Blue Yonder: digital transformation in retail supply chains
According to the latest research report conducted by Blue Yonder and WMG University of Warwick, many global retailers are still at the early stage of digitally transforming their supply chains.
The benchmark for digital supply chain readiness of 104 global retailers surveyed by the two organisations revealed that only 15% currently have prescriptive or autonomous supply chains. However, while many retailers may be over reliant on legacy systems currently the report also revealed that retailers do have ambitions to digitally transform their supply chain operations with 61% wanting to achieve prescriptive or autonomous supply chains by 2025.
The challenges for retail supply chains
The report highlighted that manual demand and replenishment planning processes are slowing retailers down, with many not able to react to changes in demand in real time. Currently only 8% of retailers are harnessing real time planning processes, while 22% are still using spreadsheets. However, 74% do want to switch to prescriptive or autonomous technology in the next five years.
Other key finding include:
- 61% of retailers manage omnichannel inventory as separate channels, however, 75% wish to achieve full omni channel capability in the next five year
- 41% aim to use AI to evaluate optimum inventory locations
- 25% currently still use spreadsheets to manage replenishment analytics, however 46% are planning a fully autonomous approach in five years’ time
The report also revealed that in relation to pricing, most retailers work from a static promotional calendar, with only 13% optimising prices dynamically. Currently 11% of retailers assess multiple factors - such as inventory, margin, and waste - for promotions, however, 46% expect to achieve this in the next five years. In addition the use of Artificial Intelligence (AI) for markdowns and promotions is expected to increase from 11% to 43% in the next five years.
The final challenge highlighted by the report included the need for financial planning and strategies to become more cross functional and real-time. While retailers know they need to include stock and margin for financial planning and strategies, only 11% are doing this, while 40% wish to be implementing this by 2025. In addition retailers want to move away from static planning and strategy to a real time approach, Currently only 7% have this capability, however, 36% have set targets to have this capability in the next five years.
“The retail industry never stands still for long, and the impact of COVID-19 means it is currently going through a particularly disruptive period. At this time, it’s crucial for retailers to be able to manage multiple factors and complications across their supply chain in real-time. At the moment, however, an over-reliance on manual processes means too many retailers are taking time to adapt in line with this unique set of challenges,” commented Jan Godsell, Professor of Operations and Supply Chain Strategy at WMG, University of Warwick.
“As the research reveals, retailers know they need to get their supply chains digital-ready. This will enable them to evolve and make adjustments, both in line with internal factors, such as changing organisational goals, and external ones, such as changing customer desires,” added Godsell.
“Retailers recognise now is the time to significantly step up their supply chains, as many of the tools and processes currently used are no longer fit for purpose. They need to jump the digital gap, recognising that managing their supply chains ineffectively is costing them and not meeting their customers’ needs. By introducing greater analytics and automation capabilities, retailers will be able to connect across their organization to create optimized processes and be able to more accurately sense, predict and plan than ever before,” concluded Wayne Snyder, vice president of retail strategy EMEA at Blue Yonder.