If the Coronavirus disease (COVID-19) has taught us one thing, it is that there may not be a new normal. The year 2022 will be of intelligent supply chains that prioritize transparency, anticipate new disruptions and enable faster decision-making. Businesses need to adopt technologies that build resilience and agility in supply chains, so they become secure, low risk, transparent, cost-efficient and smart in real-time handling of crises.
Crisis slows down the world leading to inefficient processes, wastage due to items getting damaged, unsold and ending in landfills. Industries need to become more efficient and adaptive to sudden changes in demand or supply and retailers need to gain greater visibility and insights into operating costs and inventory management to ultimately become more sustainable.
Here are five supply chain trends that will help businesses navigate future global crises:
1. Cut down inventory cost with effective hybrid inventory management strategy.
An effective push-pull strategy combines just-in-time (JIT) and just-in-case (JIC) techniques to create a cost-effective inventory management strategy that addresses short-term and long-term sales needs. While JIT is a reactive technique to keep lean supply chains and reduce carrying costs with on-demand production, it is risky and highly sensitive to supply chain disruption. JIC, on the other hand, is a proactive technique to order excess quantities and avoid loss in sales due to disruptions in normal processes or unexpected increases in demand. However, excess stock blocks working capital and increases the chances of wastage and loss. Modern merchandising solutions provide a granular birds-eye view of the current inventory levels in the pipeline and future demand by analyzing inventory turnover and sensing trends based on previous sales data. This end-to-end demand visibility builds greater efficiency, responsiveness and resilience in the supply chain by supporting both JIT and JIC inventory management techniques. It gives businesses the flexibility to manufacture customized products when the need arises, and service regular requirements uninterruptedly.
2. Integrate cloud-based supply chain management solutions.
Limited visibility across supply chains reduced business adaptability that got highlighted during the pandemic. New-age cloud-based solutions help businesses through rapid digitization and process automation to recover from losses and optimize systems for future growth. These specialized Software-as-a-Service (SaaS) solutions for efficient warehousing and accurate merchandising integrate seamlessly with other systems to give businesses real-time inventory visibility, maximize decision-making efficiency by providing a single view of inventory and ensure flexibility and easy scalability during peak seasons. Cloud-based solutions build interconnected, intelligent, and innovative supply chains that keep automatically upgrading with regular software updates. Aside from being a valuable solution for businesses, SaaS helps improve customer relations and profitability by quickly adjusting to customer requirements.
3. Build stronger D2C relationships.
COVID-19 exposed and accelerated weaknesses of brands that were heavily dependent on marketplaces and wholesalers and lacked direct-to-consumer (D2C) relationships. Distinctive digital stores provide a unique and fulfilling experience to strengthen brand loyalty. As the D2C model gains popularity, it is imperative to skip intermediaries and establish complete control over sales and order fulfillment to build value-driven relationships with customers. Interpreting local customer demands and emerging patterns and serving them through distributed warehousing and regional utilization can help brands come closer to customers with decentralized inventory management and low CapEx. Building micro supply chains simplify processes and build agility in business, thus creating business efficiencies and reducing uncertainty and risk.
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4. Rethink delivery and approach.
Local expansion is the new global expansion. Taking better control of delivery with third-party logistics (3PL) and brand partnerships reduces risk during economic turmoil and limits carbon emissions with faster deliveries. Last-mile-as-a-service (LMaaS) is an innovative concept of building dynamic collaborations, ultimately boiling down the supply chain to the last mile. It enables brands to provide personalized products in almost real-time to any location and allows smaller companies to access the logistics capabilities of major brands, on-demand and incorporate advanced technologies to power them. Brands need to build agility and flexibility with distributed warehousing and expanding delivery networks.
5. Building sustainable, circular supply chains.
As retail becomes omnichannel, creating an effective returns management strategy for all sales channels is critical so goods can be reused, recycled or resold efficiently to reduce environmental footprints and improve resource efficiency. Cost-effective technology solutions can help retailers reduce manufacturing, eliminate waste and increase sales by targeting true demand potential. An efficient returns management solution promotes rapid re-commerce by bringing good inventory back into circulation and optimizing the value of damaged or defective items in the secondary markets to maximize resale.
It is time to unlock the elastic and scalable potential of the cloud to design optimal cost-effective solutions that drive speed, expertise and efficiency into supply chains. Implementing fast cycle strategies that eliminate bottlenecks and delays in products and optimize resource utilization by assessing the feasibility of new investments on digital twins will help in improving supply chain strategies and day-to-day decision making. Intelligent technologies are crafting more responsive and sustainable supply chains, and retailers must ride the way of innovation to survive this competition.