How Retail is using Smart Supply Chains to Recover Post


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Sep 10, 2023

How Retail is using Smart Supply Chains to Recover Post

Recent years have brought global upheavals that have rocked the economy, with

Recent years have brought global upheavals that have rocked the economy, with the retail sector at the forefront of these shocks. Retailers now juggle complicated inventory planning, unpredictable freight rates, and labor issues to name just a few of the balls in the air. They face common hurdles, from inventory shortages to surplus warehouse space and staffing complications across the board. These roadblocks create a daunting puzzle for retailers, but they're not without solutions. The glimmer of hope? Technology. It stands ready to buffer these impacts and empower businesses to respond and adapt effectively.

When global lockdowns shook consumer demand like an earthquake, inventory planning strategies turned on their heads. Essential goods, once mundane, were suddenly gold dust, leaving bare shelves in their wake. In contrast, non-essential items gathered dust as consumers tightened their belts, focusing on necessities. Then once the floodgates opened, a surge of demand for everything discretionary pushed by stimulus, remote work, and pent-up demand led to yet another sudden seismic shift. These stark shifts highlight the fickle nature of consumer behavior amid crisis and the need for businesses to be agile.

Marc Tomkinson, the new CTO of C3 Solutions, a provider of Truck Dock Scheduling and Yard Management Solutions, provides insight into this situation. "Even three years on, the ripples of the crisis are still felt deeply. The supply chain has been wrestling with a series of complex disruptions - from factory closures to labor market constraints, and the ripple effects of a volatile economy," he explains. "In such a tumultuous climate, retailers found themselves navigating uncharted territories, striving to secure any available products amidst the uncertainty."

These shifts in consumer behavior resulted in a paradoxical situation for many businesses, where they were dealing with simultaneous inventory shortages and excess stock. Supply chains, which had heavily relied on global trade networks that were disrupted by the pandemic, found themselves strained and struggling to meet the new demands.

Adding to these challenges was the volatility experienced in ocean freight rates. With disruptions to international trade routes, strained shipping capacity due to increased demand, and intensifying port congestions, freight rates rose sharply. However, as countries started to recover and the initial panic subsided, these rates experienced a dramatic fall. This rapid swing required retailers to adapt their inventory strategies once again, leading to a tumultuous cycle of inventory shortages followed by periods of overstock.

These periods of chaos have had far-reaching implications for the retail sector. Some businesses have seen their bottom lines severely impacted due to the cost of unsold inventory and the burden of high shipping costs. On the flip side, consumers have had to grapple with inconsistent product availability and occasionally inflated prices as retailers attempt to recover their losses.

So, how can retailers navigate these challenges and turn the tide in their favor? Three potential solutions stand out: supply chain diversification, strategic investments in technology and data analytics, and a renewed focus on sustainability.

Firstly, supply chain diversification has emerged as an essential strategy. The recent disruptions have highlighted the dangers of relying too heavily on a single source or region for supplies and distribution. By diversifying supply chains, retailers can better mitigate risks associated with trade disruptions and freight rate volatility. "Just-in-time inventory isn't obsolete, it simply needs to adapt to the current landscape," asserts Tomkinson.

Secondly, investments in technology and data analytics have proved critical for managing the complex landscape of inventory planning and freight rate fluctuations. By leveraging the power of data analytics and artificial intelligence, retailers can gain valuable insights into consumer demand patterns, predict future trends, and make informed, data-driven decisions regarding inventory management. This, in turn, can lead to increased efficiency and profitability.

"We have a data science team that is dedicated to helping customers continuously manage their inventory more effectively," said Eduardo Pelleissone, President, Americas and Asia Pacific, GXO. "Our advanced forecasting capabilities enable our clients to better manage sales demand during key retail events, like those during peak holiday season. We also help customers position inventory closer to their end consumers through our GXO Direct network, which provides flexible warehousing space in key markets as demands change. In addition, we've been able to consistently add value to our clients' bottom lines through automation and advanced software."

Moreover, Eduardo explains that "effective data analysis can also significantly enhance workforce planning and resourcing. GXO uses automation to streamline the process of employee onboarding and training, and manage labor needs in real time, down to specific aisles or picking stations. Together with artificial intelligence we’re able to optimize operations by forecasting volumes and having the right teams in place."

Lastly, but certainly not least, promoting transparency in the supply chain can significantly benefit the transformation process. Retailers must maintain vigilance to avoid unnecessary overspending on shipments due to the often-opaque nature of the industry. A transparent supply chain not only reduces costs but also enhances trust between retailers and their suppliers, leading to more robust and resilient business relationships.

In an era where unprecedented disruptions are quickly becoming the norm, retailers are facing a new reality filled with complex challenges. However, rapid advancements in technology offer a lifeline. Through a combination of automation, intelligent labor forecasting, increased transparency, and enhanced inventory data analytics, retailers can better navigate these tumultuous waters. These strategies not only provide the means for retailers to move forward amidst disruption, but they also deliver invaluable lessons for the future.

While the challenges are many, the opportunities for growth, resilience, and innovation are equally plentiful. By embracing these strategies and integrating them into their operations, retailers can transform these challenges into steppingstones towards a more resilient and profitable future. The retail landscape may have changed, but with adaptation and innovation, retailers can not only survive but thrive in this new era.

From Reset to Recharge: How Retail is using Smart Supply Chains to Recover Post-Pandemic