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3 Common Supply-Chain Weaknesses Retailers Must Solve to Keep Up with Consumer Expectations

Three common supply chain weaknesses retailers must solve

eCommerce marketing is usually top of mind for digital retailers – and there’s no question it’s important to have a robust omnichannel marketing strategy that’s personalized to meet your customers’ unique needs and preferences. But when it comes to building a robust customer experience (CX), your strategy needs to include more than strong marketing practices. Hidden beneath the shiny marketing exterior, your supply chain is an integral part of that CX to ensure that the entire customer journey meets customer expectations. Never has that been more important than during Covid, a “black swan” event that continues to disrupt supply chains and impact the ability to rely on correct supply numbers, pursue real-time inventories, and distribute products efficiently.

The Implications of Covid-19 on Supply Chains

Before the pandemic, most online retailers sought to improve supply chain and logistics performance in terms of reducing costs. But Covid forced retailers to adjust their priorities. As ports closed and manufacturing lead times grew, the need for supply chain systems that could quickly navigate disruptive forces and respond faster to a much more volatile (and unpredictable) supply and demand became critical.

Instead of driving down cost as the primary metric of success, companies today must make their supply chains more resilient, collaborative, and networked. In fact, most enterprises are investing in new solutions based on AI, machine learning and other advanced technologies. Despite the fact that more than 70% of companies suffered negative effects to their operations because of the pandemic, 92% did not halt technology investments in 2020.

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The past year and a half of disruption has accelerated the need for organizations to transform traditional supply chains to stay competitive and meet customer expectations as they evolve. To implement the right supply chain strategy for your organization, it’s important to first have a clear understanding of how the pandemic has affected supply chains in the U.S. and around the world.

Talent shortages, multi-country disruptions, and overly burdensome IT systems highlighted long-standing gaps in supply chain capabilities that were often already bursting at the seams. Most experts agree that rather than causing new problems, COVID-19 exposed three areas of weakness that existed before the pandemic:

1. Fulfillment Disruptions

Over-reliance on real-time and just-in-time inventory management created an environment in which interruptions caused serious fulfillment disruptions. While customer expectations grew as online retail numbers soared, the impact of COVID-19 paired with heightened demand for available transportation resources created massive slowdowns in delivery. As a result, the need for newer technologies that could provide more flexible fulfillment options became much more than a “nice-to-have” – they became a necessary adaptation to survive.

2. Real-time Transparency Demands

The need for real-time transparency throughout the entire supply chain became critical as organizations tried to set more accurate expectations with customers and supply chain partners. This capability will only grow in importance as supply chains increasingly rely on even more suppliers and distributors in the post-Covid economy.

3. Limited Supply

A focus on cost reduction created many supply chain systems that relied on single source supply, which created havoc when that supplier was forced to shut down or delay manufacturing as local Covid protocols changed. Perhaps the most well-documented example of this disruption was the reduced supply of PPE experienced by healthcare providers around the world when access to a handful of Chinese manufacturers became limited. In the coming years, a growing number of companies have already prioritized reshoring strategies as one way to more easily navigate supply chain disruptions in the future.

All told, 94% of Fortune 1000 companies reported seeing coronavirus-driven supply chain disruptions and 56% of CFOs identified this as a key issue facing their company. Without access to sophisticated supply chain and data management systems, small to medium-sized organizations suffered even more. From a customer perspective, this is bad news. Every time a customer turns to a different brand to find a product, there’s a chance they won’t come back. According to one McKinsey survey, 75% of consumers opted to try new brands or methods of shopping early in the pandemic to address product availability challenges.

How Retailers Can Respond to Supply Chain Disruption

But here’s the good news. After experiencing each of these challenges firsthand, enterprises are more motivated than ever to look for new ways to become more flexible in the face of supply chain disruption – which will help create more resilient, adaptable systems that are better equipped to withstand future challenges.

Fortunately, cost-effective technologies already exist to support more efficient and adaptable supply chains for enterprises of any size, and at any stage in the cycle – from supply to distribution, to warehousing and shipping. To be effective, however, these technologies must have a strong focus not only on the overall business goals of the organization, but also on the needs and preferences of the customer experience.

When viewed as an integral part of the CX, well designed supply chain systems enable a superior customer journey that begins with a need or desire and ends with a product in hand at the right time, at the right place, and for the right price.

Organizations who successfully navigate severe disruption can fundamentally transform their supply chain to empower richer, more robust omnichannel experiences. More importantly, they can construct next-gen supply chains that are more agile, more forward-thinking, and better equipped to make changes at a moments’ notice.

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