Retailers reveal plans for addressing supply chain disruption

New research from international logistics company Advanced Supply Chain Group (ASCG) uncovers how retailers intend to overcome supply chain delays and disruption in 2022.

Supply chain disruption hit many retailers over the golden quarter
Supply chain disruption hit many retailers over the golden quarter

Last year’s supply chain problems caused a below-par peak for numerous retailers nationwide.

According to new research from international logistics company Advanced Supply Chain Group (ASCG), one-in-five retailers reported Christmas trading, including Black Friday sales, was between 21% and 30% down on forecasts, whilst a similar number saw pre-tax profits at 16% and 20% below expectations.

This meant more than £5million in lost seasonal sales for a third of retailers, whilst 13% missed out on sales revenues worth over £1m.

Out-of-stock scenarios meant lost sales for 46% of retailers. Selling opportunities were also compromised by the late arrival of products and retailers not being able to get hold of the key products they really wanted to offer shoppers.

Almost a third of retailers (32%) reported that supply chain issues increased overheads and diluted margins.

A new eBook from ASCG shows how retailers are planning to avoid such negative impacts in 2022 and how they are planning to embrace other key consumer trends.

Retailers are prioritising four key actions to stabilise supply chains and enhance stock inventory management this year.

1) Early ordering

Getting hold of goods early was a trend that started to gather pace in the wake of the pandemic, and it’s one that retailers are aiming to build on in 2022.

A third of retailers plan to order stock earlier this year to mitigate supply chain disruption, with the majority (27%) placing orders six to eight weeks ahead of usual schedules.

Caroline Ellis, commercial director at ASCG, says: “Bringing in goods well ahead of peak is seen as the most logical answer to supply chain volatility.

“It can have its advantages but can also prove costly and risky for retailers. Consumer purchasing habits can change in a matter of weeks, leaving retailers with stockpiles of goods that become difficult to shift or need discounting.

“Rather than going early, retailers should consider alternative solutions to beating uncertainty. It’s possible to find different trading routes and methods for optimising transportation space to enhance the timeliness and reliability of supply chains.”

2) Investing in supply chain software

Retailers are focusing on enhancing supply chain visibility by investing in more bespoke supply chain software. The right systems can provide accurate, up-to-date information that provides complete transparency of stock inventory management at the touch of a button.

“Covid and Brexit have seen retailers start to overhaul legacy supply chain IT,” adds Ellis. “Global issues showed just how rigid some systems can be and emphasised significant gaps in stock inventory management data.

“Retailers need a control tower view of their whole supply chain – from source of origin through to point of sale, and back again. Sophisticated supply chain software can deliver data and insight that informs more accurate forecasting and creation of various and robust contingency plans.

“A software solution that’s developed specifically to meet objectives can improve overall supply chain agility and resilience in the event of unforeseen issues.”

READ MORE: Six lessons from Christmas 2021 from Tesco, Sainsbury’s, M&S and ASOS bosses

3) Enhancing efficiencies

Supply chain uncertainty has been dogged by unprecedented events over the past two years and, unfortunately, is a trend that shows little sign of abating.

It’s becoming increasingly difficult for retailers to try and sit-out rising freight costs and operating expenses or to predict when overheads may stabilise.

Supply chain disruption hit many retailers over the golden quarter
Supply chain disruption hit many retailers over the golden quarter

In response, retailers are increasingly looking inwards at the factors they can better control. They are auditing supply chain strategies to find efficiencies that can offset margin dilution.

Ellis says: “Supply chain best practice should be a process of continuous improvement. The movement of goods is affected by so many fast-changing variables that access to accurate data is crucial.

“With the right information and analysis, retailers can find solutions for minimising errors and alternative approaches that will help improve overall performance and profitability.”

4) Creating contingencies

‘Right first time’ has long been the preferred strategic approach of retail and especially FMCG. The defect-free, zero errors perfection of practices such as Six Sigma can provide a significant competitive edge by protecting margins, saving valuable time, and enhancing customer satisfaction.

This ‘right first time’ strategy has become even more important during times of disruption, as there’s less guarantee of being able to quickly fix problems and send replacement products to consumers.

However, there’s a trend of retailers accepting that the quest for perfection is becoming even more difficult and that there’s growing value in having a Plan A, B and C.

“Retailers are increasingly utilising software and data to create various supply chain models,” says Ellis.

“Different models are being mapped, which make allowances for the worst-case scenarios and enable the creation of possible contingencies. In the eventuality of something not going as intended, a back-up can be quickly activated to minimise disruption.”

ASCG’s eBook covers more supply chain trends and also looks at the three key actions retailers can take to optimise stock inventory management and supply chain strategies in 2022, and beyond. Click here to download a free copy.

Click here to sign up to Retail Gazette‘s free daily email newsletter


Please enter your comment!
Please enter your name here