As retailers remain leery about upcoming demand, they’re going to have to prioritize supply-chain investments if they want to ensure the chaos brought on by the Covid-19 pandemic can be firmly put in the past.
Nearly half (49 percent) of 118 retailers and brands surveyed by Coresight Research felt that the ongoing agility and flexibility of their supply chains was their most pressing business issue in the upcoming 12 to 24 months.
With such a concern lingering across the industry, it’s becoming more clear that retailers need to fundamentally change how they manage their supply chain and interact with their entire community of business partners, whether its suppliers, freight forwarders, packaging companies, mills and factories, or financial institutions.
The agility and flexibility needed within the supply chain aren’t the only pressing issues for retailers, although these substantially outpace other concerns: 42 percent of respondents cite delivering business model transformation and new revenue streams as one of their most urgent matters, while 41 percent cite finding new suppliers and leveraging current suppliers as a chief concern.
All of these points are consistent with the main themes heard across retail supply chains in recent months, as retailers struggled to handle the supply chain’s “seesaw effect” with supply falling off early on before demand of non-essential products fell precipitously; find new avenues to sell products as stores closed; and maintain positive relationships with suppliers as they canceled or deferred orders throughout the pandemic.
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Another 39 percent see supply chain transparency and traceability as a top business concern.
The report suggests that retailers adopt multi-enterprise platforms (MEPs), cloud business networks that are designed to enable real-time communication and collaboration in the end-to-end supply chain process across all participating parties, in order to survive in what it calls a “Darwinian” retail industry.
Supported by an API, MEPs allow data to be shared and accessed simultaneously across all networks, with the end result aimed at improving efficiency, lowering costs and enhancing sustainability initiatives.
The ability to share and access data anywhere is clearly a major need for today’s retailers, with 57 percent of retailers and brands citing the ability to see financial implications of decisions in real time as extremely important to their jobs. Right behind that need is the ability to maintain consistent data across different platforms, at 56 percent.
Another 55 percent say the overall sourcing process is extremely important to their jobs, illustrating the imperative to know more information about where a product is in the supply chain at all times. In unifying sourcing information, users can have a full picture of estimated landing costs with cost-simulation software and can compare quotes across different geographies, channels or suppliers, resulting in increased margins. The function also validates factory capabilities, capacity and compliance before retailers place orders, to ensure regulatory adherence.
Unsurprisingly, 50 percent say their jobs hinge on three more factors: 24/7 access to suppliers and their offerings; visibility into the supply chain; and the ability to comply with regulations in the sector. All these factors would be enhanced if a retailer could always easily share and access data.
American Eagle saves $6 million with MEP deployment
Bamboo Rose, a multi-enterprise product and supply chain platform that sponsored the report, highlighted a case study with American Eagle Outfitters that gave insight into how MEP systems could help retailers manage some of the top complex supply-chain challenges.
The retailer turned to Bamboo Rose to streamline its global sourcing process with one integrated system for product lifecycle, order and global trade management, and can now automatically alert suppliers to start production and pre-plan container loads and optimal routing across different countries to improve time to market.
Through the deployment of the Bamboo Rose solution, American Eagle Outfitters reduced the cost of processing invoices by 95 percent and has taken three weeks out of the design cycle, which equates to $6 million in annual savings.
Collaborating with more than 500 vendors in 29 countries on a single system enables the retailer to gain visibility into factory readiness of product eight days sooner.
Three generations of supply chain digitization
The report split the transformation of the digital supply chain into three steps: Gen 1, Gen 2 and Gen 3. Gen 1, the first iteration of supply-chain digitization, consisted of moving messages through electronic data interchange platforms and digitizing data on a one-to-one basis. There was no interaction with content or results, but the derived business value was improved efficiency in receiving information and sending messages.
Retailers that have reached Gen 2 became the “one-to-many” hub that connects with all relevant business partners in various departments, office locations and geographies to support a comprehensive single view of an organization’s transactional data. But even Gen 2 retailers still aren’t reaping the full benefits that an MEP can provide, the report says.
Gen 3 retailers operate digital supply-chain platforms on a “many-to-many” engagement model using an MEP to leverage community and network digitalization to enable collaboration around data to happen on one platform. The data are constantly cross-validated by all partners on the platform, thus enhancing the quality of the data. Powered by an API, the MEP is all the more important in today’s environment with so many employees across the supply chain still working from home or engaging in social distancing.
Within an MEP, participating parties can be host or hub to their network while simultaneously interoperating with other networks as a spoke—for example, brands and wholesalers can centralize data coming in from labeling and packaging companies, trend forecasters and couriers, all while sharing this information with retailers, mills and manufacturers.
“The real power of MEPs lies in its network effect,” Deborah Weinswig, co-founder and CEO of Coresight Research, wrote in the report. “As a retailer onboards more of its vendors and uppliers on a unified platform, communication and visibility across multiple business processes improve—providing a greater number of options and more-informed choices, while speeding up products’ time to market and enhancing sales and profitability.”