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Demand & Supply Chain Management Evolution




25 Aug 2020
Digital Supply Chains: Now or Never for Retailers

Wayne Snyder
Blue Yonder

Things have never stood still in the retail world. With lines blurring between physical and digital worlds, and ever-changing consumer demands, retailers find themselves continuously evolving to keep pace with competitors. Today, more than ever, retailers need to be agile, responsive and resilient. The COVID-19 pandemic has shone a light on retailers’ supply chains, exposing flaws in processes designed for simpler times. So how can retailers be both agile and resilient? 

The global pandemic has highlighted how difficult it can be for retail supply chains to adapt if they are comprised of siloed, manual processes. Will COVID-19 be the catalyst to help retailers move from legacy processes to a new generation of supply chain that does not just react, but predicts and prescribes actions to get ahead of the market and disruptions?  

digital supply chain roadmap

To find out just how far along the journey to a digital supply chain they are, WMG at Warwick University together with Blue Yonder surveyed 100+ global retailers regarding their current processes and future aspirations. 

The results showed that just 15% of retailers currently have supply chains that are at the level they desire them to be: The main challenges being that they are disconnected and unable to provide always-on services to predict issues and prescribe actions. However, retailers are very much aware of the benefits of solutions incorporating artificial intelligence (AI) and machine learning (ML) with over half of those surveyed planning to implement prescriptive or autonomous supply chains.  

 

Manual Processes Obscure the Bigger Picture 

WMG took a deeper dive into key areas of the supply chain, starting with demand planning: 

  • Retailers are unable to react to changes in demand quickly: only 8% can refresh processes in real-time.  
  • The majority use manual tools, with almost a quarter (22%) still investing time and energy into using spreadsheets. Many retailers had the limitations of this approach laid bare during the COVID-19 disruption, struggling to respond quickly or automatically to sudden changes in demand.  
  • They want to get smarter, with almost three quarters (74%) aiming to use prescriptive or autonomous technology for demand planning in the next five years. It’s a similar story for replenishment processes.  
  • 25% of retailers still use spreadsheets to manage replenishment analytics, but almost half (46%) want a fully autonomous approach by 2025.  

Overall, when it comes to managing inventory, retailers’ supply chains aren’t digitally mature enough to provide the unified omnichannel experience that customers expect. Although many of them have been operating multiple channels for decades, more than half (61%) still manage these channels separately. Bringing these together is imperative to help customers shop how they want to shop. For example, by understating real-time availability in all locations to evaluate optimum order and despatch location, retailers can maximize sales and reduce distribution costs. Many retailers found that this siloed approach meant they were unable to scale efficiently when COVID-19 struck, explaining why 75% want full omnichannel capabilities within the next five years. 

 

Digital Supply Chains to Drive Smarter Financial Decisions 

The research also reveals that too many retailers take a static approach to financial decisions. Just 13% continually optimize prices at present, leaving a large majority using static promotional calendars. Only 11% assess multiple factors, such as inventory, margin, and waste when setting promotional pricing, making it hard to strike a balance and align with corporate strategies. Almost half want to be able to use machine learning capabilities to consider across multiple factors at scale, managing pricing at a much more continual, granular level than ever before.  

Overall, just 10% of retailers run financial planning and strategy in real-time, although this number is expected to nearly quadruple by 2025. To make this ambition a reality, retailers need to connect processes and systems across their organization.  

 

Digitalizing the Supply Chain to Realize Automation Ambitions 

The bottom line is that retailers aspire for a stronger, intelligent supply chain but know there is work to be done. They want to inject prediction, automation, and optimization into their supply chain but know this can only be fully achieved once the supply chain is completely connected and digitized. It is not only warehouses that need automation (which 40% of retailers are aiming to do), but everything from planning and inventory to financial decision-making. Once this transformation has happened, they will be able to break down silos and piece the entire jigsaw together. AI and ML will be at the heart of this transformation helping retailers to predict more intelligently, accurately and at a greater scale than ever before.  

Retailers have experienced significant disruption over recent years, and it’s more vital than ever to move to a digital supply chain. Stitching together in-store and omnichannel experiences is critical especially as more shoppers want speed and personalization. Now is the time to seize the initiative and the opportunity. 

We invite you to participate and receive a customized 16-page report that compares your company to industry norms and provides lots of advice and frameworks to accelerate digital maturity. 

Alternatively, click here to receive a complimentary Executive Summary of the results to date.

 

 

 

 

 









 
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