Forty-one percent of surveyed retailers identified an inability to adjust or respond to fluctuations in demand as an obstacle in 2021, according to RIS’ Annual Supply Chain Technology Study.
The study benchmarks the state of the retail supply chain in 2021, identifies the technologies retailers view as being keys to success in the near-term, and offers recommendations for ways retailers can build supply chain resilience against the next major disruption.
It’s been a challenging year for retailers and brands, with raw materials shortages, erratic weather events, carrier capacity constraints, port congestion, factory closures, and rapid fluctuations in consumer demand culminating in a nightmare of supply chain instability.
Building a supply chain capable of adjusting quickly to market fluctuations is particularly important now as retailers experience a rebound in consumer demand following the worldwide shutdown caused by the pandemic. While COVID-19 is still a major concern for most governments, state and federally imposed lockdown regulations have mostly lifted.
A lack of supply chain agility and responsiveness to demand can cause a bullwhip effect of delays, additional costs, and problems with carrier or distribution capacity, among other issues.
In an effort to future-proof retail supply chains against disruption, retailers reported plans to devote 30% of their tech budgets to improving overall supply chain capabilities.
The top three technologies seeing the greatest amount of investment in the next two years are fulfillment at 85%, replenishment at 84%, and distributed order management or orchestration systems at 80 percent.
Adjusting supply chain operations to support omnichannel fulfillment – with a focus on the growing popularity of ecommerce – is also a top priority among surveyed retail executives.
Over 30% of retailers plan to partner with home delivery services providers, and a little under 30 percent plan to invest in micro-fulfillment centers.
Adding micro-fulfillment centers as additional nodes in the supply chain can help retailers more efficiently fulfill online orders. Retailers including American Eagle Outfitters have started leveraging brick-and-mortar store locations as micro-fulfillment centers to reduce the costs associated with direct-to-consumer (DTC) delivery and accommodate tight delivery timelines.
Despite these issues, retailers stated they do see opportunities in today’s retail environment to increase sales and margins. Seventy-percent of retailers said optimizing the supply chain for speed can help to boost revenue, while 56 percent said shipping from stores to consumers can help to increase margins.
A little less than half of retailers see buy-online for in-store pickup (BOPIS) as an opportunity to achieve higher margins.
Ultimately, most retailers view increasing automation, speed from distribution center to consumer, and predictability of demand as the most important areas for retailers to focus on for a more resilient supply chain end-to-end.
As part of the report, RIS identified 10 recommendations based on key findings in the study that can help retailers engineer a more resilient supply chain.
Chief among these recommendations is to diversify the supplier base: a diverse network of supplier partners expands retailers’ options during times of disruption and reduces the likelihood that a shortage or factory closure in one region will significantly hinder the supply chain.
Report authors also recommended retailers create real-time inventory visibility, devote 30 percent of tech budgets to supply chain maintenance, and invest in distributed order management and replenishment systems, among other suggestions.
Retailers can leverage the Bamboo Rose Multi-Enterprise Platform to diversify their supplier base, without introducing additional quality and compliance risk, and respond efficiently and effectively to fluctuations in demand.
The platform includes B2B Marketplace, Product Lifecycle Management, Sourcing, Agile Purchasing, and Global Trade Management solutions designed to automate key tasks throughout the retail supply chain, help retailers easily identify new supplier partners to diversify their network, and enable the complete supply chain visibility necessary to achieve resilience and agility.
Ready to build a more agile and resilient supply chain? Try the Bamboo Rose platform today.