While COVID-19 slowed the world down to a standstill, it greatly accelerated the growth of online shopping. In particular, lockdowns pushed demand for online groceries into new territory. The Adobe Digital Economy Index details how monthly spend in this category more than doubled, rising from $3.1 billion pre-pandemic to $6.7 billion a month post-COVID. Adobe projects that the online groceries sector will be worth $85 billion a year in 2022.
As well as stretching to satisfy this demand, supply chains are also dealing with inflation, the war in Ukraine and labor supply shortages. It all adds up to a challenging scenario for retailers and suppliers.
Yet, when COVID-19 spread across the globe, the retail industry proved more resilient than many thought it to be. Retailers acted with agility, changing the way they planned and managed inventory in a remarkably short time. This kind of adaptability will be vital as we head forward: McKinsey forecasts that manufacturing production will suffer significant disruptions every 3.7 years, on average. Even now, some analysts believe it’ll be mid-2024 before we see a degree of normalization in supply chains.
With so much uncertainty surrounding supply chains, how can retailers make sure they’re ready for further disruptions and challenges?
Keeping customers content
Some 54% of company executives say they’re missing a clear view of supply chain data past tier 1. This means that any shortages can easily be missed, right up until the customer attempts to buy the product.
According to figures from Adobe, online shoppers faced 60 billion out-of-stock messages from March 2020 to February 2022. On average, one in every 59 product pages now carries that message — a 235% increase from pre-pandemic levels.
Aside from the obvious missed sales opportunities, there’s also reputational damage to consider, as well as potentially boosting competitors’ sales.
Today’s customers have high expectations, so any retailer must ensure customers have the best possible experience when shopping with them. Effective inventory management plays a vital role in this — and data-led solutions can make a real difference here.
3 issues holding retail back:
When swift and informed inventory decisions are required, manual, error-prone processes can seriously harm a business’ ability to react to changing situations. Phone calls and email are inefficient ways for large teams to communicate. And manually checking on inventory takes employees away from making sales or other valuable activities.
Even when inventory data is digitized, all too often it’s kept in silos. If data systems aren’t connected, retail teams can’t access relevant data when it’s needed.
Data processing problems
Having data that you can’t interpret effectively is no better than having no data. Tools can enable retailers to connect and correlate all inventory data with external events. They can then proactively deal with inbound disruptions, measure inventory turnover velocity and cut back on overstocking.
Guarding Against Supply Chain Disruption
If data is gathered, categorized and structured properly, it becomes easier to forecast potential issues with supply chains.
In the years to come, AI will prove extremely useful in supply chain management. In addition to predicting disruptions, AI systems can manage automatic responses, ensuring issues affect business as little as possible.
Reliable retail planning software can also help businesses run smoothly, with fewer surprises. Even from the concept and development stage, the product lifecycle process can be mapped out, including delivery and omnichannel sales. Feedback and real-time plans can be fed into these systems, improving their accuracy and their ability to inform decisions.
The Way Ahead
No matter how sophisticated the next generation of inventory management tools is, they’ll ultimately rely upon data being accurate and easy to access. Retailers must ensure they can instantly call upon quality data, particularly when it is AI searching for the data.
AI and machine learning will use predictive models to produce ever-more-accurate real-time forecasting. Thanks to the integrity of these forecasts, retailers will be able to operate with lower levels of safety stock — thereby reducing their carrying costs — and will achieve higher inventory turnover.
When retailers have such a system in place, they won’t need to fear the impact of supply chain problems — or other external factors — so much. With more efficient and adaptable inventory management processes in place, retailers can be confident of minimizing disruption to their operations. Data is the key to this future.
Paula Biste is a Business Consultant at Centric Software, which offers award-winning PLM and planning solutions for companies of all sizes.