Jeff Eckel, Director at e2open
Industries worldwide continue to feel the impacts of the cost-of-living crisis. Retail is being hit hard by plummeting consumer confidence, with a recent report finding a fall in sales for eight consecutive months across Europe.
Supply constraints and constant fluctuations in demand only add to an already challenging landscape. The aftershocks of the pandemic are still being felt, as well as increased geopolitical trade conflicts. But there is cause for hope. With Christmas less than 100 days away and Black Friday on the horizon, there is an opportunity for retailers to capitalise on the critical holiday period and bolster sales. Businesses with flexible and scalable operations gain a competitive edge when they ensure products reach shelves on time or before schedule. Visibility and flexibility will be integral for supply chain leaders across networks to meet the challenges – and reap the rewards – of this year’s Golden Quarter.
Predicting seasonal surges
By now, retail organisations have revenue forecasts for the fast-approaching sales season. Whether brick-and-mortar, online, or a combination of both, the supply chain process remains the same – identify finished goods suppliers and place orders ahead of time to have the correct quantity of the right product at the right time.
In an ideal world, these suppliers would have anticipated the orders they will receive and forecast this within a supply plan, allowing enough time to produce the finished goods and ship – or, better yet, on an even earlier timeline for distributors and other sales channels.
In most cases, suppliers outsource the building, assembly, and production of the goods they sell, whether that be to diversify supply or take advantage of trade agreements and tax advantages. However, outsourcing often comes at a steep cost and creates issues around visibility, quality, and control. After all, suppliers will prioritise production speed over visibility into contracted operations.
Building this level of visibility can seem daunting for both parties. Yet, when retailers and suppliers increase collaboration and transparency, they will mitigate risk and capitalise on all the Golden Quarter offers. So, what does that look like in practice?
Agility is a must-have, not nice-to-have
Greater agility across operations directly correlates to great customer service. Consumers will return to a brand if products arrive on time or ahead of schedule. Agility is also a helpful tool when rising to meet the competition. For instance, if a retailer’s biggest competitor announces a new product for the holiday season, operations and decisions should be made quickly to keep pace accordingly. In this scenario, most businesses would adjust their forecasted revenue to expect fewer product sales and, consequentially, for the supplier to change the plans and orders already set in motion.
On the other hand, new protectionist trade regulations and policies require finished goods suppliers to quickly diversify their suppliers to acquire a critical supply of parts or products to fulfil orders on time. When suppliers experience challenges with specific parts or material shortages, they need the ability to predict, monitor, and react.
Fortunately, weaving new data sources into their networks and combining disparate information with real-time insights will give retail supply chain leaders the visibility they need to act quickly. This enhanced view of data requires greater collaboration between retailers and their suppliers – as well as their suppliers further up the chain – on orders, inventory, and forecasts.
Ultimately, greater visibility means greater opportunity to diversify suppliers and meet tight production deadlines – vital to minimise risk, fulfil orders, and remain profitable during peak seasons. And when AI is brought into the mix, this brings even greater opportunities to optimise operations.
Business decisions backed by real-time insights
It’s tricky to address risks without a clear picture of potential challenges on the road ahead. An end-to-end view across the supply chain drives collaboration between suppliers. It ensures quick responses to near-term supply and demand signals, meaning businesses can address potential inventory issues before they snowball into more significant problems across the network. When many retailers still act reactively, not proactively, such visibility provides supply chain leaders with a clear competitive edge.
Artificial intelligence and IoT have transformed decision-making processes. Thanks to these new technologies, it’s possible to pull together multiple datasets that automate manual tasks and workflows. AI can select the best carrier for every shipment, calculate routes, and adjust replenishment frequency based on historical fluctuations in demand. It can even identify areas that would benefit from supplier diversification, helping to take the pressure off busy retailer supply chain managers.
With Halloween, Black Friday, and, of course, Christmas on the horizon, retailers can gain a competitive edge by leveraging logistics plans that are both flexible and scalable. The impact of disruptive events such as extreme weather and global conflict can be mitigated through platforms that provide end-to-end visibility and collaboration across the entire network. Employing new technologies now will offer short-term gains and long-term benefits as predictive algorithms address anticipated peaks in demand. When retailers put communication and visibility at the forefront of their supply strategies, they will be well-equipped to deliver on targets in the critical period ahead.
