Online shopping has been on the rise for years, but due to the coronavirus pandemic, that growth skyrocketed in 2020. You just have to look at the trends from this last holiday season to see the proof: 71 percent of U.S. adults were planning to do more than half of their holiday shopping digitally in 2020, compared to 59 percent in 2019. E-commerce sales in November and December rose 33 percent compared with the same period in 2019.
The rapid shift in favor of online shopping was just one in a string of disruptions facing supply chains in 2020. Retailers and consumer packaged goods (CPG) companies alike have fought to keep up with changing consumer demand, shifting supplier networks, and new buying patterns. For example, consumer goods and products such as toilet paper or sanitizing wipes have had times where they disappeared off store shelves for weeks at a time, with no refill date in sight. While some supply chains have recovered for now, most companies realized that their supply chains need to handle future disruptions and uncertainties, since it’s not a matter of if these disruptions will occur, it’s when. Now more than ever, it’s critical that supply chains are agile and can respond to change at a moment’s notice. Retailers should rethink their operations now so they can quickly adapt to any new challenges that arise in 2021.
Prepare the Supply Chain by Leveraging End to End Visibility Capabilities
Nielsen research revealed that online shopping has gained popularity due to improvements in speed, cost, participation, transparency and trust. And, because of the pandemic, many shoppers are opting for the safety of non-physical stores. However, whether online or in-store, retailers need to ensure that they have end-to-end visibility into their supply chains to meet shopper expectations. Retailers will need to pay close attention to supply and demand levels to ensure that they can meet any offered promotions. To do so effectively, retailers will need to break down siloes that exist in their organization and leverage methods, like concurrent planning, which takes the entire planning network into view and triggers corresponding changes in the rest of the supply chain in real time when a change in one part of the supply chain is triggered. By increasing end-to-end visibility, retailers can monitor for demand both in-store and online to shift inventory accordingly.
Monitor Inventory Levels Closely by Leveraging Data Across All Sources
As inventory levels are adjusted for seasonal promotions throughout the year, retailers and CPG companies should leverage data whenever possible so that they can better understand where inventory is lacking, especially by leveraging e-commerce data sources. This way, they’re able to quickly pivot to deliver more inventory to warehouses and fulfillment centers where demand is highest. To get the most out of data, retailers should leverage any artificial intelligence (AI) or machine learning capabilities to consolidate and generate insights about their data on a mass scale vs. relying on multiple Excel spreadsheets. For the most impactful results, retailers must ensure that these tools can quickly read new data once it comes in, so they aren’t hindered by old systems or spreadsheets. Nearly 50 percent of retailers planned to use AI for their pricing and promotion decisions by the end of last year, meaning that these investments can help retailers anticipate where inventory and demand will be impacted, providing visibility into critical issues and helping them to respond in a more agile way.
Respond to Shopper Behavior with Scenario Planning
Throughout the year, retailers offer promotions tailored to their target shoppers. However, to ensure that the promotions offered are relevant and can be delivered on time, supply chain and demand planners should work closely with their marketing and category management teams to align with shopper demand. By leveraging tools like scenario planning, which helps promotion planning teams create “what-if” scenarios, retailers are in a better position to mitigate any promotional risks. For example, if a planned promotion doesn’t perform as expected, retailers can quickly create scenarios to adjust their next set of promotion plans to meet the change in shopper demand and increase the chances of the promotion being successful.
2020 forced retailers to look inward at their supply chains and demand planning systems to see where improvements can be made to respond to disruptions. To better adapt to any challenges arising in 2021, retailers will need to break down the siloes that exist in their supply chains to quickly act when inventory or demand levels change. The supply, demand and promotional planning teams will need to consistently communicate to respond to changes and map out various scenarios when plans aren’t being met. By prioritizing agility and resiliency in the supply chain, retailers will be in a better position to succeed and thrive.
Source: Total Retail