COVID-19 and Planning Now for the Future of Retail
The current pandemic has caused major disruption across the globe, especially for retailers relying on supply chains to keep essential products on shelves for consumers in a time of critical need. Many businesses are quickly shifting their focus toward maintaining supply to meet demands, which are rapidly shifting. However, leaders should also view this as an opportunity to better plan for future unpredictable disruptions.
No leader can predict exactly when and where disasters will hit. But they can learn from what's happening now — at a time when it’s hitting everyone, everywhere — to move away from a largely reactive model toward one that better protects customers, workers and the business. This will require confronting and overcoming fear and uncertainty around product shortages, while assessing the impact of COVID-19 on supply chain and logistics operations. Identifying actions now to help improve resilience into the future will ultimately strengthen retail operations and the global supply chain.
To help, retailers should use this time to harness the power of artificial intelligence (AI) and other emerging technologies such as automation and intelligent workflows to maintain longevity of the business amid periods of uncertainty. According to a new IBM Institute for Business Value report, COVID-19 and Shattered Supply Chains, supply chains should be dynamic, responsive and interconnected to an organization’s ecosystem and processes. This smarter supply chain requires end-to-end visibility, real-time insights and decisive actions, particularly in situations like this.
Retailers must walk away from this situation having learned that no company can afford not to have a multidimensional, dynamic supply strategy that's capable of responding to disruption. As organizations continue to move toward intelligent, self-correcting supply chains, there are three strategies to consider:
1. Understand today’s supply chain to prepare for tomorrow’s temporary normal.
Once the immediate issues are under control, and the world transitions to its temporary normal, retailers will see different demand signals and supplier relationships emerge. For instance, these changes may affect supply routes, allowing product to reach certain markets faster. As a result, organizations may create something better than what existed before — but no new system comes without its own issues. This is where retailers can apply AI to unstructured, real-time data, generating alerts to help predict disruptions and vulnerabilities, and then providing visibility and insights for recommended corrective actions. This includes assessing geopolitical risks, climate change, cybersecurity issues, and natural disasters. Organizations can proactively identify alternate sources wherever possible, test and contract multiple logistics routes, and maintain the flexibility to reposition inventory across their supply chains.
2. Improve visibility using real-time data and insights to regain control.
Understanding where inventory is located through control-tower capabilities, and putting tools in place to make workers better versions of themselves will help ensure that both consumers and employees are protected from disruption. Workers right now can’t continue at the pace and under the pressures they’re currently operating. AI has to start doing more of the "hard" work, allowing people the time to think more strategically about what our "new normal" looks like, and how to find more fulfilling work when we enter that phase.
3. Move closer toward rapid reaction and issues resolution.
The key to a successful new normal will be collaboration like we’ve never seen before. Retailers and their supply chains must communicate more effectively and meaningfully to ensure the right information is reaching everyone, from employees to customers to suppliers. As we see different demand curves flatten over time in the immediate term, organizations need to make sure their entire ecosystem understands the overall strategy for ramping back up again.
In this period of extreme uncertainty, retailers must continue to confront immediate challenges, while focusing on what the future of their business will look like. These organizations are learning how to better manage, foresee and limit the severity of disruptions by building the capabilities necessary to respond to future events with both pace and certainty. That preparedness today will shape their success tomorrow.
Jonathan Wright is global head of cognitive process re-engineering at IBM.
Related story: Fulfillment in the New Retail Reality, Part 1