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Supply-Chain Execs Are Struggling With a Singular Priority and Pain Point Right Now

Executives are struggling to redesign their supply chains to meet consumer needs that are quickly changing amid the coronavirus pandemic.

“When I talk with supply chain professionals, they all talk about the large shift in customer demand,” Jeffrey Pratt, a managing director and supply chain practice leader at BDO, said during the consulting firm virtual event Thursday on the “Path to Recovery Amid COVID-19.”

Executives responding to a BDO survey listed boosting customer service and introducing new products as their top supply-chain improvement priorities right now. “Organizations are looking to find a way to react to customer demand and find a way to service” customer needs and pain points, Pratt added.

In order to execute on this front, businesses must re-examine their current supply-chain footprints, from real estate assets to automation designed to enhance efficiency. Firms are scrutinizing what’s needed in order to react with agility when client demands shift. “They don’t want to have a supply chain so lengthy and so drawn out that it takes a long time to shift to meet that demand,” said Pratt.

And a big topic among supply-chain leaders? Supplier risk, Pratt said. Turmoil on the trade and tariff front, especially when even more uncertainty and disruption could lie ahead, is propelling this concern to the fore. Business must re-strategize their networks with an eye to managing and mitigating supplier risk, he added. Many companies are moving their supply chains “closer” to market to keep risk at bay.

The shift away from an overreliance on China has been underway, though the tariff war and now the coronavirus crisis are ratcheting up that exodus or at least prompting companies to reconsider. Pratt said many firms are narrowing their supply bases accordingly. “The focus on suppliers located in one part of the world is shifting,” he said.

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According to Pratt, supply chains will become more intelligent through the application of digital technologies like predictive analytics that allow for on-demand shipment rerouting and even driverless vehicles for materials transport. New tools will help companies rework their supply-chain footprint to maintain their in-stock rates and fulfillment lead times as many also look to make capital investments in inventory warehousing and other areas to manage overall operations costs.

Overhauling supply chains could be a matter of post-COVID survival for a retail sector flailing amid an onslaught of pressures brought on by the pandemic. Forty-seven percent of retailers expect their revenues to suffer as a result of the virus and another 44 percent believe they’ll experience product delays before the world fully moves on from the contagion’s clutches. In addition, 40 percent expect inventory shortages throughout the year, said Natalie Kotlyar, BDO’s retail and consumer products national leader.

Executives surveyed by BDO echoed a familiar outlook on growth expectations for retail this year. They estimate that e-commerce sales will rise by 18 percent, while total retail sales including brick-and-mortar are expected to suffer a 10.5 percent fall. “Luxury spending is expected to decrease with consumer confidence down,” Kotlyar said, adding that industries outside of essential items are going to be impacted for the year.

Retailers can blunt some of that impact by addressing consumer concerns around store safety and preparing to confront a potential second wave of infections. That means retailers must reassess their risk profile, enact a plan involving vendors and landlords, and identify available funding now rather than when the virus resurges.