Pandemic was a ‘Wake-Up Call.’ Just Don’t Hit ‘Snooze’
Hear that? That creaking sound? That might be your supply chain showing its age.
As we mark the one-year anniversary of the pandemic, 85% of consumer products companies and 88% of retailers report they had major supply chain disruptions in the past year. Not surprisingly, 66% of organizations foresee making significant changes to their supply chain strategy in the next three years.
“The supply chain is creaking around the world,” the Capgemini Research Institute quotes James Quincey, CEO of Coca-Cola, in a new report. “There are flashpoints when it’s getting a little harder to get ingredients through, whether it’s delays at the borders [or] the big changes in channel mix.”
In “The Wake-Up Call: Building Supply Chain Resilience in Consumer Products and Retail for a Post-COVID World,” Capgemini examines the stresses on companies in these two closely related industries. It quotes Walmart CFO Brett Biggs making a now-familiar observation: “The shift in purchasing patterns at the start of the pandemic amounted to three to five years of acceleration in e-commerce, really in a period of weeks and months.”
That rapid change is enough to make any supply chain start to squeak. The report says organizations would be wise to focus on three areas:
- Realign your supply chain strategy and adopt new ways to handle disruptions and assess supply chain resilience for agility, visibility, diversification and contingency planning. “While today’s supply chains have better visibility and resilience than ever before, they still aren’t resilient enough,” Bart Talloen, vice president of supply chain innovation at Johnson & Johnson, is quoted as observing. “Understanding the multidimensional nature of risk and creating a resilient supply chain is essential to minimizing risk, especially when disruptions seem poised to occur more frequently and with greater severity.”
- Industrialize automation across the entire supply chain, including warehouses and stores. Capgemini noted that its research demonstrated that warehouse automation can potentially increase profit margins by 8% via improved throughput and lowered fulfillment costs.
- Overhaul last-mile delivery to withstand disruptions with an optimized store network, flexible workforce policies and collaborative models. For example, Mark Tritton, president and CEO of Bed Bath & Beyond, said his company converted about 25% of Bed Bath & Beyond and buybuy Baby stores in the United States and Canada into regional fulfillment centers “to use our vast inventory resources to assign orders locally and deliver quickly.”
You can download the complete report here. “We don’t know what the future holds,” concluded Capgemini, sounding a little like an Allied platoon leader on the eve of D-Day, “but we do know it will be volatile.” Don’t lose heart: Lots of planning and hard work got us through that challenge; they’ll likely do the same in this instance, too. (Just don’t oversleep!)