How retailers are rethinking supply chain strategies

Retailers are refocusing supply chain strategies towards forecasting, data visibility, and localisation to adapt to changes in light of the pandemic, according to research.

A survey by Capgemini Research Institute found two-thirds (66%) of retail and consumer product organisations were changing their supply chain strategy following disruptions and shifts towards online shopping.

Firms are putting efforts towards demand forecasting, improving supply chain visibility, and investing in regionalising and localising supplier and manufacturing bases.

Covid-19 was seen to be “a wake-up call” with over eight in 10 retail and consumer product organisations facing disruptions, and only 25% of retailers believing they had the agility needed to support “evolving business needs”.

Lindsey Mazza, global retail supply chain leader at Capgemini, said: “Consumer packaged goods and retailers recognise the great risk of future disruption, and they have an opportunity to be in front of creating agility and resilience to adapt their supply chain networks.”

Following significant difficulties around effective demand planning due to inaccurate and out-of-date information on customers, two-thirds of firms (66%) plan to make improvements by restructuring supply chains according to demand patterns, product value and regional locations.

Over half (54%) are turning towards technologies such as analytics and AI to inform demand forecasting.

Lack of supply chain visibility caused barriers for three quarters of firms (75%) when production capacity needed to be rapidly increased or decreased due to Covid. 

There is also a move from a global production base to a localisation or regionalisation of manufacturers, with 72% of consumer product organisations and 58% of retailers actively investing in changes. 

Mazza added: “The pandemic was an accelerated learning event. Organisations realise that new technologies can enable much-needed agility – from improving demand predictions, to boosting fulfilment to quicker, cost-effective last mile deliveries.

“By investing now, organizations put themselves in good stead to safely support consumers in their time of need – whenever the next industry disruption may be.”

The report surveyed 400 supply chain executives from consumer product and retail firms with reported revenues of more than $1bn for the last financial year.

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