British supermarket chain Asda serves more than 18 million customers every week via its supercentres, superstores, small grocery stores, Asda Living stores and e-commerce site. To ensure it can deliver the right products to the right customer in the right place at the right time, Asda relies on the artificial intelligence-powered forecasting, end-to-end supply chain visibility, omnichannel fulfilment and workforce management capabilities of Blue Yonder’s Luminate Platform.
The solution, which runs on the Microsoft Azure cloud, integrates and synchronises forecasting, fulfilment, warehousing, transportation, labour and delivery systems across multiple channels to enable Asda to keep pace with changing market conditions and customer demand. It uses machine learning at scale to provide Asda with insight into demand drivers and customer behaviour so it can better forecast and manage inventory, optimise pricing strategies to reduce excess stock and waste, improve order fulfilment, and drive efficiency and value across the entire business.
Asda is just one of many retailer and consumer goods (CG) companies investing in new technologies to ensure it can continue serving customers consistently, despite the unprecedented geopolitical and macroeconomic headwinds the industry is facing.
“Issues such as widespread financial crises, environmental challenges, demand fluctuation, delivery delays, and labour, materials and product shortages are making it increasingly difficult to deliver seamless shopping experiences,” says Felice Miller, business strategy leader for retail and CG at Microsoft.
Simultaneously, digitally savvy consumers are driving a retail revolution that is making the path to purchase significantly more complex. “People now expect smooth shopping experiences across multiple channels, as well as services such as same-day delivery, kerbside pickup, and faster and easier returns,” explains Miller. “And, as customers now prioritise in-stock availability and convenient shopping experiences over loyalty to a brand, retailers and CG companies must rapidly reinvent their operating models to remain competitive and profitable.”
According to Miller, they must shift from a reactive to a proactive operating model that prioritises long-term planning and empowers them to rapidly adapt processes to overcome predicted supply chain disruptions and accommodate fast-changing consumer demands.
“Retailers and CG companies need to be able to anticipate how market trends and customers’ demands will evolve and also understand how geopolitical, macroeconomic and other external factors will impact their ability to deliver the right product to the right place at the right time,” she says. “By doing this, they can accurately forecast product demand to optimise inventory and minimise issues like overstocking or stockouts, while increasing on-time order fulfilment in every sales channel.”
To move to this predictive model, retailers and CG companies need to capture and analyse data from multiple sources across the supply chain and collaborate with partners to act on the insights this information delivers. “They’re unable to gain access to these insights using traditional supply chain models because all the data is trapped in silos and disconnected systems,” says Miller. “Instead, they must create an agile, customer-centric supply chain of services.”
Miller recommends that retailers and CG companies build an interconnected, cloud-based digital ecosystem with integrated artificial intelligence and machine learning capabilities.
“Data, cloud and AI provide the foundational tools for agile, resilient and sustainable supply chains,” she says. “Composable applications built on cloud platforms like Microsoft Azure or Microsoft Cloud for Retail connect systems and data across the entire supply chain. This provides retailers and CG companies with the end-to-end visibility they need to optimise operations and drive innovation, operational efficiencies, and more.
“Meanwhile, AI and machine learning can analyse data at scale to help organisations rapidly identify trends so they can orchestrate automated responses to anticipated changes in demand or bottlenecks in the supply chain to meet customer demand in every sales channel.”
These tools can also help to establish a framework for flexible order fulfilment based on the availability of stock in a given location. “If, for instance, a product is out of stock at a warehouse but available at a store near a customer’s house, retailers can fulfil the order from the store instead and ensure it is still delivered within the requisite time period,” says Miller.
Microsoft collaborates closely with an extensive ecosystem of partners to help deliver the industry-specific solutions retailers and CG companies need to build agile, sustainable and resilient supply chains.
“Our strategic partnerships are built on the principle of co-innovation and are underpinned by a strong go-to-market alignment that enables our customers to maximise the value of their Microsoft technology investments to fuel supply chain transformation,” says Miller. “One key partner is Blue Yonder, which won Microsoft Partner of the Year for our Worldwide Retail and Consumer Goods Group in 2023 and is also an Industry Prioritized Partner. Blue Yonder provides the most extensive end-to-end, customer-centric supply chain solutions, allowing retailers, manufacturers and logistics providers to seamlessly predict, pivot, and fulfil customer demand.”
