COVID-19

Do you really know your supply chain?

Anna Clymo, Hannah Tharp
Retail Consultants

Covid-19 shone a very bright light on the cracks within the retail supply chain. Many retailers have found themselves stuck with outdated, inflexible systems, which are no longer fit for purpose, but are embedded in their organisation and extremely expensive to replace.

As consumer demand dramatically shifted overnight, retailers were forced into making quick decisions without a holistic view of their supply chain. Decision making without having access to important information is not a new problem. The current situation has highlighted the need to leverage technology to gain visibility, as well as how expensive a lack of information can be.

Supply chain systems are undoubtedly a very complex network that cannot be modified overnight, but the need for intuitive and connected technology has never been so evident. This article provides a guide to the questions retailers should be asking themselves, and how they can use technology to drive efficiency, without the giant price tag.

 

The recovery

As the UK battles through its 11th week of lockdown, most retailers have already implemented short term, transparency-increasing solutions. In order to survive, retailers have needed to work closer and more openly with their suppliers than ever before, with daily updates on production and demand being provided by both parties. Whilst necessary, in the future retailers will need to use data and technology to automate these activities, to help them drive efficiencies and increase profitability.

With the initial shock of the pandemic behind us, focus and effort must shift to increasing revenue and profitability. Retailers need to implement solutions that provide insight and flexibility, without breaking the bank. Through leveraging current systems, harnessing available data and investing in supply-chain partnerships, retailers can gain better visibility of their supply chain and improve forecasting accuracy, whilst making the supply chain leaner.

Many retailers have already made costly investments in new technologies. However, the question of whether they are getting maximum value out of them is debatable. Before looking elsewhere, retailers should review their current technology stack, understand what capabilities are available to better support the supply chain, and whether any of these can be linked to third-party partners.

In addition, the quicker retailers understand what data is available in their supply chain, where it is stored and how they can access it, the quicker they can enable end-to-end transparency and drive growth to recover from this crisis. Identifying the meaningful data, and a simple way to visualise it, will enable retailers and their suppliers, to react quicker and more efficiently to shifts in demand.

The big UK supermarkets continue to lead in this area and during this crisis we’ve seen Morrisons introduce a new platform that gives suppliers access to operational data. The platform collects data from ePOS and supply chain systems to inform both the retailer and its suppliers on how products are performing. This enables both parties to react quickly, increase availability, reduce waste and improve overall performance.

Obviously, leveraging current technology and data does not come without its challenges. Retailers may find they do not have the right people and processes in place to support these new capabilities. An investment in reviewing operating models, recruitment and training will be key to their success in the ‘new normal’.

 

The path to renewal

Once retailers have a grasp on this data, they must innovate quickly and drive further efficiency through investment in artificial intelligence and machine learning. As a starting point, they should consider what business challenge they are trying to solve, and where the gaps in their data might be. This will help them to start small and achieve quick results.

Over the past 11 weeks, we’ve seen those organisations ahead of the curve embark on partnerships to deal with volatile demand and drive transparency within their supply chain, such as the recent JD.com & Blue Yonder partnership. The US company will collate data circulating multiple channels, develop actionable insights and visualise these through interactive dashboards. This forecast data will be complemented with real experience and insights that JD.com harness every day. We expect to see more of these partnerships develop over the coming months and years. However, with the crisis hitting many hard, this may not be a feasible option for all.

At a minimum, retailers need to review their product lifecycle and start closing the data black holes in their network, for example the gap from warehouse to store. The end goal should be to gain end-to-end transparency of the supply chain, but they should start by connecting the dots and visualising real-time data. In doing so, retailers will see massive improvements in their ability to react to demand, forecast more accurately and reduce overall costs and wastage.

Like all new ventures, retailers will need to consider whether they have the right people and operating model in place to support this strategy, the right processes that enable these new ways of working, and the right infrastructure to support any new systems or capabilities.

 

Key to survival

For many, if not all, Covid-19 has been a catalyst for change long overdue in the retail industry. Using technology and data to build end-to-end transparency in the supply chain is no longer a nice idea but paramount for business survival. The benefits are clear, a leaner supply chain, reduced costs, reduced wastage, improved forecasting accuracy and reduced customer frustration. The retailers that recognise this, and react quickly, will undoubtedly have a shorter road to recovery and be able to put this crisis behind them.