Retailers recognize the need to integrate more digital automation into their supply chain processes.
According to a new survey of 100 global retailers from retail and supply chain enterprise software provider Blue Yonder and the University of Warwick, a majority of respondents are at an early stage of digital supply chain adoption.
The study benchmarked respondents’ digital supply chain readiness against four levels:
1. Infrequent autonomous process.
2. Periodic autonomous process.
3. Continual autonomous process.
4. Real-time autonomous process.
Respondents achieved an average score of 2.1, with only 12% reaching level 3 or above. However, more than 50% of respondents have the ambition to reach level 3 to 3.5 (24%) or 3.5 to 4 (32%) within five years.
More than eight in 10 respondents said additional human intervention was required to augment their planning decisions during the COVID-19 pandemic. This includes 41% who required human intervention to a high degree and 17% who required it for all planning decisions, as well as 25% who required it to a limited degree. Another 13% said there was no change in the amount of human intervention required to augment planning decisions and 5% they required none at all.
The survey also asked respondents about levels of automation in their pricing, demand and replenishment, cross-channel inventory and planning, and warehousing and transportation processes. Functionally, most respondents manage pricing through a promotional calendar with only 13% continually optimizing prices.
Thirty percent of respondents orient promotional pricing to increase sales while 28% aim to increase margin. Only 10% are able to manage across multiple factors such as margin and inventory clearance. Today, there is little investment in artificial intelligence (AI) and machine learning (ML), but over one-third of respondents aim to incorporate these capabilities.
Nearly half (49%) of respondents have very basic demand processes, with only 11% able to accurately sense and shape demand. This basic approach extends into replenishment, but 39% of respondents are looking to develop a digital twin to manage inventory with optimizations based on demand, cost and business strategy.
A majority of respondents plans inventory and planning channels separately, with over 20% maintaining discrete inventories. Only 10% of respondents operate fully automated warehouses, with 40% aspiring to do so over the next five years. According to Blue Yonder and University of Warwick analysis, significant labor issues during the pandemic are likely to have highlighted this issue.
The survey was conducted in March and April 2020, during the height of the COVID-19 emergency in many countries. The questionnaire was extended to assess the impact of the pandemic on global supply chains.