Another partner is SAP. “It is empowering retailers to drive business transformation by migrating their supply chains to Azure,” says Miller. “Meanwhile, SAS has built an integrated analytics platform on Azure to provide retailers with forecasting tools so they can respond faster to changing demand and improve product availability in all sales channels. Plus, Tomorrow.io uses our AI technology to deliver AI-driven weather predictions and intelligence solutions for optimising logistics planning. And CH Robinson provides organisations with visibility and track and trace capabilities.”
Another notable example is o9 Solutions, which has built an AI-powered platform that runs on Microsoft Azure and uses data analytics, machine learning, graph-based enterprise modelling, advanced algorithms for forecasting and supply chain, scenario and revenue planning.
“o9’s ‘digital brain’ helps our customers to transform supply chain revenue, profit and loss planning, and decision-making,” says Miller. “For example, o9’s platform is enabling a multinational athletic apparel and footwear retailer to automate demand forecasting and quickly rebalance inventory in response to changes and market volatility. Not only has this improved forecast accuracy for pre- and in-season products in markets across the globe, but it has also contributed to the brand’s sustainability goals by reducing inventory and excess waste.”
Aera Technology is also collaborating with Microsoft to enable CG companies to decrease waste, spoilage and stockouts. “It has built a decision intelligence platform on Azure to deliver AI-powered, data-driven decisions for inventory, order fulfilment and more at scale,” says Miller. “Similarly, Microsoft technology supports Upshop’s AI-driven platform, which provides accurate demand forecasts to fresh produce retailers to optimise inventory and thereby reduce food waste.”
Both Microsoft and its partners are exploring how to leverage generative AI technology to help customers unlock the full potential of their supply chains.
For example, Microsoft has introduced AI-powered Copilot support for procurement in the Dynamics 365 Supply Chain Management platform to empower users to efficiently manage and assess changes to purchase orders on a large scale. The tool offers a concise overview of purchase order modifications as well as an insight into the potential downstream impact of these changes. Copilot also uses the Text-davinci-003 generative AI model to create natural language summaries of these modifications, making it easy for procurement teams to understand and communicate their implications through emails and Teams conversations.
“In this new era of AI and at an unprecedented inflection point for technology and supply chain, Microsoft is making important investments to help enable supply chains team members be more productive,” says Miller. “Copilot’s AI-driven capabilities optimise the procurement process, improves decision-making and enhances communication between stakeholders, ultimately leading to a more agile and responsive supply chain.
“These are just some of the many examples showing how data, AI and the cloud are empowering retailers and CG companies to go beyond simply optimising their existing processes to fundamentally transform the way they manage supply chains and capitalise new opportunities to further improve both operations and the customer experience.”
We asked selected partners how they are using Microsoft cloud and AI tools to help retailers and CG organisations make supply chains smarter, more transparent, efficient and sustainable.
“Our decision intelligence platform leverages Microsoft Azure to deliver AI-powered, data-driven recommendations at scale,” says Eduardo Tobias, vice president of partnerships and strategic growth at Aera Technology. “Using Aera Decision Cloud, consumer goods companies are minimising stockouts, improving on-time and in-full delivery performance, reducing product waste and spoilage, and decreasing the amount of manual work required to make decisions.”
“Tomorrow.io’s weather intelligence and climate adaptation platform, available on the Microsoft Azure Marketplace, empowers retailers to improve supply chain transparency, efficiency and sustainability,” says Cole Swain, vice president of product at Tomorrow.io. “Supercharged by next-generation space technology, generative AI and proprietary modelling capabilities, Tomorrow.io equips retailers with insight into potential disruptions days in advance.”
“Our seamlessly integrated solutions leverage Microsoft Cloud for Retail’s advanced capabilities like Inventory Visibility and Intelligent Order Management, sharing data on a unified model to enable real time decisions and ensure constant product availability,” says Francesco Stolfo, partner and vice president of business development at ToolsGroup.
Read more from these partners as well as Blue Yonder, o9 Solutions and SAS in the Autumn 2023 issue of Technology Record.