- “Six months ago our businesses all thought this was transitory, now every business I know expects this to last in 2023 and 2024.”
- Being able to accurately predict demand for their products is the key to striking the delicate balance of avoiding stock-outs of the most profitable items and avoiding having warehouses packed with inventory that cannot be shifted.
- Diversify suppliers. Take a closer look at how much you pay for shipments and factor in the current lead time. Analyze whether or not suppliers are meeting their targets and your standards.
by Mark Hook
From ports clogged with containers and raw materials running low, to factories shutting down and truck drivers being in short supply, retailers have faced a steady stream of devastating supply chain issues over the last year. The worst part is that industry experts and economists now believe the problems could continue into 2023 and beyond, with geopolitical tensions and ever-increasing costs adding to the disruption caused by the pandemic and a boom in consumer demand.
As Ian Wright, chair of the Food and Drink Federation, told the House of Commons business, energy and industrial strategy committee: “Six months ago our businesses all thought this was transitory, now every business I know expects this to last in 2023 and 2024.” Many retailers have, understandably, reached a crisis point. To survive and grow successfully, many are now having to make critical decisions to navigate supply chain challenges.
The good news is that brands who proactively take the right steps to deal with supply chain issues ahead of time can do more than just survive — they can thrive. After all, when supply chain management is effective, it is proven to lower a company’s overall costs and boost profitability.
Here are six ways brands can beat the supply chain crisis:
1. Optimize Inventory
Without optimized inventory, promotions or peak periods will feel especially stressful during the supply chain crisis. For retailers, being able to accurately predict demand for their products is the key to striking the delicate balance of avoiding stock-outs of the most profitable items and avoiding having warehouses packed with inventory that cannot be shifted.
The best demand planning tools make this easy for brands by connecting sales data and factoring in seasonality and promotions to predict what consumers will buy. Armed with accurate inventory forecasts, retailers can regain control over their supply and focus on replenishing the most successful items. Optimizing inventory in this way makes good business sense all the time, but it is particularly important as brands navigate the current market.
2. Automate Shipping
With container costs up by around 600 percent, it is essential that retailers streamline shipping workflows as much as possible — and that means introducing automation. Automated shipping typically means that as orders are placed, pick, pack, and ship workflows — including choosing the best shipping provider, sending invoices, and printing labels — are triggered automatically. If implemented properly, automated shipping can help dramatically boost supply chain efficiency, saving valuable time and resources. Ultimately, automating shipping can help your business continue to grow and keep your customers happy.
3. Follow Your Data
As the leader of a fast-growing business, your success rests on being able to make the right decisions at the right time. However, the supply chain crisis has brought with it huge uncertainty, which makes it harder than ever to confidently make snappy decisions. The solution? Tech tools that give you the insight you need, when you need it. With the right data, you can make smarter, faster decisions about everything, from which new channels you should add to boost profit to which new items you should invest in. In these uncertain times, data removes any guesswork and offers a roadmap to protected margins and an optimized supply chain.
4. Diversify Suppliers
It is easy to get stuck in a rut of using the same suppliers, but it is time for that to change. Take a closer look at how much you pay for shipments and factor in the current lead time. Analyze whether or not suppliers are meeting their targets and your standards. This will help you work out the cost effectiveness of each provider. If a supplier is cheap, but the lead time is long, it might not make business sense to continue to work with them as you will not be able to make sales during their replenishment time. Consider investing in leading operations software that can provide real-time, detailed visibility on inventory levels across channels and even assess supplier performance. Ultimately, the more you know about how your suppliers work, the more you can avoid volatility in your supply chain.
5. Speed Up Cash Conversion
With so much disruption taking place, it is a good idea to think carefully about how long it takes your business to convert inventory into cash. It may no longer be practical to use a ‘just in time’ approach to inventory, especially if significant disruption would quickly leave you short of cash. Work out whether your cash is tied up in more days in inventory and raw materials than in days to collect on sales — a good Retail Operating System will easily do this for you. Then decide if you need to switch up your workflows and practices to speed up how long it takes to convert your inventory into cash.
6. Keep Looking for Ways to Improve
When it comes to managing the supply chain crisis, there is no magic bullet. The steps mentioned above will certainly help you optimize your own supply chain, but it is also important to be open to opportunities to continuously improve as the commerce landscape continues to evolve. Whether it is embracing automation, diving into advanced reports, or implementing warehouse management, focus on consistent efforts to reduce inefficiencies as part of your long term success strategy.
Mark Hook is the VP of global brand, comms, and PR at Brightpearl.