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Retailers are struggling to cope with the impact of the pandemic on their businesses – issues that are reflected in their supply chains, which are seriously flawed on several fronts.
But the overall pressure they are under affects their ability to overcome these challenges.
In a study recently published by LogiSource in partnership with Coresight Research, 88% of retail executives surveyed reported that the Covid-19 pandemic was having at least a moderately negative impact on their bottom line.
Half of the respondents said the impact was very strong.
The impact on balance sheets is worrying: 51% rated their situation as “moderately critical,” while 11% feared they would not survive unless the major trends change direction.
With margins under pressure moving from in-store to online sales, along with ever-increasing shipping costs, retailers have tried to shift delivery to other channels, like lockers or curbside pickup. .
Last August, the number of retailers offering free shipping fell 12.5% year-over-year, according to a Gartner survey of 500 major retailers.
And managing inventory during peak season was difficult. According to a report released in early December by Advanced Supply Chain Group (ASCG), 66% experienced delays in stock deliveries and 63% reported availability issues.
The report found that the pandemic had forced 82% of respondents to change their inventory management practices and 40% had invested in improving the accuracy of their inventory management.
Some of the problems were due to planning issues. Fluctuations in demand and product availability made planning a difficult juggling act for everyone, but many players were handicapped by limited planning capacities, as Reuters Events showed in a report on sector supply chain planning, based on inputs from 394 supply chain leaders.
For some, their understanding of the supply chain was hampered by insufficient end-to-end visibility, where 18% of respondents reported challenges. Overall, visibility was better in the warehouse, as opposed to in-transit or in-store inventory, but even in the warehouse, less than two-thirds (62%) had full visibility.
Inadequate planning tools, such as outdated legacy systems and traditional supply chain practices, have emerged as another major flaw for a number of retailers. No less than 28% had manual planning processes. The most used tool was Excel, for 22% of respondents; while 20% used warehouse management systems for their logistics planning, 16% had bespoke tools and 15% used transportation management systems.
The Reuters Events study identified several aspects affecting planning capacity, from lack of integration with other systems and the inability to consolidate workloads through a centralized platform, to lack of performance measurement inventory planning.
One third of respondents experienced significant gaps between planning and execution, and 17% found that in execution their plan was not achievable.
Paralyzed by these gaps and cost pressure, many retailers are struggling with customer expectations and cost control, which have emerged as key challenges in the industry, according to the Reuters authors.
They found that the overall state of retailers’ supply chain planning systems remains “ inadequate, ” but improved last year compared to 2019.
But for companies struggling to stay afloat, that’s little comforting.
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