Adapting to Supply Chain Shocks: How U.S. Retailers Stay Agile

By implementing real-time visibility tools and fostering collaboration both within their organizations and with external partners, they can develop the agility needed to navigate today’s unpredictable retail environment.

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Retailers in the United States are grappling with an array of challenges—ranging from global crises like the conflict in Ukraine to domestic disruptions like labor shortages and extreme weather events. These hurdles are compounded by ongoing inflationary pressures and rising transportation costs. Supply chain bottlenecks, unpredictable consumer behaviors and logistical issues have become the new reality for retail. In this environment, businesses must be more adaptable than ever to ensure continued success.

For many, the solution lies in adopting ecommerce platforms that centralize operations across multiple sales channels. These technologies give retailers greater visibility and flexibility, empowering them to respond to disruptions swiftly while keeping their operations running smoothly. Unified commerce platforms help retailers create a centralized view of their business, making it easier to manage challenges as they arise.

Navigating the Pressures of Expanded Opportunity

US retailers have been presented with an unprecedented opportunity to expand their customer base far beyond national borders, thanks to the explosive growth of ecommerce. While this global reach is exciting, it comes with increasing pressure to deliver a flawless customer experience every time. Even a small supply chain issue, such as delayed shipments from West Coast ports, could disrupt deliveries across the entire country and affect marketplace service level agreements (SLAs). Failure to meet these agreements could result in penalties and the loss of vital revenue streams.

During the height of the COVID-19 pandemic, congestion at the Port of Los Angeles and the Port of Long Beach led to severe delays. Retailers like Home Depot and Walmart took drastic measures, including chartering their own vessels to ensure that inventory could reach stores and customers in time for the holiday season.

Beyond these headline issues, retailers are also affected by smaller, more localized disruptions. For instance, California's recent emissions regulations have made trucking more costly and less available, contributing to transportation delays. Similarly, Hurricane Ian in 2022 caused significant damage to Gulf Coast infrastructure, leading to further delays for retailers reliant on those routes for moving goods.

Unfortunately, many small and mid-sized retailers remain unaware of the potential impact of these disruptions until they start affecting day-to-day operations—by which time it’s often too late to respond effectively.

Achieving Real-Time Visibility

To build resilience in this unpredictable environment, retailers must leverage technology to gain real-time visibility into their operations. Real-time inventory management systems allow retailers to monitor supply chain events as they happen and respond proactively. If severe weather is forecast to hit key distribution hubs, retailers can reroute shipments, adjust inventory placements, or shift to a drop-shipping model in affected regions.

Hurricanes like Harvey in 2017 provide a clear example of this. When the storm hit, it disrupted the petrochemical industry, causing a shortage of plastic materials essential for packaging. Retailers that had robust inventory visibility and contingency plans in place were able to pivot more effectively, sourcing alternative materials or adjusting their packaging strategies to continue meeting demand.

Quickly identifying a problem and understanding its implications is critical. While larger enterprises may have contingency plans in place, smaller retailers often find themselves scrambling to find new suppliers or shipping capacity when disruptions strike. Technology platforms that integrate ecommerce operations with financial data allow retailers to react faster and minimize losses by providing immediate insight into both the logistics and financial implications of disruptions.

The Power of Collaboration

Collaboration across the retail ecosystem is also essential for maintaining resilience. By working closely with supply chain partners, retailers can quickly identify alternative solutions to mitigate the impact of disruptions. During recent labor shortages in the trucking industry, major retailers like Amazon and Target expanded their use of regional distribution centers and partnered with third-party logistics (3PL) providers to ensure they could continue fulfilling customer orders quickly and efficiently.

Having the right technology stack within a connected ecosystem allows retailers to streamline communication with their partners, identify alternatives, and make informed decisions within moments of a supply chain issue. Additionally, this visibility helps retailers provide proactive communication to customers. By keeping customers informed of potential delays and outlining how the business is addressing the issue, retailers can maintain trust and mitigate negative feedback.

Internally, clear communication is also crucial to prevent unnecessary disruptions. For example, if a warehouse in the Midwest plans to shift operations or undergo renovations, it must coordinate with other departments to ensure customer expectations are managed. Similarly, marketing teams must align their promotional efforts with inventory availability to avoid creating demand that can’t be fulfilled.

Supply chain resilience is now a cornerstone of retail success in the US. With increasingly complex logistics networks and higher customer expectations, retailers must go beyond assuming that goods will arrive on time. Supply chain management has become a critical part of the overall customer experience.

Take Target, for instance—the company has invested heavily in its supply chain infrastructure to streamline operations and create sortation centers that improve delivery efficiency. This forward-thinking approach allowed Target to mitigate the impact of trucking shortages and continue meeting customer demand.

To mitigate the risks associated with potential disruptions, retailers must recognize the strategic importance of their supply chain. By implementing real-time visibility tools and fostering collaboration both within their organizations and with external partners, they can develop the agility needed to navigate today’s unpredictable retail environment and continue delivering for their customers.

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