Improving the Supply Chain for Retailers

Improving the Supply Chain for Retailers

As e-commerce growth, shipping and stock challenges, inflation, the pandemic, potential recessions, and labor shortages continue to plague the supply chain, it might be hard for retailers to be optimistic. But in this article on improving the supply chain for retailers, we investigate the challenges pragmatically while reminding ourselves why the retailer is an integral part of the supply chain. And then, we share a few tips for forward-looking retailers.

Challenges Facing Retailers

Three key challenges face retailers: Disruption, varying consumer demand and the shift to e-commerce, and a lack of visibility.

  • Disruption

Writing in Raconteur, Emile Naus, former head of logistics strategy at Marks & Spencer and current adviser at BearingPoint, says disruptions include “temporary labor shortages as well as long-term labor migration, transport issues due to disrupted flows and loss of capacity, the war in Ukraine and the overall disruption to sales, demand changes and cost inflation.” Massive increases in shipping costs and challenges with availability mean that the just-in-time (JIT) model is now “out of the window for many retailers,” according to Enda Breslin, general manager for EMEA at logistics and fulfillment firm ShipBob. “While it’s an efficient method in a perfect world, its vulnerability in a crisis is clear to see.”

Instead, retailers are near-shoring suppliers and working with a larger supplier base. And six in 10 retailers say they are taking steps to increase inventory visibility and reduce cycle times, according to SymphonyAI report on Strengthening the retail supply chain.

  • Varying consumer demand and the shift to e-commerce

Will these steps be enough to address varying consumer demand and the growing shift to e-commerce? It’s hard to say. But with online shopping habits here to stay, retailers need to make changes. Statista says that in 2021, retail e-commerce sales surpassed 5.2 trillion U.S. dollars worldwide. They predict e-commerce will reach 24% of total global retail sales by 2026. Considering that nearly 60% of all online retail purchases in the U.S. were done on Amazon last year, according to data from PYMNTS,  it’s impossible to ignore the critical role of e-commerce in the supply chain.

  • Lack of visibility

A 2021 report by The Economist Intelligence Unit says, “Companies lack end-to-end visibility, leaving them vulnerable to dynamic or unexpected risks.” Too often, they say, “the view of supply chains is based on internal data or relies on siloed or outdated data sets. This limits their ability to detect emerging threats or calculate how a disruption will unfold across supply chains and business units.”

Retailers know they need to have more resilience built into their supply chains. Research by Gartner in 2022 showed that 96% of retailers plan to invest in making their supply chains more agile, and 90% are planning investments to make them more resilient.  

Why the Retailer is Fundamental to the Supply Chain

A lack of resilience is part of a bigger challenge, however. Even before the pandemic, a survey from 2018 revealed that 47 percent of the leading US retailers surveyed said miscommunication between internal stakeholders and departments was creating barriers in the supply chain process. This report revealed, “Many retail supply chains suffer from structural inconsistencies, functioning effectively in certain processes but riddled with weak links in others. And those weak links can add up to serious setbacks because each part of the chain—from setup to inventory policies to product flow optimization— reinforces the others.”

No part of the supply chain operates completely independently. The same applies whether we’re talking about selling goods or tracking rebates and incentives associated with their sale. Fundamentally, all parties need to work together effectively, trust that they’re being reimbursed appropriately, and get goods to customers that meet or exceed their expectations.

It’s a big ask, but since retailers step up to the plate and put goods in customers’ hands every single day, don’t they deserve a bit of help?

Tips For Improving the Supply Chain For Retailers

  • Maintain and improve supply chain relationships

Writing in SupplyChainBrain, Mark Van de Wiel points out that retailers operate multiple planning processes that are often not integrated. With marketing disconnected from inventory planning, financial planning, and management – to name a few – the risk of a disconnect between departments increases risk. The same goes for rebate management.  

However, success is far more likely when systems, processes, and supply chain partners are connected. For example, Raconteur reports that the supply chain resilience of supermarket giant, Tesco, helped it outperform the wider market during the pandemic due to its longstanding supplier relationships. They quote Tesco’s CEO, Ken Murphy, who acknowledges the critical role that planning and collaboration played: “Thanks to good planning and great collaboration from our suppliers, we kept products moving and protected availability.”

The importance of effective, trust-based supply chain relationships cannot be underestimated. Using the right tools to improve collaboration enhances relationships, especially when it comes to tracking and reimbursing rebates.

  • Invest in technology

Retailers are investing in technology to address the effects of supply chain disruption. Keeping on top of the latest innovation helps retailers stay ahead of competitors and on top of market forces.  

A report by SymphonyAI says that “52% of retail supply chain professionals say their organization will invest in capabilities that cut down on number crunching... and 44% percent invested in new technology because their old systems couldn’t cope with growth.” According to the same report, the majority of supply chain professionals surveyed had already invested in inventory planning (74%), warehouse (70%) and store replenishment (66%), workforce management (60%), forecasting (60%), transportation management (58%), allocation processes (57%) and warehouse management systems (55%).

But the survey was silent about how many had invested in their rebate management processes.

Turning Supply Chain Chaos Into Revenue

There is a way of turning supply chain chaos into revenue. While this won’t address major inventory problems or solve global crises, a surprisingly effective solution can improve collaboration and visibility for all supply chain partners who deal with rebates. It can even help rebate users outperform their supply chain competition.  

Amid supply chain chaos, this opportunity is tangible, practical, remarkably quick to implement, and returns a solid ROI. More importantly, solving one of the most underestimated supply chain challenges (rebate management) has significant benefits for all involved.  

Organizations that invest in innovation are more likely to remain successful in this ever-increasingly challenging landscape. But the beauty of the supply chain is: When one link in the supply chain supports and strengthens the others, everyone benefits.

It’s impossible to control inflation, pandemics, recession, or market forces. But perhaps it’s time to address an element of supply chain chaos that retailers do have control over?

Rebate management can improve the supply chain for retailers. Schedule a demo with Enable to see how.

Elizabeth Lavelle

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