Commentary

OPINION Building supply chain resiliency to weather the retail storm

Mark Morley, director of strategic product marketing, OpenText, explores how retailers can ensure supply chain resilience during and after the pandemic.

Coronavirus has led to one of the UK’s largest retail resiliency experiments to date, with quarantines, shutdowns and trade disruption significantly impacting supply chain operations for 1 in 4 retailers across the country. The reality is that retail operations will simply not “return to normal”. In fact, Deloitte recently referred to COVID-19 as a “black swan event” that will have reverberations across the industry and impact supply, demand and liquidity for years to come.

We can’t disguise the fact that turbulent times lie ahead for the retail industry. In addition to the second wave of COVID-19 and the increasing number of regional lockdowns being put in place across the UK, retailers are also facing uncertainty around the UK’s trading future with the Brexit transition period drawing to a close in December. But looking ahead, it’s not all doom and gloom, as it often takes a compelling disruption to instigate change. In fact, many organisations have already demonstrated their ability to adjust to new challenges quickly when required during the UK lockdown period earlier this year.

For example, Tesco spent £840 million adjusting its online and digital operations to meet the soaring demand for home deliveries during lockdown, which included a priority list of 590,000 vulnerable people. Another example includes Holland & Barrett who partnered with Deliveroo to sell gluten-free, vegan and low sugar products via the popular takeaway app to ensure they could continue to serve customers with specific dietary requirements who were self-isolating at home.

The pandemic has definitely been a stress test for UK retailers and their global networks, exposing inherent weaknesses and highlighting the need for continuous improvement to sustain efficiencies and remain competitive. The case studies mentioned above are just two examples of companies that have made a fundamental change to their approach to business practices, rethinking their pre-existing supply chain and building in more resilience by adopting more robust digital tools during the height of the pandemic.

Looking ahead to the next phase of the pandemic, and with only a couple of months left before the Brexit transition period finishes, how can retailers continue to adapt their supply chain operations to achieve long-term resiliency and be better prepared for the next major disruption? In my opinion, retail organisations must focus on four key areas to future proof their supply chain operations.

  1. Flexibility – Harnessing technology which enables flexibility and keeps vital channels of information accessible across organisational and geographical borders is essential for business continuity. Moving data from on-premise storage to cloud-based storage, for example, will ensure that all business information is globally accessible for both staff and relevant third parties. As a result, the supply chain is better positioned to easily and quickly adapt to any restrictions put in place in specific regions or countries.
  1. Collaboration – It’s also important to maintain collaborative relationships with external partners. Deploying a cloud-based platform allows retailers to improve the contact management relationship with trading partners if a global disruptive event occurs. As a result, partners can continue to monitor and supervise the execution of dual sourcing strategies. It also means they can use the centralised management of all trading partner contact information to establish the post-disruption condition of a supply chain quickly – providing significant competitive advantage while also leading to more accurate risk assessment and prevention steps for future disruption.
  2. Visibility – Retailers should consider transitioning to technologies that integrate third-party data sources to provide the visibility needed to speed up and improve decision-making processes. By doing this, retailers will be able to self-monitor the functionality of critical components that could be impacted by unforeseen supply chain and operational disruptions.
  3. Insights – Analytics, artificial intelligence, and machine learning technologies are invaluable during a period of disruption. A greater focus on data preparation and integration to bring together information from a wide range of sources is crucial. By capturing and analysing its entire data set, a retailer can derive insights which enable greater efficiency, improve operations, drive innovation, and open up more new business opportunities.

For instance, the adoption of a cloud-based predictive analytics platform enables real time alerts when supply chain issues arise – such as a late delivery or a missed order – and ensure timely human intervention can correct these errors. It also allows for ‘what if’ scenarios to be played out to understand the impact of any disruption or change, such as introducing a new set of second source suppliers across a supply chain. Essentially, better information management layered with analytics and machine learning technology can provide the insights required to remain on top of potential issues and maintain workflows – both of which are vital for the viability of retail operations within the larger supply chain system.

Future-proofing the supply chain  

Supply chain disruption is nothing new, but the coronavirus crisis is arguably driving disruption on a scale that has not been seen before in our lifetime – and it will change the way the retail industry operates forever. In addition to the ongoing health crisis, the UK’s post-Brexit transition period draws to a close in December and many question marks still remain around our trading future.

Regardless of what the future holds, organisations that have adopted a cloud-based supply-chain platform – either before or in response to the pandemic – to boost their agility, will be ready for a variety of contingencies. With end-to-end supply chain visibility and flexible, scalable ways to trade, collaborate and grow digital partner ecosystems, UK retailers will be better prepared for the retail storm that’s brewing.

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