Mastering the Balancing Act in Retail Supply Chains

With inventory volatility and fulfillment complexities both on the rise, retail supply chains are under tremendous pressure as they adapt to the demands of omnichannel. To meet these demands, 72 percent of retailers are digitizing their supply chains – a landmark shift AGL saw firsthand among the nearly 4,000 companies attending NRF’s Big Show this year[1].

In new research from AGL, we look at changing supply chain realities for retailers and the tools likely to help businesses improve visibility and agility.

Explore the Research

In this notoriously tough industry, retailers need to be ready at a moment’s notice to meet customer demands before a competitor beats them to it. Challenges continue to mount for businesses on both the supply and demand sides of the equation, making a high-functioning supply chain even more indispensable. These challenges include:

  • Rising tariff duties. With yet another round of S.-Chinese tariffs potentially looming in March, retailers must consider whether to continue forward-buying inventory to bear potential cost spikes. Imports rose to a record 21.8 million TEUs in 2018, a 6.5 percent increase over 2017, as many shippers rushed to procure merchandise ahead of impending tariffs.
  • Longer, more complex fulfillment paths. While retail merchandise once followed a predictable path from factory to warehouse to store, today’s deliveries take myriad routes to their final destinations, whether that’s a store or a shopper’s doorstep. Retailers are also picking up the pace on deliveries, with Target and Wal-Mart among the businesses announcing same-day delivery recently in an effort to keep up with retail behemoth Amazon.
  • The boomerang effect. Among e-commerce retailers, what goes out is increasingly coming back. One study shows that shoppers return 30 percent of online purchases, more than triple the number of returns for brick-and-mortar purchases, adding to the supply chain pain for retailers.   

A growing dependence on digital

As they grapple with this quickly evolving environment, more retailers are recognizing the value a technology-enabled supply chain can bring to their operations. In our latest research initiative with Logistics Trends & Insights, AGL explored the rise of retail supply chain technology and the tools that hold the greatest promise in this space. We discovered:

  • Digital transformation is a top priority for retailers… A Zebra study found 72 percent of retailers say they plan to adopt technology to drive real-time supply chain visibility.
  • …But many are still in the beginning stages. Only 15 percent of retailers have made it past the pilot stage for supply chain technology, and 13 percent are still using Excel exclusively to crunch the numbers.
  • Retailers want trusted partners to guide them. Retail businesses spent $50.7 billion on third-party logistics providers in 2018, according to Armstrong & Associates, as many providers develop proprietary tools to improve supply chain visibility and control. Along with fueling innovation, an experienced partner can provide valuable hands-on support to help businesses get the most from their IT investments.

Interested in the five technologies most likely to deliver benefits for retail supply chains? Download a free copy of our latest white paper, “Supply Chain Brief: Eye on Retail.”  

[1] “2018 Demographics,” NRF 2019: Retail’s Big Show.