Report: Retailers Apply Lessons Learned in Pandemic
More than 80% of retailers saw increased demand for their products during the pandemic, but 34% of them could not meet this new demand because they ran out of stock and could not quickly replenish it. As a result of the disruption, a new survey has found, retailers realize that they need to have a Plan B ready, and so four out of five of them are changing their approaches to managing stock.
“This isn’t to say that retailers did not plan for supply chain disruptions or disregarded risk prior to the pandemic, but that the vast majority of their attention was so focused on perfecting Plan A that it significantly detracted from how much time, resource and capital was invested in back-up plans,” commented Claire Webb, managing director of Advanced Supply Chain Group (ASCG).
In “Retail Supply Chains in the ‘New Normal,'” ASCG said five trends have become evident as retailers work to respond to the “seismic shifts” of the pandemic and prepare against future disruptions. Among practices they are taking a hard look at: just in time. Webb predicted that reliance on JIT “will have to change because it’s less able to cope with increasing unpredictability — it quickly becomes ‘just out of time.’ Supply chains will evolve as retailers aim to better mobilize stock, keeping it more agile to [share] its value across multiple routes to market.”
The 5 trends concern:
- Rethinking current lead times — “Consumers want to know when they’ll get their products and expect brands to deliver on time, every time,” ASCG said in its report. “Retailers need to be able to commit to realistic timings to ensure they build and retain consumer confidence, which is extremely valuable during times of economic uncertainty.”
- Localizing stock — ASCG said retailers are looking at increasing the amount of stock held stock in local fulfilment centers or are expanding their own warehousing footprint. “This trend will see retailers evolve from tying up capital in local stock to better mobilizing supply chains,” it said. “They will want to maximize availability of products, while minimizing the risk of stock depreciation and obsolescence.”
- Gaining real-time visibility — Retailers are seriously considering new technologies to help them better manage inventory levels.
- Optimizing stock — Whether or not there is an ongoing disruption like COVID-19, customer demand can be hard to predict. ASCG said 33% of retailers are diversifying the stock they sell, with a similar percentage concentrating on offering higher-margin products.
- Defending against disruption — A third of those surveyed told ASCG they were developing contingency plans to protect against future supply chain disruption. These include tactics such as sourcing products from more suppliers.
“Retailers are dealing with the disruption and ongoing economic uncertainty of COVID-19 by making their stock work harder for their bottom lines,” the report concluded. “By improving stock performance and accuracy, they are able to extract maximum value from every sale and boost the chances of repeat purchasing across an ever-growing number of channels.”
To download “Retail Supply Chains in the ‘New Normal,'” click here.