3 reasons supply chain visibility is vital to retail resilience

The 2020s have already brought unprecedented upheaval for retail and CPG brands, evident in the massive fluctuations in logistics costs and lead times during the pandemic, the economic pressures affecting buying behaviors, and the rapid evolution of new sales channels. Disruption is the new norm.

Retail supply chains need the flexibility to adapt to any challenge, from more recent global emergencies like the Red Sea crisis to resource shortages and industrial action. If they don’t, customers will simply go elsewhere.

Supply chain visibility is the key to this resilience. As the Council of Economic Advisers explains, “Resilience can be achieved through better data on the structure of supply chains, investments in redundancy, greater ability to substitute between inputs, and improved communication across the supply chain.”

Most retailers have already invested in systems to make their lives easier, from established technologies like transport or warehouse management systems to newer real-time visibility tools to enable flexibility. Retailers must connect data from all these systems and gain end-to-end visibility of supply chain processes.

Here’s three reasons why:

1. Understanding what’s really happening
Visibility empowers retailers and CPG brands to understand what’s happening within their supply chains. One retailer, for example, knew their carrier spend was excessive but didn’t know why. By increasing the visibility of decision-making hierarchies (or behaviors), they realized carriers were declining primary tenders, then going onto the spot market and accepting the same load as a secondary tender at a higher rate. This costly trend was invisible with standard reporting tools.

Retail supply chains are made up of multiple departments, and the hand-off points between these are the largest areas of opportunity. The “chain” in “supply chain” is ultimately how everything links together. Phone calls, emails and instant messages are traditionally used to share information at these hand-off points. But these are ineffective, and a new approach is needed where exception handling is automated and the hand-off points between departments become a single source of truth linking them together.

With end-to-end visibility, it’s possible to gain an overview of all departments, see how their processes interact and find the root cause of any issues. Problems are often felt first in inventory, for instance, with alarm bells raised by too much or too little stock. But these issues almost always originate elsewhere – perhaps in procurement or demand planning. With this knowledge, retailers can have the right conversations and begin to make changes.

2. Taking the appropriate action – fast
With full visibility into the supply chain, retail and CPG brands can take action to drive value.

Following the pandemic, a well-known CPG brand realized their transportation costs were increasing due to a large number of shipments with underutilized capacity. They visualized transactional data in the shipment planning process and augmented it with additional data from parallel processes like procurement, production and fulfillment. They could then take proactive action, leveraging low code and no code automation and prioritizing action through operational task lists. The result? Millions of dollars in transportation spend reduction in a matter of months.

This ability to act on insight is particularly useful when dealing with unanticipated challenges. With the data available to recommend the next best course of action, retailers can adapt to any situation. But visibility also allows better long-term decisions.

3. Making better strategic decisions for the future
Retailers must continually adapt to market trends, and end-to-end supply chain visibility can make this a strategic, data-driven process. Reverse logistics is a great example.

The rise of online shopping has significantly impacted retail returns, which are expected to exceed $620 billion in 2023. A variety of return options means a better customer experience, but the logistics behind returning goods to the warehouse, reprocessing and reselling is often costly and haphazard, with inventory frequently written off.

With full supply chain visibility, retailers can understand how long returns take to reprocess. They can see shipping and handling costs, and what proportion are eventually resold. They can look upstream to see what’s raising the return rate – perhaps low-quality products from suppliers or too many touches in the warehouse increasing damage risk. With this information available, retailers can make informed decisions about their reverse logistics strategy.

Most retail and CPG brands are already investing in technologies to improve supply chain performance. By connecting data from WMS, TMS, ERP and other transactional systems to enable full end-to-end visibility across the supply chain, they gain the insight and flexibility to boost resilience in a world of continual disruption.

Source: Supply Chain Dive

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