The pandemic has led to several customer behavior changes and supply chain issues that call for a unified supply chain with greater visibility for stakeholders at both ends. However, the push for digitization of the supply chain is not new – it has only intensified in the current pandemic, adding to the pressure on the already stretched delivery systems.
To give you an overview of the supply chain changes caused by the pandemic, we spoke with experts across multiple industries and rounded up the critical challenges identified by them. Understanding these challenges is crucial to comprehend the future of retail and manufacturing and steer the supply chain in the right direction to expand its scope and turn it into an accelerator for the enterprise.
Bottlenecks in Container Movement
The retail industry was already reeling under the impact of the tariff wars between China and the US before the pandemic, creating pressure on the global supply chain. The pandemic magnified those challenges even further. As an example, consider the goods containers that move from China to the US. You’d agree that the container movement from the US back to China was much lower in the months before the pandemic, owing to the tariff wars. This created pressure on the number of containers available in China to ship to the United States.
The situation became even worse during the pandemic. Generally, once these containers reach the US, they are offloaded from ships onto trucks and trailers. However, the pandemic led to chassis and labor shortages at the ports. The chassis and trailers sitting in various companies’ distribution centers were not being emptied fast enough because of the pandemic and social distancing rules, labor shortages, and such. Thus, containers were not being picked up from the ports, leading to backlogs and preventing more ships from entering the harbor. By the time retailers picked their containers, they were already facing backlogs and manpower shortages, further slowing down the process.
Following the above, it is evident that retailers have inventory in the pandemic, but it isn’t reaching them in time for sales. As a retailer, this means you have stock that you have paid for, but you don’t have the option to sell it. Over time, when the stock does finally reach you, you’d already be facing backlogs and potential labor shortages, which may lead to further delays in putting the stock for sale. By the time you do get to it, the stock would probably be old, a little bit damaged, possibly out of fashion, and you’d also have spent considerably on storage.
Inter-dependencies of Multiple Geographies
The pandemic has highlighted the fragility of the global supply chains. As you are aware, a lot of manufacturing happens in Asia. However, many geographies are involved in the process before the manufacturing stage, and travel restrictions in even one area can throw the entire supply chain in disarray.
Evolving Customer Expectations
In addition to logistics, there’s been a marked change in buyer behavior over the years. In the past decade, we have seen a shift from brick and mortar to digital, and the pandemic has only accelerated this change. However, this sudden acceleration has created pressure on the existing delivery mechanisms, forcing retailers to think of new delivery methods that are swift, contactless, and involve fewer stakeholders. For instance, instead of same-day doorstep deliveries, retailers are now looking at in-store pick-ups, which calls for a major rehaul in the supply chain. To begin with, you need to place the inventory in the right place, or the entire system stands to fail.
So, a product that would have historically been in a distribution center must now be sent to a store where it is expected to be in high demand, to be picked up by customers when they need it. This represents a three-fold challenge in the supply chain:
- Gaining complete visibility to track products and predict demand accurately.
- Managing potential labor shortages by reducing the workforce in warehouses and increasing the number of people in-store to pick, pack, and ship.
- Diverting marketing dollars from existing promotions to promoting in-store pick-ups or whatever delivery model you intend to follow.
However, this is easier said than done unless you already have such flexibility built into your supply chain to pull the levers when required to handle these situations on a case-by-case basis.
Building Agile Supply Chains with Tech-Based Innovation
As we mentioned before, organizational leaders’ aim should be to turn the supply chain into an opportunity and profit center as opposed to be a hurdle to customer experience. Some trends we already see in this direction include the integration of blockchain and smart contracts to increase the accuracy of supply chains and intelligent automation – or artificial-intelligence-based technology like IoT and predictive analysis – to increase visibility, eliminate bottlenecks, and reduce time and costs.
For example, the pandemic is inducing reshoring, specifically the concept of reshoring of manufacturing, supply chain, and logistics to overcome geographical dependencies. This process can be facilitated by AI and advanced analytics to predict client demand and drive anticipatory shipping – for products, and perhaps services, too – creating a transparent, efficient, and customer-centric supply chain.
At Zensar, we are equipped to enhance the retail customer’s journey across mobile, web, and instore by identifying supply chain challenges and uniquely optimizing retailers’ delivery, fulfillment, and inventory capabilities, resulting in a lean, agile supply chain.
With our expertise and proven methodologies across inventory management, warehouse management (WMS), transportation management (TMS), and specialization in the implementation of leading Order Management Systems and Warehouse MS platforms, Zensar can fully digitalize your supply chain and further leverage technologies like AI/ML to infuse AI-driven Planning and Forecasting algorithms at more granular levels to deliver a reliable supply chain.