Global Supply Chain Challenges in Retail Industry 2020
Practically every industry has faced certain difficulties in 2020 due to CoVID-19, so no wonder that global supply chain challenges in retail are even more prominent at the day.
Retail supply business has always been one of the most important in every way, providing goods of first importance even to the most distant parts of the world.
Needless to say, the retail supply chain, as one of the busiest chains, has to serve the changing needs of customers and focus on price and quality. Yet sometimes it’s impossible to predict the rise in the demand, or prepare for the upcoming changes in consumers’ lifestyle.
Everyone remembers empty shelves in the food retail stores at the beginning of 2020 and the panic around bottled water and paper, when the stores ran out supplies and couldn’t replace the stock fast enough to cover the demands.
The pandemic highlighted the efforts of retailers to build more flexible supply chains in 2020, which would be able to predict the demand and would let the retailers be ready for global supply chain challenges.
- Challenge 1. Shifting to “on-demand” availability
- Challenge 2. Profit margin is one of the lowest
- Challenge 3. Visibility and predictability
- Challenge 4. Trend responsiveness
- Challenge 5. Multichannel approach
Challenge 1. Shifting to “on-demand” availability
These years test the retailers for their readiness to embrace new approaches to distribution. Once people were eager to visit public places, which included malls and large retail stores. It was important to provide a wide range of goods covering customer demands on a shelf.
Right now one of the most difficult supply chain challenges in retail industry is that customers tend to use on-demand delivery services for FMCG, that replace physical brick-and-mortar stores.
For the global supply chain this means the need to completely overlook the supply chain, rethinking the usage of local warehouses and ways to deliver goods on demand.
Winning over customers through positive experience that fits their new lifestyle is one of the top global supply chain challenges in 2020.
Challenge 2. Profit margin is one of the lowest
Online channels play a huge role in the modern consumers’ life, allowing to compare prices across various retailers. E.g., Amazon marketplace often offers ridiculously low prices, so competition makes it impossible for retailers to beat it and sell goods for a higher price.
One of the global supply chain challenges forces companies to try reducing the costs for inventory management, warehouse space, transportation, etc. Therefore, a profit margin in the retail industry is one of the lowest throughout all sectors.
The purpose of every customer is to get the best quality goods at the lowest price with available customer support. A retail supply chain has to provide such a large variety of products on schedule to serve customers’ expectations through multiple channels.
To provide convenience to a consumer, the successful retailers aim to alleviate the pricing pressures by providing more features, adding larger assortment, and scaling their activities about product development and search for suppliers.
Challenge 3. Visibility and predictability
An ability to predict the demand correctly and readiness for fast changes in the supply chain is an ongoing improvement priority. Artificial intelligence-powered analytics enables real-time decision-making and discovery of delayed shipments warning signs. To minimize the delays of information from suppliers, manufacturers, and 3PL partners, retailers use shared programs with common environments. There are both out-of-the-box solutions and custom software options. Both options provide an answer to one of the tightest global supply chain challenges.
Challenge 4. Trend responsiveness
Being on top of the game means following the latest trends and offering customers something they haven’t heard of yet, even before they know that they need it. This approach allows increasing the profit margin and beat the competitors who don’t work as fast.
On the other hand, trends tend to come and go, and one of the global supply chain challenges is to know when the demand is about to fall beforehand, watching the global trends around the world.
Challenge 5. Multichannel approach
Consumers on average shop from at least three channels. Logistics from each of these channels will undergo complexity with the different cost and delivery schedule. To guarantee the success of omnichannel integration, retailers should transform business processes and deliver necessary information to consumers.
What about the growth of online and mobile retail sales? To thrive in this new paradigm of 2020, the retailers need to implement the most innovative supply chains, where products are distributed to consumers through multiple channels.
New technology solutions help in managing the omnichannel retail demands effectively. And, if you need a custom integration to your common retail channels, Coreteka team gladly help you with it.
Leading retailers are focusing their success around three areas: fulfillment automation, human capital, and digitizing their supply chain systems. With dozens of fantastic devices and concepts, global supply chain challenges can help the retail business grow into something more, and those companies which embrace the changes turn out to be on the winning end.
We are convinced that one of the major challenges of supply chain management is the readiness of every link in the supply chain for an innovative approach. Using new technologies to optimize processes and cope with the objectives of the ever-changing world is the key to success.