Planning challenges abound in retail supply chain
Forecasting, visibility, capacity to react to changes and system integration are the key issues, with few happy in their planning capacity to handle these challenges says new report
Retailers, manufacturers and their Logistics Service Providers (LSPs) all agree that there are several key issues in how supply chains are currently overseen and operate. These center around four issues: Forecasting; visibility; capacity to react to changes; and system integration, says the new 2020 State of Retail Supply Chain Report, which can be downloaded for free here.
The top concern across the retail supply chain is forecasting, which 30.8% of retailers and manufacturers chose and 27.5% of LSPs also said that this was their customers’ biggest challenge. This is followed by visibility over the supply chain (23.1%), the ability to react faster to changes (16.7%) and, finally, system integration (10.3%)
This combination shows a clear trend towards the need for deeper technological integration and digitalization, which can aid with the pressing concerns of having greater oversight of the logistics process and the ability to quickly modify it to best suit circumstances and demand patterns.
Hampering this is poor system integration, chosen by a little over a third of retailer in the report survey (34.6%). The next biggest areas for improvement were around the business intelligence capabilities of planning systems with: 32.1% keen to improve planning systems’ ability to test multiple scenarios; 30.8% wishing for automated planning and optimization; 26.9% needing more flexibility; 23.1% looking for automated testing of plans against key metrics; and 21.8% wanting both more complex rules built into systems and to be able to view the entire planning process more easily.
Clearly, there are substantial gaps creating major roadblocks for retailers and manufacturers in building more intuitive, smarter planning systems and the ability of said systems to cope with new parameters and inputs. It appears there are major opportunities for technology companies to provide solutions to bridge the gap between retail supply chain planners and their ability to both understand what is happening on the ground in their operations and project ahead. Logistics and purchasing managers are crying out for help in their planning software, so they can understand how plans will perform, test scenarios and have Artificial Intelligence (AI) help them to improve their operations.
This is underlined by the report’s findings from those supporting the retail supply chain. Few of those working in LSPs or technology and other solutions providers from around the sector believe that existing planning systems fully support efforts to improve the planning process, with just 6.3% of technology and other solution providers believing so and 16.5% of LSPs feeling this way. Indeed, the majority of technology providers said that installed systems are only good for measuring the current state of the planning process but are not good enough to improve it or are in effect pretty much useless.
There will therefore need to be considerable investment and coordination to address the issues of forecasting, visibility, low capacity to react to changes and poor system integration. The urgency of this is further increased by the current environment, where customers expect their items in shorter timeframes than ever before, inventory goes out of date at a rapid rate, returns are far more frequent and tracking of items through to delivery becomes the norm, all the while against a backdrop of shrinking margins.