Southwest Technology

‘Retail Winners’ Say Real-Time Inventory Visibility Is Paramount

supply chain, Symphony RetailAI

Dallas, Texas-based Symphony RetailAI, a global provider of integrated AI-enabled marketing, merchandising and supply chain solutions for FMCG retailers and CPG manufacturers, recently announced the findings of a new benchmark report, “The Retail Supply Chain: Designing New Ways to Satisfy Demand.” The sixth annual study focused on supply chain strategy, conducted by Retail Systems Research (RSR) and sponsored by Symphony RetailAI, shows that retailers are driven to change their supply chain strategies for a number of reasons, but they all revolve around the need to improve supply chain execution in a changing world.

“We have years of data that points to the fact that supply chains aren’t keeping up with the changing world of retail,” said Brian Kilcourse, managing partner, RSR. “It’s very hard to separate the customer experience from supply chain excellence, and retailers know this. The variability of consumer demand is the most widely reported business challenge in this year’s research, but the best performers, what we call ‘Retail Winners,’ have a very different view of the world. The importance Retail Winners place on varying aspects of inventory—levels, agility and location—as well as social and environmental issues, reveals a vastly different positioning strategy. The outbreak of Covid-19 across the globe only underlines the need for greater supply chain agility.”

 

Unpredictability of demand cited as challenge

Forty percent of all retailer respondents identified unpredictable consumer demand as their top business challenge. But isolating the results to look at these highest performing retailers versus other respondents shows that Retail Winners feel different pressures than others.

Only 28 percent of under-performers cited “making sure our supply chain can keep up with demand” as a top challenge for supply chain execution, compared for 40 percent of Retail Winners. The same percentage, 40 percent, of Retail Winners indicated “digital channel growth outpaces store growth, putting new pressures on supply chain” as a top challenge, while cited by only 21 percent of non-winners.

 

Retail Winners have broader strategic concerns

In striving to better understand demand and shopper preferences, leading retailers also are starting to make headway on organizational changes to impact consumers’ societal and environmental expectations. Additionally, dynamics of customer demand are changing how products are sourced. It’s no surprise to see that this latest research shows product quality as the driver of 85 percent of retailers’ supply chain strategy, behind the need for speed and even low cost.

Consumers today are more demanding about which products they want and the prices they are willing to pay, but they also care a great deal about where the product was made, how it was manufactured and what the ecological impact of that process was. 

According to the research, over-performers are placing high importance on being conscious of factory workers, which indicates their desire for overall awareness and supplier collaboration in the end-to-end supply chain process. Only 31 percent of under-performers say that the globalization of retail has caused them to re-think supply chain strategies, compared to 55 percent of Retail Winners. Sixty-nine percent of over-performers “strongly agreed” that the way workers are treated in contracted factories is of highest importance, compared to 54 percent of others. 

 

Inventory visibility, forecasting are paramount

Whether inbound, outbound, on the shelf or in the distribution center (DC), retailers recognize the need to know where their product is. Seventy-six percent of Retail Winners see “real-time visibility across the supply chain” as a focus area for improvement, compared to just 54 percent of average and under-performers.

Inventory management is a challenge for all retailers, but the concerns of Retail Winners versus others present interesting comparisons. Most notably, Winners fear that they have too much inventory, while poorer performers tend to believe they don’t have enough. Thirty-three percent of Retail Winners say their inventory management issues are characterized by too much inventory in DCs, compared to 21 percent of others, while more under-performers (36 percent) cite too many in-store out of stocks as a challenge, versus 29 percent of Retail Winners.

RSR suggests that it’s likely Retail Winners have made more and better investments in forecast engines than their poorer performing peers, but the research points to inventory visibility and forecasting as opportunities for all retailers in the current landscape.

“What we find most interesting from this research is that Retail Winners are focused on new methods for achieving better visibility and better supply chain execution,” said Patrick Buellet, chief strategy officer for Symphony RetailAI. “Their organization’s ability to execute in these areas will be not just a result of their strategic view of the retail landscape, but by doing entirely different things than the improvement efforts we’ll see non-winners take on this year. In the report, RSR is clear about one thing: it doesn’t believe that real-time visibility and accuracy will be possible apart from a ‘digital twin’ concept for the supply chain—essentially a digital representation of the physical supply chain enabled through AI. Symphony RetailAI looks forward to continually enabling this ability for leading retailers in 2020 through AI-driven and real-time supply chain insights.”

For this research, RSR conducted an online survey from November-December 2019 and received answers from 74 qualified retail respondents. 

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