Integrating them has led to better performance at Unilever.
It even meant that an “enormous processing plant” making laundry powder during Covid-19 could be run remotely without people thanks to the automation technology that Unilever has and its mastery over its supply chain data.
This expertise could be fed into the production facility enabling it to continue running.
Flexible technology is essential
For Uber Direct, the key thing is having a flexible technology base that can span to meet different needs and serve different customers.
As an example, Caroline Varga, Head of UK & Ireland at Uber Direct, discussed how they have expanded beyond their restaurant and take away delivery base to serve the grocery market in the UK, providing fast local and small scale deliveries for big grocery brands.
“Lots of physical stores are closing now or under threat of it. But if businesses use them as distribution centres they can get more value,” said Varga. “For example, grocers are now doing ‘pick and packing’ in-store, alongside their separate large distribution centres, to take advantage of their estate.”
Uber Direct can do the last mile delivery.
“Retailers tell us they don’t want a single point of failure either. They want different options since the Covid-19 disruption,” added Varga. Her company and modern technology can provide that flexibility.
There are still many different sustainability, ESG and other factors to consider in these new supply chain models that are emerging. But Unilever’s Cuthbert argued that technology can help here too, citing a partnership they have with Google to identify Palm Oil deforestation hot spots that they should avoid.
The threat of protectionism, access, sanctions and a consequent need for local capabilities needs to be considered in future.
As the panel of senior retailers at the FT event admitted during the opening of this conference session, things aren’t ever going back to how they were. It’s best to get used to the new reality in global vs local supply chains and make it work for your business as best as you possibly can.
2024 RTIH INNOVATION AWARDS
Supply chain technology is a key focus area for the sixth edition of the RTIH Innovation Awards, which is now open for entries.
The awards, sponsored by CADS, 3D Cloud, Retail Technology Show 2025, and Business France, celebrate global tech innovation in a fast moving omnichannel world.
It’s free to enter and you can do so across multiple categories.
Key 2024 dates
Friday, 25th October: Award entry deadline
Tuesday, 29th October: 2024 shortlist revealed
30th October-6th November: Judging days
Thursday, 21st November: Winners announced at the 2024 RTIH Innovation Awards ceremony, to be held at RIBA’s 66 Portland Place HQ in Central London.
