Study: Retailers lose ground on supply chain

Retailers’ confidence in their ability to handle supply chain issues has eroded since 2020.

According to “Retail Supply Chain: Navigating Through Rough Waters with Improved Agility,” a new study of retail supply chain issues from Retail Systems Research (RSR) and Blue Yonder, 41% of surveyed retail respondents say they can monitor capacity and add more when market conditions demand it, down from 56% in 2020. Four in 10 respondents can currently understand the impact of bottlenecks and prioritize which ones need to be addressed, down from 48% in 2020.

And 32% of respondents can currently simulate the effect of changes to the supply chain before implementation, down from 42% in 2020. The study additionally indicates the supply chain now has new demands put on it, including a greater focus on sustainability. More than nine in 10 (93%) respondents agree or strongly agree they must find more sustainable practices and products to satisfy changing consumer tastes, with 51% saying they strongly agree with that statement.

As part of the study, retailers across fashion, general merchandise (GM), fast-moving consumer goods (FMCG) and fashion/specialty/brands were asked to identify the top challenges that a more agile supply chain would help their business address, as well as rank the top three opportunities associated with an artificial intelligence (AI)-enabled supply chain. Results included:

• 65% of FMCG retailers identified creating more flexible sourcing strategies due to geopolitical and environmental issues as their top concern.
• 52% of GM retailers said rapidly changing consumer demands that undercut ability to buy big and lower costs was their chief concern.
• 67% of fashion/specialty/brands retailers cited the need to be able to monitor and adjust the supply chain in real-time as their top challenge.
• 60% of FMCG retailers said predictive models to anticipate supply chain disruptions at the individual SKU level and recommend cost-optimized corrective actions.
• 41% of GM retailers said real-time and accurate visibility throughout the supply chain to better control timing and cost.
• 38% of fashion/specialty/brands retailers said the ability to leverage external influences like macroeconomic factors, weather, consumer sentiment, demographic trends in mid-to long term forecasting to drive supply chain decisions.
• 60% of all respondents are budgeting or have planned projects focused on current demand vs. forecast analysis & re-balancing.

[Read more: Study: 98% of retailers having supply chain issues; will last beyond 2022]

“The pandemic has been hard on everyone, and it has only accelerated changes needed in the supply chain to meet the dramatically new and different ways that consumers shop,” said Brian Kilcourse, managing partner, RSR Research. “While both over-performers (‘retail winners’) and their competition are equally eager to get past disruptions, winners haven’t given up on their relentless search for new efficiencies. In fact, achieving ‘operational excellence’ is a core strategy for retail winners, and recent disruptions on both the customer and supplier side of the operational model hasn’t changed that at all.”

“Supply chain disruptions are top of mind as we head into the holiday season, but the weeks following this season may prove to be even more challenging for retailers,” said Edward Wong, senior VP global retail sector leader at Blue Yonder. “Retailers have benefitted from strong consumer spending so far, but inflation and supply chain delays are threatening to slow demand and weaken pricing power, potentially leaving retailers with a mountain of unsold inventory come January 1. The good news is retailers can employ AI-centric supply chain solutions to navigate these challenges.”

RSR conducted an online survey in the summer and fall of 2021 and received answers from 90 qualified retail respondents.