One of the world’s leading jewelers is tackling digital transformation

There’s a phrase that’s been repeated more times than most of us can count: In a matter of months, COVID accelerated trends that might otherwise have taken years to unfold. Pandora, the Danish jeweler known for its affordable, high quality jewelry that empowers self-expression and collectability, and one of the world’s largest jewelry brands, illustrates that phrase.

The company was in the midst of a digital transformation when it launched its digital hub in early 2020, just before the onset of COVID. At the time, the jewelry business, including Pandora, was still primarily a brick-and-mortar business. For example, Pandora jewelry is sold on six continents, in more than 100 countries, through over 6,700 points of sale, including more than 2,600 concept stores. “When it came to our stores, we focused on serving the consumer, who would leave happily with our product in hand,” says Mariane Heidingsfelder, Vice President of Supply Chain Technology and Innovation for Pandora Jewelry. “The stores were our footprint. We had a website and brand pages, but we weren’t focused on the consumer experience online.”

She adds: “That was pre-COVID.”

It’s a strategy that had served Pandora well for years. The network included two manufacturing facilities in Thailand and distribution centers like a European DC in Hamburg, Germany, to replenish stores and ship to wholesale partners. 3PLs handled an e-commerce channel that represented a small share of sales.

But, of course, COVID changed all of that when Pandora had to close most of its stores yet still meet customer demand for its products. The answer was to pivot to a digital hub the company launched just prior to the pandemic, including inventory and order management solutions from IBM Sterling.

A charmed history
The pivot to a digital supply chain was not Pandora’s first pivot. According to the company’s history, Pandora was founded in 1982 in a small jeweler’s shop in Copenhagen by Danish goldsmith Per Enevoldsen and his wife Winnie. The couple frequented Thailand in search of unique jewelry they could import. By 1987, they had closed the shop to focus on distributing to wholesale clients. That year, they also hired their first inhouse designer to create unique jewelry. They began manufacturing the company’s designs in Thailand in 1989.

Pandora launched its best-known product, the collectible and very personal charm bracelet, in 2000. By 2004, Pandora was not only operating in Denmark, but had expanded into the U.S., German and Australian markets. To keep up with the demand for its popular products, Pandora opened three more manufacturing facilities in Thailand between 2005 and 2010. Today, it is one of the world’s three largest jewelry brands, with the collectible charm bracelet the cornerstone of the product portfolio.

For most of the company’s history, it focused its sales efforts on the personalized, high touch customer service that comes with in-person shopping. The web site was more informational than an omni-channel hub. “I joined Pandora from the shoe and apparel business, which is very different from selling jewelry,” says Heidingsfelder. “Prior to COVID, the e-commerce share of the jewelry market was low.” With respect to Pandora, an important part of the sales process was helping a consumer select the right charms for her bracelet. “It’s difficult to replicate that experience online,” Heidingsfelder notes.

At the same time, just as the company pivoted from a small retailer to a wholesale distributor, and then from the Scandinavian market to the global market, Pandora realized that consumers were becoming more comfortable buying other high touch items online, like furniture and cars. A digital pivot was on the horizon for the jewelry business. “Our CEO and CTO were visionaries who wanted to be the front runners in jewelry sales offline and online,” Heidingsfelder says.

Pandora began to work on this new strategy in the year before COVID . Part of it was implementing technology that would create the foundation upon which to build the digital hub. Salesforce.com, for instance, is the customer-facing application while the company implemented a portion of IBM Sterling’s order and inventory management applications to allocate the right inventory to stores and fulfillment centers. The idea was to roll this all out in 2020, with the digital hub coming to life just at the start of COVID, and then build from there over time. Suddenly, that time frame was accelerated.

Keeping the wheels turning
With stores closing around the world, Pandora confronted the same question that other retailers were asking: How do we continue to serve our customers with our jewelry? And, given the exponential increase in the demand for e-commerce orders, how do we develop e-fulfillment capabilities. It was a little like the proverbial changing a flat tire while speeding down the highway.

One part of the strategy was to replicate the traditional customer experience online. To do that, Pandora kept its sales staff employed throughout the pandemic, even if they were now working from home. In key markets, they activated remote shopping assistance that allowed salespeople to help customers select jewelry just as they would in the store. AR technology allowed customers to virtually try on items such as rings. In geographies where it was permitted, sales staff worked in stores to fulfill click and collect orders for pickup in store and curbside pickup. “Sterling helped us allocate inventory across locations for click and collect,” Heidingsfelder says. “We don’t have true distributed order management yet, but Sterling also helped us orchestrate where it made the most to fill an order for the customer.”

The company didn’t have the staff or capabilities to effectively do ship from store, so Pandora worked more closely with 3PL partners that were already doing e-fulfillment. That presented another allocation challenge. “In the past, most of the allocation was to brick-and-mortar stores,” Heidingsfelder notes. “We had to work closely with our production site in Thailand and better utilize our data to improve our forecasting. And, we increased our allocation runs to our 3PL partners from once a week to three times a week to get them fresh inventory. This was a huge effort.”

Finally, Pandora opened new facilities, including a location in Las Vegas solely for e-fulfillment in the U.S. and in a matter of months added B2C capabilities to the European distribution center in Hamburg that serves Germany, Austria and Belgium.

Becoming CX focused
If you read Gartner’s Top 20 Supply Chains for 2021, you can’t help but notice how often a new metric appears in the write-ups about the best supply chains: CX, which stands for customer experience. In those supply chains, cost is still one of the top five drivers of the supply chain, but led by Jeff Bezos and Amazon, delivering a customer experience is now number 1.

Going forward, Pandora has laid out a three-year strategy with digital investments that will strengthen its CX chops. “Growth is important, but we are putting personalization, omni-channel experience and the consumer at the center of what we do,” says Heidingsfelder. “We are working to break down the silos between our retail, wholesale and e-commerce channels to deliver a world-class customer experience.”

There are roughly five elements to that strategy:

Product availability is king. That will require continued investments in planning and forecasting technologies and capabilities. DOM will be part of that strategy.

Focus on speed to the consumer. That includes strengthening last-mile capabilities in markets where the customer is looking for same day/next day delivery. To that end, Pandora is investing in a new TMS and in carrier integration solutions.

Robust fulfillment is important. This goes hand in hand with speed to the consumer. “We are creating a multi-node network strategy, where we utilize our partners, our own facilities and our stores,” Heidingsfelder says. “We have been working with 3PLs on e-fulfillment but we want to bring B2C capabilities inhouse and work from pooled inventory stock where possible.”

Personalization is key for many customers. Pandora is looking for better ways to track the status of deliveries, but also to communicate messages from a gift giver to the gift recipient. “We just went live in Italy with an application to provide this online,” Heidingsfelder says.

Sustainability has to be at the center of the supply chain given its importance to consumers.

Consistency. Pandora will deliver what it promises the customer at the time of the order.

Looking forward, Heidingsfelder says that Pandora needs to do two things to execute that strategy. “We need to build upon the foundation we’ve put in place, and do so without losing innovation,” she says. “One of our core values is we dare and the other is we deliver. In omni-channel, we want to do both.”

Want to learn more about Pandora’s digital transformation? Then register to attend the NextGen Supply Chain Conference, where Mariane Heidingsfelder will be the keynote speaker on Wednesday, November 3rd. NextGen is a virtual event November 2 – 4, 2021.

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