The Importance of Digital IoT Agility for Retail Supply Chain Organizations

One of a retail operation's most underestimated yet critical elements is an optimized, resilient, agile, scalable, and cost-effective supply chain operation. Considering how dramatically customer expectations have changed in the age of Amazon, an optimized supply chain is critical for retail growth and profitability. The challenges of managing disparate data sources, fragmented business processes, technical debt, and struggles to harness technology to unlock business value and reduce costs have raised the importance of building the foundation for digital agility.

The narrative has changed, and supply chains are no longer considered a cost function. They are crucial for increasing profitability, integrating digital and physical customer experiences, reducing costs and risk, and driving value. By proactively addressing supply chain disruptions, retailers can position themselves to meet the dynamic nature of consumer demand and gain a far more competitive edge in the market. Retailers can be far more strategic and prescriptive by integrating advanced data & analytics and AI capabilities within their supply chain functions. This will help build the resiliency to keep ahead of fluctuating consumer demand.

The Forrester Total Economic Impact study shares how leveraging Microsoft Fabric capabilities substantially impacts supply chain organizations. It revealed a 379% ROI over three years for a typical retail supply chain organization, with an impressive payback period of under six months. The study highlights some critical benefits, including a 25% increase in productivity levels and a 20% improvement in business analyst output, which are essential for optimizing supply chain operations. Additionally, infrastructure consolidation contributes to significant cost savings, while enhanced data insights improve business outcomes, as demonstrated by an overall profit increase of $3.6 million.

By leveraging AI capabilities, retailers can streamline their operations and quickly adapt to market conditions and consumer demands

Microsoft Fabric empowers retail supply chain organizations to manage and analyze their data more effectively, respond to customer needs promptly, and make informed decisions that can increase efficiency and profitability, including:

• Reducing operational costs: Reduce supply chain costs by up to 10% through improved demand forecasting and inventory management capabilities

• Increasing revenues: Companies with superior supply chain performance achieve revenue growth 2.5 times faster than their competition

• Enhancing demand forecasting accuracy: AI capabilities can help improve demand forecasting accuracy by up to 20%, leading to improved inventory levels

• Driving warehouse efficiencies: Implementing AI in warehouse operations can increase efficiency by 25%, including optimized picking routes and automated inventory management

• Optimizing transportation routes: Optimizing delivery routes and schedules potentially reduces transportation costs by 5-10%

The real-time capabilities integrated with Azure AI’s precise analytics can reduce troubleshooting issues across IoT devices from hours to under a minute. Microsoft Fabric can help retail supply chain organizations in several transformative ways, including the following business benefits:

• Powering agile supply chains with unified data capabilities: Integrating retail insights, allowing for improved inventory optimization, customer segmentation, sales forecasting, and dynamic pricing capabilities

• Providing real-time intelligence: Providing real-time intelligence capabilities that empower supply chain organizations to make strategic actions based on real-time insights and available to promise inventory across channels

• Enabling strategic decision-making: Harnessing the power of data and analytics for strategic decision-making is crucial for supply chain organizations in a dynamic and competitive environment

The transformation journey begins with getting the data foundation right

Retailers seeking to improve their supply chain processes, optimize their operations, and enhance solutions leveraging AI must ensure that the data used to train the large language models (LLM) are high quality. This means ensuring the data is accurate, complete, and consistent throughout the models. Retailers can leverage Data Quality (DQ) tools and processes to ensure that the data used to train the AI model meets all the requirements. Retailers must establish a robust data governance framework to ensure the AI model is used ethically and responsibly. Microsoft Fabric Data and Analytics, combined with AI and Purview, can provide significant benefits.  

Here's how the combination of Microsoft Fabric and Microsoft Purview can help

• Data modernization: Enabling data modernization capabilities with Elastic Stack, managing the entire stack infrastructure and analytics workloads, and providing actionable observability through AI/ML capabilities

• Data governance: Leveraging MS Purview enables supply chain leaders to drive data governance models, which are crucial for maintaining data integrity and compliance in retail operations

• Visibility and risk management: Optimizing contingency planning with Microsoft Cloud, which includes Microsoft Fabric, helps build strength, security, and sustainability into the supply chain through visibility and risk management

• Fully integrated analytics solution: Activating Microsoft Fabric as an integrated analytics solution that handles everything from data movement to data science, real-time analytics, and business intelligence. This is essential for connecting legacy systems with modern IoT devices, allowing frontline workers to access necessary information when and where they need it.

• Lake-centric and open platform: Empowering teams with Microsoft Fabric's lake-centric, open environment with role-specific tools and persistent governance and security. This benefits supply chain leaders by enhancing collaboration and bringing efficiencies and capabilities to analytics in the AI era.

• Generative AI enablement: Integrating the Microsoft Fabric capabilities can enable the adoption of generative AI services to provide the proper governance foundation and methodologies. This can help automate processes and augment the retail supply chain productivity and economies of scale.

Advanced supply chain, sourcing, and product development capabilities are being enhanced with AI

Retail leaders have struggled to keep their inventory levels up due to the headwinds from the pandemic and the subsequent global supply chain disruptions. By integrating AI capabilities within the merchandising, supply chain, sourcing, and product development functions, retailers can be far more strategic and prescriptive. This will help build the resiliency to keep ahead of fluctuating consumer demand.

These examples demonstrate how Microsoft Fabric can be a strategic asset for retail supply chain leaders:

• Intelligent Supply Chain Hub: Leveraging Microsoft Fabric to help supply chain leaders navigate supply chain volatility, anticipate disruptions, and maintain seamless operations to be more predictive and prioritize challenges for quicker decision-making

• Visibility and Risk Management: Providing visibility and risk management supported by Microsoft Fabric, allowing for contingency planning for the future with forecasting and planning capabilities

• Supply Chain Strategy Enablement: Leveraging a fully integrated analytics solution that can handle everything from data movement to data science, real-time analytics, and business intelligence

• Data Strategy and Governance: Integrating Microsoft Fabric’s capabilities with data governance tools like Purview enables a data service platform that supports self-service options for business users, modernizing and streamlining decision-making processes in supply chain management

Starting the journey to supply chain transformation

Leveraging the advanced data and analytics that Microsoft Fabric offers, powered by AI capabilities, represents a revolutionary pivot in the retail supply chain operating model. Any business transformation and innovation cycle requires a crawl, walk, and run approach to ensure supply chain organizations adopt AI capabilities, executive sponsorship, and change management to achieve the North Star goals. It must align with the business goals, objectives, and strategies to unlock significant tangible value.

 AI is now more seamlessly integrated within essential supply chain processes, providing insights to enhance revenues, reduce operational costs, and drive outstanding customer experiences. Microsoft and Kyndryl are well-positioned to provide retail supply chain leaders with the tools and capabilities to keep up with digital-first customers and all the dynamic ways consumers shop and engage with retailers. This transformation can begin once retail supply chain leaders have the intelligent capabilities that AI provides to be far more strategic with their decision-making and planning.