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2020’s Top Supply Chain Challenge: Balancing Clicks With Bricks

Over the next year, retailers must figure out how they can manage the modern balancing act of handling an influx of online business from the pandemic on top of their in-store demand, which is kicking up as most locations are operating again. According to EnVista’s 2020 Supply Chain Survey, 34 percent of retailers say it is the top challenge they face as they aim to improve their supply-chain capabilities.

The survey, sponsored by international technology group Körber, identified demand planning and forecasting (33 percent of respondents) and improving efficiencies (30 percent) as the next major supply-chain challenges facing retailers, while another 26 percent cited supply-chain costs, accessing and moving store inventory and balancing human labor with automation as three more urgent issues they will be grappling with over the next 12 months.

Addressing these challenges will be even more pivotal due to customers’ rising expectations. According to a separate consumer survey conducted in December, EnVista found that 67 percent of consumers indicate that inventory visibility across stores, online and mobile is an important service to offer, while another 65 percent of consumers claim the ability to buy anywhere and ship anywhere is an important service to offer.

Additionally, 48 percent of shoppers cited the ability to pick up an online purchase in-store as an important factor when choosing where to shop. Luckily for retailers, 84 percent have already implemented BOPIS capabilities on some level within their retail ecosystem, with 60 percent saying are happy with their current offering.

Where retailers stand as far as catering to the continued shopping desires varies, but for the most part, one thing remains clear: a large percentage feel these fulfillment services need improvement.

For example, only 22 percent of retailers surveyed say same-day delivery is implemented and working well, while 42 percent say they have implemented the service, but it needs to be improved. On top of that, there are still 36 percent that have not implemented it yet at all.

Retailers are still trying to get one-day delivery on track as well, but have thus far been more confident in it than in their same-day efforts. Thirty-eight percent say they have implemented one-day delivery, while 48 percent say it needs to be better.

With the acknowledgment that same-day and one-day delivery systems still could benefit from improvement, it makes sense that 41 percent of retailers indicated that increasing the speed of delivery is a top transportation priority for the next 12 months. These retailers realize that with the increased demand across channels, there will likely be more issues than usual for the foreseeable future, as planning cycles are completely upended and lead times lengthened.

Ship-from-store and vendor drop shipping are two widely adopted services that retailers are still looking to get a better handle on, especially as adoption has increased throughout the pandemic. Ship-from-store offerings are working well for 40 percent of merchants, though there is a higher percentage of processes that need improvement (47 percent). And while 38 percent lauded their dropshipping capabilities, 40 percent still see areas where they can be enhanced. Another 22 percent have yet to use dropshipping in any capacity.

Expansion, automation top warehousing priorities

With increased e-commerce orders continuing to be the new norm and social distancing and safety now a top-of-mind concern, more than one-third of retailers (39 percent) revealed that their top warehouse/distribution center priority involved expanding existing capacity. Additionally, expanding capacity would help retailers suffering from the opposite scenario, in which demand has collapsed for certain items, requiring an overall need for more space.

And while 31 percent see improving labor productivity as a top priority, labor remains one of the highest costs in the supply chain. With that in mind, it makes sense that slightly more retailers (32 percent) consider automation and robotics deployments across the warehouse as a chief concern, particularly amid worries about high e-commerce demands stretching employees far too thin.

There is a vast gap between the usage of automated material handling equipment (MHE) in stores—with 91 percent using the technology in some capacity—and the usage of robotics, which only 40 percent say they have deployed. Only 13 percent say they have implemented robotics and that it is working well, while as many as 19 percent say they still have no plan at all to use the technology.

Automation also leads in-store fulfillment priorities

When it comes to prioritizing fulfillment within the store over the next year, retailers are trying to reinvent themselves in a multitude of ways that range from micro-fulfillment (25 percent of retailers) to implementing or expanding lockers for in-store pickup (19 percent).

Thus far, the biggest commitment, according to 32 percent of retailers, is implementing automation within the store. Increasing in-store inventory storage is a top priority for 31 percent of merchants, while optimizing the back-of-house operation is a top priority for 29 percent.

As automation technology continues to mature, rather than using technology to reduce staff numbers, retailers could ideally alter the role of staff. Automating manual and mundane tasks frees staff to focus on delivering a personalized experience.

Many retailers are transforming their back-of-house processes and using new technology to ensure that associates can access the information they need to fulfill customer orders and expectations in a timely manner.

Some retailers have sought to accomplish this is by outfitting associates with smartphones or tablets connected in real-time to inventory and order management systems so that items can be found and fulfilled in an organized, coordinated way. Order status updates can be sent directly to associates on-demand and in real time for faster fulfillment. Order information such as pick alerts and tasks can be delivered based on the role, location and availability of associates.

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