Where Retailers Should Focus in Order to Mitigate Disruption Before Destruction

Disruption vs. destruction is a key distinction for manufacturing and retail-centric supply chains during today’s tumultuous time. Disruption equals delays, while destruction equals damage (beyond repair). COVID-19 is both disruptive and destructive on a global scale. It has and will continue to cause shifts and reduction in “wants” merchandise and an increase in “needs” merchandise. So how can manufacturing and retail supply chains survive and successfully preserve cash while fostering resilience? These predictions below are a good indication of what's to come as retailers pivot quickly in order to survive.

The Need for Lean

Pressure to reduce supply chain costs will motivate companies to pursue lean strategies. Expect consumer products goods (CPG) brands/manufacturers to accelerate their inventory strategies to compete with retailers. Similarly, retailers will start producing more branded merchandise to counteract the threat of CPG brands/manufacturers. No matter what route, leaner supply chains that compress time and eliminate variability will equal less inventory; which means fewer resources are required to support their end-to-end networks as channels contract.

Shift to Digital

Manufacturers and distributors will accelerate their digital strategies. They will be less concerned about channel conflict and will create digital strategies along with supply chain networks to move to direct-to-consumer. Consumer behaviors will drastically shift from brick-and-mortar to online as they look to reduce social interaction and maintain distancing. Expect to see more localized fulfillment in urban areas in order to provide same-day or next-day deliveries. Consumers will be less concerned about having three deliveries a day vs. being exposed to hundreds of people in an uncontrolled environment.

Buy Online, Pick Up In-Store and Curbside

Expect to see more localized assortments and inventory positioned for buy online, pick up in-store (BOPIS) and curbside delivery with less human interaction. Exposing enterprise inventory to shifting demand points (e-commerce demand), and rapidly enabling omnichannel fulfillment capabilities, including BOPIS, ship-from-store and drop-ship will allow retailers to take advantage of EVERY sales opportunity, and fulfill more order volume out of their retail networks (stores, distribution centers, and vendors).

It’s All About the Data

Expect supply chains to become more focused on Internet of Things (IoT) to provide data to move inventory, automate processes, improve security and enhance customer experience. Popularity of radio frequency identification (RFID) is coming back as well and can help with revenue improvements by increasing inventory accuracy without human interaction. Track and trace, leveraging blockchain and RFID tags will be a norm for farm-to-fork supply chains. Security and traceability are important, but knowing what and where inventory is located is equally important as supply chains need to shift rapidly in time of crisis. For retailers, as customers look to BOPIS and ship-from-store, RFID is a technology enabler to improve inventory accuracy within the store, which then improves the ability for the retailer to make the promise and keep it.

Automated Business Processes

Electronic data interchange (EDI) may be old technology, but as manufacturers and retailers look to reduce dependency on manual processes performed by humans, EDI helps automate commerce by moving data across a network (B-to-B). EDI reduces data errors and invoicing processing costs and improves customer service. Rest APIs are the future for B-to-B integration over EDI, however, many enterprise organizations don't have modern platforms to leverage APIs for B-to-B integration.

Less Human Interaction

Self-checkout or cashier-less may not be the easiest to implement up front, but in the current landscape it will be necessary to enhance the customer experience and see a quick return on investment.

Robotics and Automation

Increasing workforce efficiency is more important than ever at this time. As retailers shift from in-store to e-commerce, it's imperative for warehouses and distribution centers to consider the use of robots or collaborative robots (COBOTS) for piece picking, AGVs, and shuttle systems, minimizing the dependency on direct labor.

As consumers “nest or cocoon” for the next few weeks and even months, end-to-end supply chains will need to overcome disruptions by anticipating the above. Whether you’re a small, midsize or large manufacturer or retailer, you'll need to be prepared to respond quickly to shifts in consumer demand.

Is your supply chain prepared to preserve cash and foster resilience in order to mitigate DISRUPTION before DESTRUCTION?

Jim Barnes is CEO of global software and consulting firm enVista.