Turning Woes Into Wins: How Retailers Should Navigate the Current Supply Chain Landscape to Succeed

To combat last year's supply chain woes, retailers stored up large amounts of inventory, only to be left with excess product sitting in warehouses a year later. Now, amid high inflation rates, retailers are struggling to get rid of extra products on shelves before the end of the year.

Big-box retailers including Walmart, Bed Bath & Beyond, and Best Buy have reported that they're coping with a glut of casual clothes, kitchen appliances and electronics as consumers have pivoted away from spending on goods amid inflation. To deal with this, other retail brands like Target are taking aggressive measures by canceling orders and marking down unwanted merchandise. What’s more, supply chain volatility is expected to last throughout 2023, making it more challenging for retailers to stock up in response to real-time consumer demands.

A Packed (Ware)House This Holiday Season

Excess inventory taking up shelf space leaves less room for incoming products for the holiday season. A recent report suggests logistics departments need 800 million square feet (MSF) of warehouse space or more to accommodate inventory growth. To stay ahead of any disruptions this holiday season, retailers must account for everything that could impact inventory, including delays in unloading ships, transporting goods onto trucks, and moving them inland from West and East Coast ports.

In addition to dealing with holiday supply chain challenges, retailers must factor in the industry’s continued shift towards e-commerce. The growth of e-commerce continues to place pressure on retailers to find faster ways to deliver to customers, hence the increase in retailers tapping into third-party last-mile delivery applications such as Instacart, Shipt, and DoorDash’s Dash Mart. These services help alleviate some of the pressure as consumers’ desire for quick deliveries have increased. 

The Lay of the Land(scape)

The current supply chain landscape is still in recovery, and the economy may have a long way to go before things return to “normal.” According to one recent report, global supply chain pressures have been decreasing but remain at historically elevated levels. Axios also reported that port backups, which were the source of many of the supply chain disruptions, “remain significant, straining access to certain goods.” Retailers need to be proactive in supply chain risk management to cope with the current supply chain landscape and mitigate any challenges in the future. To do so, retailers should consider the following:

• Activate backup plans. Retailers must ensure that there's a contingency plan in place to deal with disruptions. Having alternative options for suppliers, warehousing and distribution will help retailers navigate supply chain challenges when they arise.
• Establish visibility. In order to establish visibility and transparency throughout the supply chain, retailers must establish effective communication between all parties. Retailers should implement technology to gather real-time information regarding product location and transportation. Therefore, if delays occur, retailers will know how to swiftly combat them.
• Anticipate new regulations. New regulations are already on the rise with the proposed environmental, social and governance (ESG) guidelines from the U.S. Securities and Exchange Commission and the Uyghur Forced Labor Prevention Act (UFLPA). Retailers and their suppliers should be one step ahead of any anticipated regulation to help avoid bottlenecks throughout the supply chain.

Turning Woes Into Wins

The pandemic and other major events have upended the supply chain world as we know it. However, retailers can combat these challenges and turn their woes into wins by being proactive and embracing change. Being proactive allows retailers to mitigate disruptions and embracing change creates a competitive advantage for retailers — an advantage that may only widen as the global supply chain continues to spoil brands’ best-laid plans.

Tony Pelli is the practice director of security and resilience at BSI, the business improvement and standards company that enables organizations to turn standards of best practice into habits of excellence, "inspiring trust for a more resilient world."