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Supply Chain Digitalization Challenges that Every Retailer Faces and how to Mitigate Them

The supply chain industry has changed a lot over the past couple of years. As the demand for digitalization grows in the retail supply chain, retailers often face multiple challenges in achieving the same. By understanding common challenges that other retailers have faced in the past, the retailer community can work toward managing these challenges better and build their supply chains for more resilience.

What is Supply Chain Digitalization?

Supply chain digitalization is the process of incorporating advanced digital solutions in place of traditional methods throughout the supply chain to boost visibility and streamline workflows. The advancement of Industry 4.0 is pushing organizations to rethink and redesign their supply chains toward achieving higher visibility, flexibility and efficiency.

Data provides the prime fuel for running advanced technologies. When combined with analytics and automation, data can potentially drive true supply chain digitalization. The infusion of data and advanced insights into the operational processes of global supply chains is a great investment with significant value. The greatest benefits include full transparency across the supply chain system, improved visibility, time-saving and cost-efficiency.

This current trend places an increased focus on visibility and resilience throughout global supply chains. Big data and analytics play a major role here as well by providing a single source of truth for all the stakeholders across a supply chain. This will empower global retailers with informed decision-making and build more resilient supply chains prepared to deal with the turbulent waves of disruptions.

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Challenges of Supply Chain Digitalization for Global Retailers

Internal challenges of retail businesses. Not every change is welcomed equally in an organization. Digitalization of a system can also face similar resistance internally in the form of inflexibility or resistance to the use of the technologies. Other hurdles to the successful implementation of digitalization come from skill gaps, unclear goals, disparate systems and unstandardized processes.

Technological complexities. Retailers often struggle with the sheer complexity presented by a myriad of contemporary technologies and systems. It is difficult to select the right tools and solutions with relevant value, find the right vendors or assimilate new tools in existing systems and processes. The cost and time of integrating supply chain management platforms with other IT systems are often very high. Moreover, multi-tiered supply chains across the globe involve multiple stakeholders using different systems, legacy solutions and even paper-based documentation, which creates more barriers.

IT security concerns. This is a big challenge for global retailers as their businesses involve a great number of transactions every day, inviting the constant risk of cyberattacks and data breaches. The weakest links in supply chains are mostly targeted by the attackers, with irreparable impact on business performance and customer experience for the retailers. The lack of appropriate risk management strategies and real-time response cycles make cybersecurity gaps even wider.

Fetching useful insights from customer data. The recent popularity of the omnichannel shopping experience among customers has led to the sudden expansion of data available for businesses. Even then, businesses are unable to extract any actionable insights from this data or interpret it to provide a superior personalized shopping experience. The complexity of gathering, cleaning, structuring and analyzing data hinders businesses from managing information well and leads to misleading analysis, impacting the customer experience.

Top 6 Ways Global Retailers can Fight Supply Chain Digitalization Challenges

Troubleshoot internal challenges. Dealing with the internal challenges existing within any retail organization requires a detailed strategy. Retailers can deal with inflexibility among employees by maintaining deeper collaboration and communication with them. Along with creating awareness about the roadmap, they must also ensure proper training for employees to ensure successful implementation.

It is advisable for retailers to select intuitive technological systems for quick adoption and productive use by teams. The right platform facilitates better collaboration among team members by ensuring improved visibility and access to real-time data for all. Retailers can benefit from platforms that eliminate data silos by enabling greater visualization of data, updates on the latest supply chain trends and even finding new business prospects.

Leverage data and analytics to aid digitalization. Data can prove to be a real game-changer for supply chain digitalization. There is a noticeable shift toward digital transformation to use data for risk mitigation and efficient supply chain management. The global data analytics market is projected to grow at a CAGR of 13.84% in the period between 2023 and 2027.

Advanced technologies like data analytics and AI generate proactive insights to help stakeholders with intelligent decision-making and create agile supply chains. These insights can help identify profitable markets to source products, new suppliers, upcoming product categories, faster trade routes to avoid shipment delays, manage inventory, track shipments and much more. The predictive analysis utilizes real-time data to produce a clear picture basis of past trends and the present environment.

Shift to cloud technology. Budget crunch or security issues are often pressing concerns for global retailers seeking to digitalize their supply chains. They can look toward cloud technology or more advanced asset-light models to seek a secured and robust approach toward supply chain digitalization.

Cloud-based platforms offer fast, economical and minimal-maintenance ways to manage supply chains. Such platforms are becoming increasingly popular as the cloud-based supply chain management market is projected to grow at a CAGR of 11.09% in the period between 2020 and 2025. Cloud-based systems also offer higher security for sensitive data through features like firewalls, threat intelligence and data masking. Similarly, retailers can also adopt the asset-light strategy of supply chain management to reap cost benefits from outsourcing capabilities to external agencies.

Taking the right technological path to deliver a superior customer experience. Increasing supply chain challenges are pressuring retailers as they work to meet dynamic customer expectations. Higher fulfillment costs, shifting demand trends and complex inventory challenges are only some of the problems that retailers currently face. At this point, it is crucial for retailers to carefully invest in a system with a clear motive to deliver the target experience.

As retailers proceed to build effective omnichannel markets, it is imperative to think through and consciously implement an enterprise-level strategy. Departing from the linear supply chain logic, retailers can start by clearly defining business objectives, envisioning the network’s structure, identifying tech and data needs and building use cases. Once the foundations are set in place with complete transparency, retailers can strive to make their systems more advanced.

Create a digital-based supply network. A trend gearing up for the good is the shift from linear supply chains to digital supply networks that will promote the standardization of supply chain processes across the industry globally. DSN or Digital Supply Networks are systems built on digital foundations that integrate data gathered from various points and use it to improve production and supply operations.

DSNs are new supply chain models aiming to improve decision-making for retailers across the globe. With information at the core, digital supply networks enable a streamlined flow of data, end-to-end visibility, machine learning capabilities and real-time analytics. Beginning with defining their supply chain goals, retailers can integrate suitable technologies in their operations, identify and mitigate the problems and build the relevant DSNs for their supply chains.

Supply chain digitalization is coming to the forefront of the retail industry’s agendas, and it is a positive sign. While barriers to this advancement exist, having a clearly defined roadmap, gaining internal confidence of different functions and building awareness about different technology options can help overcome them. Global retailers must focus on a systematic digitalization of the supply chain to support, control and adapt to the change seamlessly.


Shalabh Singhal is a technology entrepreneur based out of Palo Alto. He is the Founder and CEO of the U.S.-based SaaS start-up Trademo. Before Trademo he founded ZipLoan, a fintech MSME lending startup, and Credence, a sales CRM startup. Over the last 12 years of his entrepreneurial journey, he has accumulated vast knowledge and experience in product development, supply chains, cross-border trade and analytics. Singhal firmly believes that supply chains are central to our civilization and data can help drive much-needed resilience in global supply chains. He started his career with Goldman Sachs, New York as an analyst. During his stint with Goldman Sachs, he built financial products for Goldman’s Institutional clients. Singhal completed his graduation in Electrical Engineering from IIT-BHU. He is a CFA(USA) Charterholder and Alumni of Stanford GSB SEED.

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