The Importance of Supply Chain Management in Retail: Building Resilience for the Future
The retail industry has been rapidly evolving, driven by changes in consumer preferences, technological advancements, and intense competition. Customers now strongly influence product trends through their reviews and social media presence and often perform extensive online research before making a purchase. In 2023, total US retail sales will hit $4.7 trillion, of which online sales will top $1.1 trillion.
As businesses adapt to the new realities of the digital age, supply chain management in retail (SCM) has emerged as a potential competitive edge. SCM refers to the end-to-end management of goods and services, from raw materials to final product delivery. Retailers can differentiate themselves from the competition by providing a reliable supply chain and supporting sustainability goals. To achieve this, they must invest in tailored processes and application portfolios that improve the customer experience.
Making Supply Chain Management a Competitive Advantage
Supply chain disruptions are not new, but the COVID-19 pandemic has highlighted the vulnerabilities of global supply chains. Such disruptions can have significant financial implications for businesses. However, proactive companies can navigate these disruptions. For example, Nike used technology to track products moving through outsourced manufacturing operations during the early stages of the pandemic. By utilizing predictive-demand analytics, the company minimized the impact of disruptions. The result? Nike’s supply chain management strategy allowed the company to track “1 billion units at 99.9% readability” Nike was able to limit sales declines in the region to just 5 percent, while competitors experienced much more significant drops in sales.
Agility & Resilience
Agility and resilience are crucial in today’s fast-moving and consumer-centric world. Traditional supply chains are no longer adequate. Supply chain management in retail needs to be much more dynamic, predictive, and responsive to changes in demand and the product and channel mix. Investing in SCM transformation can provide several benefits for retail, distribution and wholesale, and CPG businesses. It can boost revenue and customer service by synchronizing inventory availability with local cross-channel demand, increasing revenue and margin across channels. SCM transformation can also lead to shorter lead times, accelerate inventory turnover, generate one-time working capital savings that can fund the whole program, and reduce inventory carrying costs.
Improved Carbon Footprint:
As customers become more environmentally conscious, retailers who demonstrate their commitment to sustainability can gain a competitive edge. By investing in the transformation of supply chain management in retail, companies can efficiently place their inventory in the network ahead of anticipated demand and closer to customers, reducing their carbon footprint. This approach not only contributes to environmental sustainability but also enhances customer satisfaction. The Science Based Targets Initiative reported that in 2020, 94 percent of the 239 companies that joined the initiative made commitments to reducing emissions from their customers and suppliers.
The Next Steps:
Supply chain management in retail has always been complex, but recent global events have highlighted the need for increased resilience, agility, and sustainability. However, simply adding these priorities to existing systems won’t cut it anymore. A complete shift in mindset is required to integrate them into supply chain design, organization, and operation. This shift in mindset starts with top-level changes and the incorporation of risk, agility, and sustainability performance indicators. By prioritizing these indicators, retailers can begin to understand the key drivers of their supply chain risk and take proactive steps to mitigate them.
It’s time to take action and make these priorities a reality. To stay ahead of the curve and learn more about these changing trends, take advantage of the upcoming webinar by PartnerLinQ featuring Forrester. This is an opportunity to gain the latest insights and learn how to integrate resilience, agility, and sustainability into all aspects of supply chain design, organization, and operation.