How the Cloud Can Solve Your Growing Fears About Supply Chain Risk
A recent Deloitte study about the risk posed by supply chain disruptions surveyed 600 executives regarding their feelings (and fears) of exposure to unexpected events in their global supply chains. The study found that 45 percent of global executives report their risk management programs are only somewhat or not effective at all.
Retailers can't afford to have vulnerabilities in their supply chain. In fact, 71 percent of survey respondents said supply chain risk is an important factor in their strategic decision making. Global supply chains become more brittle as they continue to grow in complexity, making the potential impact of these vulnerabilities more painful each year.
Part of the problem is that supply chains have gotten longer and more complicated as companies expand sourcing and selling in new regions around the world. At the same time, there's a constant push to outsource production while simultaneously running as lean as possible.
We all heard about what the Bangladesh fire did to the garment industry in November 2012. The decision to close 200 factories for fire safety review was problematic for retailers during the critical holiday season. As a result, supply chains were disrupted and companies couldn't meet the heightened holiday demand. As a result, they lost sales and ultimately missed their profit goals.
Unchartered Territory: Agility in the Omnichannel Supply Chain
The notion of an evolving inventory mix supported by a global sourcing model isn't new for retailers. However, when you factor in the push to open new stores in emerging economies in the era of omnichannel retail, the supply-demand matrix looks especially daunting. It's not a matter of if retailers should expand into new markets or become omnichannel masters, it's how fast it can be done. It's a matter of long-term survival.
Most companies know that the rigid supply chains of the past aren't capable of supporting omnichannel retailing. For example, Target announced in January it would be matching prices with online competitors such as Amazon.com year-round as well as honoring its own web prices in its brick-and-mortar stores in an effort to meet consumer demand with increased agility. Although it's far from a new concept, the ability to adapt quickly to disruptions and opportunities is critical, yet few companies have mastered it.