Unpredictable market dynamics force businesses to be nimble. But how can retailers ensure resilience in their supply chains when faced with unprecedented challenges stemming from the pandemic? The short answer is, retailers must leverage technology, or otherwise, they will perish.

Successful retailers need to focus on three areas to be more resilient:

  1. Hyper agility through unified supply chain thinking
  2. Supply chain traceability and transparency
  3. Utilizing the power of partnerships – make or buy?

For many retail players, the pandemic has been a harsh lesson on the importance of flexibility and agility. The need to predict and forecast total demand based on omnichannel sales have increased significantly, often at speed. Retailers must also respond to customer demands and expectations across all sales and fulfillment channels, optimally orchestrating orders and delivering on-premise, and of course, optimizing profitability.

The pandemic has widened the gulf between pure e-commerce players and brick and mortar retailers with low e-commerce maturity. The permanency of the shifts in channel volumes throughout the pandemic has left many retailers with a make versus buy decision: build internal capabilities or partner with third parties.

Agility through unified supply chain thinking

Omnichannel has become a must-have capability. Retailers need to meet consumers where they are, as shoppers expect to purchase anytime, anywhere, and whatever the sales channel. As a result, retailers need to develop supply chain fulfillment capabilities that deliver on the customer promise at optimum profitability. At BearingPoint, we believe this is achieved through an extended omnichannel supply chain, known as a unified supply chain.

Designing a unified supply chain is about rethinking processes and IT to optimally orchestrate orders from any demand source, supported by inventory visibility, distributed order routing, lifecycle management, and distributed fulfillment. The unified supply chain needs to balance operational costs, product traceability and availability, inventory investment and customer satisfaction when delivering the customer service proposition.

To achieve agility through a unified supply chain, we believe the following areas are critical:

The first is to move from a cost-centric to a customer-focused and service-oriented supply chain and put your customer first, offering a coherent purchasing journey, regardless of channel. Customer centricity and internal transparency are central to an agile organization, so break down the internal silos to enhance collaboration and rapid feedback between departments.

Our view is to use data as an advantage to understand your distribution network and clients better and improve decision-making. Increase agility by using AI, machine learning, and predictive analytics to optimize forecasts, replenishment and stock allocation based on omnichannel demand, and precise insights for greater flexibility. According to Kinaxis, AI in forecasting and replenishment can improve forecasting accuracy by 20%.

It is also crucial to save time and costs by optimizing your logistics through intelligent warehousing. Using existing technologies such as robotics for picking and packing operations is a growing trend. Robotics can take all forms, from the hyper-mechanized warehouse with a minimum of human intervention to more lightweight initiatives where humans and robots collaborate. The deployment of robots in warehouses for the pick and pack process can be done quickly and easily, doubling the productivity of order preparation operations and increasing the picking capacity by 30%. The use of 3D packing machines is also growing, creating order-specific packaging that reduces packaging materials and encourages greater transport efficiency.

Supply chain traceability and transparency

We believe traceability is key to delivering a satisfying omnichannel experience to customers.

Product availability whenever and wherever they choose requires a high degree of control. More precisely, stock accuracy and reliability regarding where and when – both for internal planning purposes and to validate stock availability information for customers.

Technologies such as RFID have been a game-changer in terms of traceability and operational efficiency, providing a high degree of stock accuracy and faster localization of products. The same goes for QR codes for traceability as well as NFC. They can also help improve order preparation and picking and packing, for instance, in combination with robotics in a warehouse. These technologies support omnichannel fulfillment and the idea of one unified stock pool, facilitating a real-time 360° view of stock and enabling retailers to quickly respond to demand and effectively allocate and deliver, regardless of channel.

Transparency coupled with traceability is a key driver.

Transparency coupled with traceability is a key driver. Today’s consumers are increasingly concerned about environmental and social impacts. Demands are shifting towards “responsible buying,” and consumers tend to choose products and providers that match their ethical values. As a study from MIT Sloan School of Management showed, they are willing to pay between 2% to 10% more to buy from an ethical, environmentally-friendly brand. Along with increased environmental and social regulations, it is not difficult to see demands growing for retailers and their suppliers to have responsible and sustainable products and supply chains.

Transparency, therefore, becomes an increasingly important capability for companies as it is essential to build a broader supply chain resilience. The current COVID-19-situation has accelerated sustainability plans and put sustainability at the heart of many recovery strategies. It all comes down to the concept of meaningful growth, emphasizing that you must be sustainable to grow. There are clear benefits for companies through ensuring visibility and keeping track of their environmental footprint. We believe that by putting supply chain transparency on your priority list, you are also putting the modern-day customer at the heart of your business.

Utilizing the power of partnerships – make or buy?

The crisis has also widened the gulf between pure-play and brick-and-mortar retailers.

E-commerce sales were not a significant focus for brick-and-mortar players before the pandemic, but the shifts in channel volumes have left many retailers with a critical make or buy decision. Should they launch their own e-commerce platform or use the services of an e-commerce provider with an existing platform? Should they manage their own fulfillment operations or use the services of a 3PL with established e-commerce fulfillment capability? What we see is an acceleration in partnerships between retailers and technology and logistics providers focused on this critical make or buy decision.

So, how do you feel about your weakest link?

The changes in today’s retail world and the effect on supply chains are evident. Regardless of the pandemic, we believe that the retailers of tomorrow will need to focus on agility, transparency, and utilizing the power of partnerships to be successful.

All of that is achievable if you put your customer first and offer a coherent and sustainable purchasing journey. Focusing on a service-oriented unified supply chain with a high degree of traceability and internal control will allow you to be agile enough to meet consumer demands across all channels. As sustainability and responsible buying are important to consumers, transparency becomes an increasingly important capability for companies as it is essential to build a broader supply chain resilience. For retailers lacking internal capabilities, it may be worth considering partnerships to obtain those capabilities. Leveraging existing technologies is a competitive necessity, as well as responding to consumer demand for a sustainable supply chain.

BearingPoint has developed a framework to help companies on their sustainability journey identify supply chain transparency throughout a product’s life cycle. To learn more: How transparent is your supply chain? | BearingPoint France

We have even developed an easy to use SaaS solution, making it simple to track your emissions across the supply chain, have a look: BearingPoint’s Emissions Calculator | Emissions Calculator  

Would you like more information?

If you want to get more information about this insight please get in touch with our experts who would be pleased to hear from you.