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One of the most significant innovations in customer engagement since online shopping began has been the recent surge of conversational commerce devices — devices that can interpret and act on voice commands to conduct business. Simply say “add broccoli to the shopping list,” for example, and it appears. With the Garmin Speak, a navigation device linked to Amazon.com Inc.’s digital assistant Alexa, you can do this even while driving. And Amazon’s Echo can notify you when your packages are out for delivery.
Sales through voice-enabled digital assistants such as Amazon’s Alexa and Google Home are projected to skyrocket from $2 billion in 2017 to $40 billion in 2022. One study shows that fully 30% of owners have used their devices to make purchases. This type of commerce has the potential to transform the consumer supply chain.
In the future, the conversational digital supply chain will use technologies such as machine learning and internet of things (IoT) sensors to improve market responsiveness and agility. Its implications will go far beyond the convenience of placing orders via voice commands.
Future Retail Applications
At the retail level, for example, beacon-activated microphones will allow store employees to reorder merchandise simply by speaking aloud. Using Bluetooth beacons, the microphones enable voice commands to be automatically attributed to specific people. By capturing these demand signals earlier than cyclical ordering systems do, retailers and their suppliers will gain new insight into demand profiles to which they can tailor their supply operations.
Similarly, when customers note missing items in a store, they could verbally alert the system using the same technology. This could help solve the “phantom inventory” problem, in which unavailable items are mistakenly shown as available — a major cause of lost sales.
Another application is joining voice-enabled devices such as smartphones or dedicated assistants with IoT sensors to deliver product recommendations or special offers, thus enabling a vendor to collect valuable information on product demand for new lines. A similar service, Amazon’s Echo Look, has been selling “by invitation” for almost a year, with moderate success. As the technology improves, we expect this type of service to become more effective.
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Here’s how it might work: While you converse with a digital assistant, the camera on your smartphone sends images of the jacket you are wearing to its retailer. The retailer then analyzes the images and combines that analysis with other data, such as weather forecasts and fashion trends in your area. Details of your purchasing history could also be taken into consideration. The digital assistant would then send you images of garments by the same brand that you can preorder, along with a special coupon as an incentive. Details of the transaction thus become part of a demand pattern analysis, to be used in the subsequent development of demand forecasts for the garment.
The fashion industry is developing very rapid and responsive supply chains. Fast-fashion retailer Zara, for example, can conceive a new design and have it on the shelf in a matter of weeks. Enhanced demand pattern analysis would enable retailers to further refine their forecasting, pinpointing the most popular designs even before manufacture.
Future supply chain applications of conversational commerce will extend beyond the retail environment. For example, voice technology can enable real-time truck/conveyance rerouting. This is already possible, even if only rudimentarily, with the Garmin Speak. But its possibilities should be extended.
Important milestones in the supply chain, such as the completion of loading or delivery of a shipment, could be communicated verbally into devices. Consider, for example, receiving a damaged shipment of merchandise. It would be far easier to report the problem via speech, noting relevant details such as weather conditions, the state of the packaging, and how the shipment was handled. This information could be tied to other available information such as video feeds or GPS locators.
Conversational commerce should also be applied at a strategic level in the supply chain. One person already taking advantage of this is Kaan Terzioğlu, CEO of Istanbul-based telecommunications company Turkcell. Every morning, Terzioğlu asks Alexa to give him a briefing on the company’s key indicators and selected metrics, including those that pertain to the supply chain. He redirects requests and alerts to other executives via email and interrogates Alexa about improvements throughout the day. Coordinating Alexa with tablet visualizations enables supply chain visibility and the identification and evaluation of any bottlenecks in real time. Terzioğlu and his executive team can then converse with supply chain partners for detailed diagnosis and strategy development.
We have seen a surge of hardware and artificial intelligence mass-adoption successes. For example, point your smartphone camera at a street sign when traveling, and it can instantly translate into your native language through Google Translate. The high-resolution camera on Apple’s iPhone X records extremely detailed images and high-definition videos, even if your hand is unsteady, and it can automatically scan QR codes and documents. The miniaturization of devices such as AirPods, Apple’s wireless Bluetooth earbuds, makes them more practical for commercial operations.
More possibilities will become available as technology and business process innovation advance. Future systems could gauge customers’ moods and propensity to buy by analyzing voice patterns. Such data would enrich analyses of product demand patterns and demand forecasts. At the MIT Auto-ID Lab, we are researching cheap brain interfaces that may eventually directly sense brain activity for further analysis of attention patterns of supply chain employees. A “Thinking Supply Chain” may be only a few years away.
As conversational commerce becomes embedded into company operations, it has the potential to bring supply chains closer to customers, employees, and senior management. Supply chain practitioners must address certain challenges in order to reap the full benefits, however. Executives will need to learn how to fit conversational commerce into their short-term strategy. To create integrated, end-to-end systems, companies may need to integrate such message systems with digitized supply chains.
The time to start talking about how you want to design your conversational supply chain is now.