The retail industry has changed rapidly over the last year, with the last two months leading in volatility. Previous studies have shown that the supply chain was seen as “the next big thing,” but retailers are not effectively meeting everchanging customer attitudes and demands, especially during the COVID-19 pandemic. How can retailers use demand forecasting and product visibility to provide their customers with what they need, when they need it, even in unforeseeable situations?
The 2020 RSR Supply Chain Management Report, commissioned by Symphony RetailAI and independently conducted by RSR Research, received detailed survey responses from 74 qualified retail respondents, largely headquartered in the United States. The report examined the challenges, opportunities, internal inhibitors and technology enablers affecting the supply chain. While the research was collected prior to the onset of the COVID-19 outbreak in the United States, the implications of the results could not be timelier as supply chain needs have only been accelerated by this crisis. Here’s a look at three areas of the supply chain, with help from the research.
Demand Forecasting Creates Options for Proactive Retailers
Retailers are currently underestimating the opportunities demand forecasting can generate. The survey found that only 28% of under-performers cited “making sure our supply chain can keep up with demand” as a top challenge for supply chain execution, compared with 40% of the best performers. While it is difficult to successfully forecast for an event like this pandemic that the world has never seen before, utilizing purchase behavior during past flu seasons and other outbreaks to understand items that are typically impacted can produce beneficial information on what products to stock.
Even as retailers enter “react” mode, they can use AI in forecasting to predict which products the shopper will substitute for items that are out of stock. Will the buyer turn to an alternative option that is cheaper or more expensive? A nationwide name brand or the private label? Or will they buy an entirely different product altogether?
Private Labels Face Opportunities, Challenges
Retailers with private labels are at an advantage during COVID-19 because they have data-driven insights regarding the status and location of their products in the store.
These retailers know what’s out of stock and have the clarity across their supply chain to realize what products require an increase in production. However, these brands are obviously not immune to disruption. The optimal production of private label products will still rely on the availability of input materials as well as the maintenance of adequate labor forces that might be impacted by layoffs or social distancing measures in warehouses. The question from here on for retailers will be: Do we have the appropriate resources throughout all stages of the supply chain, whether in-house or otherwise, to generate the products customers need?
Retailers See Value of Supply Chain Visibility
The survey found that 76% of Retail Winners see “real-time visibility across the supply chain” as a focus area for improvement, compared with just 54% of average and under-performers. While inventory management is a challenge for all retailers, those that can easily determine which products are under- or over-stocked — and insights into warehouse and store shelf inventory — are going to be more successful. It’s not beneficial for a retailer to know what items are out of stock on the shelf while remaining blind to whether there’s inventory in the warehouse or currently being delivered to fill these gaps. Full visibility into the supply chain allows retailers to better serve their customers, building trust and loyalty during this trying time.
A Thank You to Essential Retailers
As retailers look to optimize their supply chains and navigate through this unprecedented time, there will be setbacks and delays, but we must remember to be patient and grateful. Without the product manufacturers, truck drivers, warehouse associates, store associates and managers who are working tirelessly to keep their communities safe and looked after, none of us would have access to the products we need.
Shaina Finch, head of supply chain solutions consulting, Symphony RetailAI