The retail supply chain is only as strong as its weakest link, and with so much at stake for retailers in this highly competitive market, it’s critical to know exactly what part of that chain needs attention. But are supply chain challenges unique to each retailer, or are they more shared than we realize? And is there consensus among leadership about the methods or solutions best suited for the task?
Commissioned by Symphony RetailAI and independently conducted by EIQ Research Solutions, the Strengthening the Retail Supply Chain survey engaged supply chain executives from 50 North American high-volume retailers, largely in grocery, seeking to uncover specific challenges and opportunities in retail supply chain management. Overall, the findings show that today’s retailers have similar day-to-day difficulties, and that their improvement efforts have a lot in common, too.
Existing Forecasting Abilities Score Poorly
The survey found that the majority of retailers are confident in their existing software solutions for allocation and inventory planning, but 48 percent of respondents rated their forecasting technology as average to very poor. It went on to reveal that retailers are also burdened by disparate demand replenishment systems. Twenty-eight percent of respondents don’t manage their modules on the same platform, and 36 percent indicated they have separate demand planning, replenishment, allocation and order management systems. Structural inconsistencies mean parts of the supply chain are functioning effectively while other sections are riddled with weak links. Without a unified process established within the organization, it’s no wonder further supply chain efficiency seems out of reach.
Inventory Visibility and Forecast Accuracy Are Challenges, Too
Supply chains feel the ripple effects of miscalculations and less-than-optimal synchronization between channels. Stocking inefficiencies and fulfillment complexities often plague today’s leading retailers. For example, overstocks are reportedly quite common, and a lack of real-time inventory visibility is an issue for 43 percent of survey respondents, leading six in 10 to say they are actively working to address the inventory visibility hurdle and reduce cycle times.
Retailers know where they can make improvements, but it's a significant challenge to steady the supply chain while keeping up with the pace of innovation. Forty-three percent of supply chain professionals say their existing technology can’t meet business demands, which is why 44 percent are proactively investing in new technology to sustain growth.
Transforming Supply Chains With AI
One in three retailers say they have already implemented some form of artificial intelligence (AI) and machine learning capabilities in their supply chain management processes, and one in four are currently working toward that goal. Organizations see AI as a prime investment to drive greater efficiency, quality control and cost savings. According to supply chain leaders, the top three areas where AI could have the greatest impact are quality and speed of planning insights, demand management, and the ability to identify and address inefficiencies.
Retailers are looking for ways to increase supply chain resilience, and AI has the potential to transform end-to-end supply chain processes. The technology moves organizations to data-driven intelligent decisions faster. These decisions impact performance and allow agility all along the supply chain. With recommended next-best actions, organizations get more than pure analysis. They have a “partner” that suggests and learns, continually refining analysis and suggestions as more data becomes available. AI-powered supply chains are here now, and those early adopters are quickly realizing the many benefits AI holds.
Patty McDonald is global solution marketing director at Symphony RetailAI, a provider of AI-enabled solutions for retailers and CPG manufacturers.
Related story: The Value in Having a Digital Supply Chain