Retailers Need Synchronized Supply Chain Solutions for Better Demand Forecasting and Inventory Visibility, According to New Data from Blue Yonder and Retail Systems Research

Report makes case for data-driven and AI-enabled supply chain solutions

Blue Yonder, the leading digital supply chain and omni-commerce fulfillment platform provider, and Retail Systems Research (RSR), the leader in retail technology research, have released a new benchmark report: “Retail Supply Chain: Navigating Through Rough Waters with Improved Agility.”

The report demonstrated retailers are slow to make progress in addressing problems associated with demand forecasting and visibility into available-to-sell inventory. The survey also presented a strong case for prioritizing AI-centric supply chain solutions in the new year.

“Supply chain disruptions are top of mind as we head into the holiday season, but the weeks following this season may prove to be even more challenging for retailers,” said Edward Wong, SVP Global Retail Sector Leader at Blue Yonder. “Retailers have benefitted from strong consumer spending so far, but inflation and supply chain delays are threatening to slow demand and weaken pricing power, potentially leaving retailers with a mountain of unsold inventory come January 1. The good news is retailers can employ AI-centric supply chain solutions to navigate these challenges.”

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@BlueYonder and Retail Systems Research (RSR) just released a new benchmark report: “Retail Supply Chain: Navigating Through Rough Waters with Improved Agility”

The State of the Supply Chain

Even at the beginning of the pandemic in early 2020, retailers were not confident in their abilities to either see supply chain conditions in real time or model contingency plans to respond more effectively when disruptions occur. A year later, what confidence they had has only eroded according to the report:

  • 41% of retailers say they can monitor capacity and add more when market conditions demand it, down from 56% in 2020
  • 40% of retailers can currently understand the impact of bottlenecks and prioritize which ones need to be addressed, down from 48% in 2020
  • 32% can currently simulate the effect of changes to the supply chain before implementation, down from 42% in 2020

The supply chain also now has new demands put on it, including a greater focus on sustainability. From the research, 93% of retailers agree or strongly agree they must find more sustainable practices and products to satisfy changing consumer tastes, with 51% saying they strongly agree with that statement.

Business Challenges

Although retailers are chipping away at problems that stand in the way of greater supply chain agility, they still have a long way to go. Retailers across fashion, general merchandise (GM), fast-moving consumer goods (FMCG) and fashion/specialty/brands were asked to identify the top challenges that a more agile supply chain would help their business address.

  • 65% of FMCG retailers identified creating more flexible sourcing strategies due to geopolitical and environmental issues as their top concern
  • 52% of GM retailers said rapidly changing consumer demands that undercut ability to buy big and lower costs was their chief concern
  • 67% of fashion/specialty/brands retailers cited the need to be able to monitor and adjust the supply chain in real-time as their top challenge

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Opportunities for Growth & Innovation

Retailers recognize the need for a more agile supply chain and see the solution in data and artificial intelligence (AI). And when asked to rank the top three opportunities associated with an AI-enabled supply chain:

  • 60% of FMCG retailers said predictive models to anticipate supply chain disruptions at the individual SKU level and recommend cost-optimized corrective actions
  • 41% of GM retailers said real-time and accurate visibility throughout the supply chain to better control timing and cost
  • 38% of fashion/specialty/brands retailers said the ability to leverage external influences like macroeconomic factors, weather, consumer sentiment, demographic trends in mid-to long term forecasting to drive supply chain decisions

The report found that retailers aren’t just thinking about these opportunities, but also budgeting for them as well. From the report, 60% of retailers are budgeting or have planned projects focused on current demand vs. forecast analysis & re-balancing.

“The pandemic has been hard on everyone, and it has only accelerated changes needed in the supply chain to meet the dramatically new and different ways that consumers shop,” said Brian Kilcourse, managing partner, RSR Research. “While both over-performers (‘Retail Winners’) and their competition are equally eager to get past disruptions, Winners haven’t given up on their relentless search for new efficiencies. In fact, achieving ‘operational excellence’ is a core strategy for Retail Winners, and recent disruptions on both the customer and supplier side of the operational model hasn’t changed that at all.”

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