Watch for the Disruptive Trends in Retail Supply Chain to Master The New Normal

Disruption in Supply Chain will Count on Transparent Practices

With new technologies sweeping in warehouses in the new normal, the practices like automated material handling vehicles, advanced robotics, and more, emerged instantly after the pandemic. For fast delivery, retailers chose to sell products through warehouses like Amazon warehouse, even with less profit margin to retain customers.

The supply chain in various industries is being worked upon on how to work and deal with current rising customer expectations. Digital transformation advancement brought customers to the forefront of the company’s operation and caused a reduction in procurement costs since last year. According to Business Wire report, the global supply chain management market size was valued at $15.85 billion in 2019 and is projected to reach $37.41 billion by 2027, growing at a CAGR of 11.2% from 2020 to 2027.

The companies who didn’t see disruption need to clear the supply chain visibility in terms of planning, integration and execution and improve internal coordination.

How Can Retail Supply Chain Match with the New Normal?

A frenetic way of managing the supply chain is required to make the process seamless and channel them. Retailers need to be cautious about the increasing demand of customers, establish connectivity with them through various channels, and invest in data management systems, transportation, and other management.

1. Customer Reach: Being omnichannel requires a supply chain to be very flexible, which can be done by making products available at all channels. For most non-essential retails it becomes difficult to maintain this smooth supply.
2. Logistic Administration: Retailers struggle with logistics and freight when it comes to seasonal demand-supply variation. The delivery in time is key to manage these seasonal expectations of customers which affects the turnover and promotion. Having end-to-end visibility of the process and keeping it transparent with customers helps to enhance their supplier-customer relationship.
3. Replenishment & Allocation: Order management, product flow & inventory management are core responsibilities of supply chain management and they must be synchronized with merchant distribution centers, customer service centers, and other units.

Supply chain management is difficult as it gets pressurized with customer expectations in a new normal with lots of units trying to incorporate different practices with changing needs.

Imperative Practices Bringing Radical Changes in Supply Chain in New Normal

Exponential growth in e-commerce has improved the customers’ ease of buying things but has made the retail industry more cautious about the supply chain management to keep pace with e-commerce. The customers’ expectation of getting the receivables has changed from days to just a day and for brands it’s difficult to keep the promise because of safety guidelines, social distancing, and work from home. However, some best rules can be practiced.

1. Resiliency in Supply Chain: Resiliency in supply chain is significant if the retail industry embraces digital transformation in new normal situations. There exist issues that need to be resolved to build resilience in the supply chain in retail as the pandemic has brought more focus on SC risk.

• Identifying the vulnerabilities like in compliance, technology, logistics, and workforce is vital as it also affects your business metrics.
• Keeping a check on different functions like supplier network, inventory plans, warehouses, etc. also maintains resiliency in the supply chain to a great extent.
• Identifying risk factors is a good step for team planning and working on hypothetical queries like what if demand rises and would you be able to fulfill it? Such questions would help to mitigate the risk of product supply.

2. Micro-fulfilment Centers (MFCs)/ Stores and Connectivity: The last mile connectivity is a need at the time of crisis, especially for retail supply chains which can be done through better connectivity and establishing minor stores, what is called “Micro-fulfilment Centers (MFCs). With e-commerce growing exponentially, the transparency in delivery mechanics and using IoT enabled AL & ML must be praised for efficiencies in delivery routes.

The key component of such stores is re-organizing the warehouse stores which will be central to all these micro-fulfillment stores and will alleviate the pressure on the supply chain.

Walmart, the world’s largest retailer has established several MFCs and would be installing 100 more MFCs in near future. According to Digital Commerce 360, Walmart’s online sales increased 79% in the fiscal year 2020.

1. Replan Cost-base: COVID-19 had put a heavy burden on retailers and forced them to think about cost reduction which affects the functionality of other aspects i.e. if you wish to reduce the cost of products’ movement, it may affect the availability of products at the store and in turn, add ad-hoc transportation or distribution cost. So working on a cost-reduction strategy is sensitive.
2. The retail supply chain had already started cost-saving techniques like establishing “Dark Store”, “Micro-fulfilment Centers (MFCs)” and other stores as distribution centers.

Clarity in Agenda and Retail Practices Needs to be Revamped

In the new normal scenario, the agenda of retail SC has changed and led to focus towards more clear functionality in different segments. A silver lining of digitalization exists that will help retailers achieve these ambitions and aid in continued commercial growth.

COVID19 has exposed weaknesses in the globalized SC management system, and in response, retailers must fundamentally rethink the goal. A redefined supply chain will be a key business driver. Improving customer satisfaction without creating barriers to the workforce will be the most important factor in the success of an agile company.

About Techment Technology: Techment Technology aims to work towards bringing positive changes in different industries. We are a development company that believes in providing products that work seamlessly and provide digital solutions in supply chain and logistics that meet the industry benchmark. For a free consultation contact us.