Retail stores have had to adapt their operations to comply with social distancing measures © Getty Images
Retail stores have had to adapt their operations to comply with social distancing measures © Getty Images

Retailers split on Covid-19 early supplier payments

More than half (58%) of retailers found human intervention was needed to respond to fluctuations in supply and demand due to Covid-19, according to a study. 

The study, conducted by WMG at the University of Warwick and software firm Blue Yonder, found the majority (61%) of retailers used inventory to buffer against the disruption of Covid-19, but many said a high degree of manual intervention was required to respond to changes in demand.

Jan Godsell, professor of operations and supply chain strategy at WMG said: “With 75 to 80% of products seeing a demand fluctuation, retailers were slightly better at responding to decreases rather than increases in demand. Whilst retailers found that their supply chain processes and systems to be effective in responding to the demand fluctuations, many were still dependent on the human touch.

“Using inventory to buffer against the disruption of Covid-19 was the most common strategy deployed by retailers. This provides the greatest certainty of supply but comes at a cost. 

“In contrast, only just over a quarter (29%) of retailers relied on suppliers with more agile manufacturing and distribution networks, which is a potentially more resource-efficient and resilient response.”

The study analysed how 105 retailers in Europe, Asia and the Americas responded to the coronavirus outbreak.

It found retailers were polarised in their treatment of supplier payments, with 37% delaying payments and 30% making early payments.

Retailers have faced a variety of challenges as a result of the pandemic such as unprecedented demand for some particular products and no demand for others, WGM and Blue Yonder said.

Many stores have been forced to close, or adapt their operations to accommodate social distancing. Changes have also impacted online shopping, which presents its own operational challenges.

Workforce was a dominant issue, with 59% of warehouse and 48% store operatives being affected by quarantine or illness. This often resulted in the closure of online operations and the need to recruit temporary staff.

Godsell added: “From warehouse and store operatives being affected by quarantine or illness to an over-dependence on human intervention within supply chain planning, Covid-19 has highlighted the human vulnerabilities across retail supply chains.”

The study identified the need for future investment in flexibility, visibility and automation to improve future resilience.

Wayne Snyder, VP retail strategy, EMEA at Blue Yonder, added: “Early indications in Asia show that customers have been most supportive of those retailers they deemed to have responded best to the crisis and we’d expect that pattern to follow across Europe and the US. 

“A critical learning for retailers is the need to invest in creating supply chains with greater flexibility, visibility and automation. Here technologies such as artificial intelligence and machine learning will play a key role in helping retailers navigate future disruption, whilst still meeting customers’ expectations.”

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