Top 7 Trends in Retail Supply Chain Strategy in 2022… and What to Expect in 2023
As geopolitical events cause major supply chain disruptions, consumer preferences rapidly change, and aging infrastructure reduces efficiencies, assessing your supply chain strategy and infrastructure is vital. Below are the top 7 trends we are seeing in Retail Supply Chain Strategies with an eye on improving efficiency and profitability. Retail Supply Chain challenges today will have lasting, downstream consequences tomorrow.
We are halfway through 2022, and it seems as one supply chain constraint is resolved, more crop up. For both consumers and businesses, supply chain bottlenecks and inefficiencies have caused profit losses, price increases, empty store shelves, and employee retention issues—and there is no end in sight.
1. Use of Retail Stores as Distribution Centers
One growing trend is to leverage your retail stores as distribution centers. This provides several benefits including minimizing distribution/freight costs and delivering goods more quickly to customers (by allowing customers to buy online and pick-up directly in stores). Also, the cost of building new distribution centers is significant so leveraging existing real estate can reduce overall costs. This does introduce new concerns including increasing last mile delivery/freight charges, visibility of accurate inventory across all channels, and additional infrastructure investment.
2. Supply Chain Automation
Supply Chain automation is a big trend and will continue to grow, helping organizations alleviate the types of disruptions we are seeing now. The implementation of predictive and prescriptive analytics — as well as advances in big data, and algorithms are changing the way business is done. Organizations that can successfully implement supply chain automation will benefit from greater visibility, data-driven decision-making, execution efficiency, predictability and profitability.
3. Talent Acquisition and Retention Challenges
Acquiring and retaining talent has been a prominent issue in all sectors of the economy, and the supply chain is no exception. The burden of staying fully staffed has become increasingly difficult since 2020. Covid left a lot of the workforce at home and a strong portion of them have not returned to the work force, leading to the Great Resignation. By July of 2021, there were over 10.9 million unfilled job positions. These unfilled positions coupled with low unemployment has encouraged many employees to quit and pursue better opportunities. More than ever, companies must now look at increasing pay, becoming more flexible and providing meaningful benefits. In addition, they must find creative ways to reward their employees while looking for new ways to incentivize them as well. This is being accomplished through the likes of stock sharing, company career path, and recognition programs.
4. Digital Supply Chains
Digital supply chains will continue to be essential improving visibility, resilience and agility. Digitized networks use technology to augment workflow and data collection — meaning that this trend has ramifications on both talent and data infrastructures. Successfully digitizing supply chains requires large-scale sensor implementation via the internet of things; shared internal and external interfaces, such as cloud-based networks; and process automation and verification. The adoption of tools such as blockchain, artificial intelligence and machine learning will meaningfully improve decision-making.
5. Artificial Intelligence and Machine Learning
Artificial intelligence (AI) and machine learning are rapidly changing the ability for supply chains to adjust to disruptions, and improving the way that people, processes and systems are integrated to reach the end-goal. In this more collaborative approach, we are seeing a blending of human touch, technology, and process. Supply chain processes such as planning, demand management, and fulfillment continue to change, and as machines learn, improved insights will be discovered.
6. Shifting Consumer Expectations and Behaviors (B2B and B2C)
Consumer behavior shifted when Covid-19 began shutting down businesses, schools and causing a work-from-home boom. New tech-savvy buyers now expect a certain level of control and visibility into the status and availability of their deliveries. The pandemic has permanently altered consumer behavior, and curating the solutions that meet this new need is the key to modernization.
7. Greater Desire to Future-Proof Business Operations
The pandemic illuminated the need for a business continuity and risk management plan. More and more companies have adopted a formal supply-chain risk-management process, and will continue to fortify themselves against future risks. After living through the past two years, business leaders are re-evaluating operations, streamlining management and seeking out strategies that boost business resilience. For many organizations, future-proofing will mean automating processes and gathering data. Trucking businesses, for example, have huge carrier and payment operations. There’s an amazing opportunity with the right partner to strengthen resources to support these businesses and provide data to digitize the back office, so there’s better visibility, management of cash flow and actionable insights.
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