The Latest Supply Chain Conundrum
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Today, retail supply chains are fragile, and agility (the ability to quickly adjust to changes in demand) and resiliency (the ability to respond to supply chain shocks) have become boardroom issues, even while challenges on the consumer side are still being addressed.
We speak frequently on this topic, and in order to keep our opinions informed, we must continually survey retailers to find out there they are at. As a result, we’ve just published our annual supply chain report. It analyzes both sides of the problem: surveying 87 qualified retailers and over 1,000 US-based shoppers to gain their insights:
The following are some of the highlights of what they told us:
- When it comes to external Business Challenges, retailers express concerns bordering on alarm that legacy supply chains cannot support the growth in their businesses. 81% say they are growing faster than their supply chains can sustain. Even more, they suspect that all the variable costs associated with supporting new consumer shopping behaviors are undermining profitability – and raising retail prices to cover those variable costs is not a workable solution. They are in a very difficult position.
- While shoppers grow frustrated, and report that they feel little has been done to solve for this growing host of problems, retailers do feel as though they are making real progress on the planning In the Opportunities section of the report, 57% of retailers say improvements in forecasting analytics and the new data available to retailers have had a profound impact on the precision with which planners can forecast consumer demand.
- Despite being presented with a long list of Organizational Inhibitors to best identify what’s keeping them from doing more, nearly half of the retailers in our study select the lack of top-level support as a top-tier challenge. With all of the attention supply issues are currently receiving, how can this be? The answer relates to measurement tools: 41% of retailers say the metrics they use to gauge success are old and irrelevant. Many executives likely have no idea how poorly their own supply chains are performing, as metrics based in “efficiency ratings” may be telling them everything is just fine.
- It is surprising how quickly artificial intelligence and machine learning have become high-value technologies for retailers. In the wake of all the changes and disruptions that have occurred since 2020, retailers are viewing AI/ML as the best technology to help them address several nagging challenges – but most prominently, improved forecasting. In fact, 81% of the best performing retailers have already begun implementation of some type AI-based forecasting Technology Enabler to develop multiple demand generation scenarios.
If you haven’t yet had a chance to read the full report, it is available for free to all at the following link. It’s a good one!