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What Will Define the Post-COVID Supply Chain?

In the case of many retail supply chains looking to clear the hurdles that the COVID-19 pandemic has thrown into their path, the future is already here. More companies are turning to new trading partners, new solutions and more transparent practices to get the right products to their consumers as efficiently as possible.

Susan Pichoff, senior director of community engagement at GS1 US, sees four specific developments that will continue to take greater precedence across the supply chain in the wake of the coronavirus crisis. Her forecast calls for an accelerated focus on contactless retailing, a new emphasis on collaborating with and diversifying supply chain partners, RFID deployments that deliver true inventory visibility and the continued prioritization of sustainability and circularity.

Ramping up the focus on contactless options

The focus on contactless within a retail environment has already intensified through the increase in curbside pickup and contactless payments. While curbside pickup has been in the works for years before the pandemic, it hadn’t caught on until retailers were forced to use their stores as fulfillment centers or forego even more sales.

“Curbside was not really prevalent before in apparel and general merchandising, but it became a must-have in a very short period of time,” Pichoff said. “You saw companies develop a process in a matter of weeks where normal processes typically take months and months to do. And now it’s here to stay.”

Now, Pichoff argues that retailers must optimize their online product data as more contactless processes kick in and fewer consumers see the product in person before buying it.

“Complete and accurate product data is the most important thing going on right now,” Pichoff said. “Think about how you go and buy something online. Are you going to pick the product with the sad picture and two lines of description? You want as much information as you possibly can get.”

Additionally, as automation within the warehouse become more prevalent, more robotics technologies will be brought into the fold for picking and packing as employees try to remain socially distant, although Pichoff believes this adoption will be slower than the customer-facing contactless options.

Trading partners: diversify and collaborate

Supply-chain bottlenecks are going to force more retailers to take a “not if, but how” approach to collaboration, and they might have to go further outside the box than they are used to, according to Pichoff.

“There’s been a phrase that’s gone around for several years called ‘collaborate to compete,’ and I think that’s going to come more into play,” Pichoff said. “I think that companies were going to find ways to connect with new customers that they never thought was possible.”

Within the supply chain, more retailers will be forced to identify where the origin of their products are, get a better grasp of optimal shipping routes and learn how to re-source a product if they can’t get it from a certain market. Standardized data in the supply chain will help retailers more transparently communicate back and forth with their partners about timely, pressing issues.

Choosing inventory visibility over safety stock

Pichoff, who also leads the GS1 US Apparel and General Merchandise Initiative—an industry group that works to solve supply chain challenges such as data accuracy, inventory visibility and efficiency through GS1 Standards—also noted that apparel retailers in particular will look to increase their use of effective inventory visibility technology such as RFID to both enhance efficiency and cut back on an over-reliance on safety stock.

“RFID has shown itself to be a technology that helps you know where that product is in the supply chain, even in your physical store,” said Pichoff. “Companies that have adopted the technology and the process really have weathered this storm very well. It not only tells you where that shirt is, or what kind of shirt, it tells you that exact individual item, that color and size. If you know where your items are, it helps you fulfill the customer’s need. If you’re using stores as part of your fulfillment process, if you know exactly where that item is and you can scan the store with an RFID scanner instead of having to scan every individual item, that’s a real game changer.”

The long-used tactic of implementing “safety stock” as a way to reduce the risk of an item being completely sold out online will fall by the wayside as more sophisticated inventory management platforms become commonplace across the apparel industry.

“Because you put in a safety stock number, those extra items are not shown as available to be sold, so you’re missing sales on it,” Pichoff said. “You’re also missing the ability to make the consumer happy. ‘I tried to buy this product and I put in the order and it said it wasn’t available.’ There’s nothing worse than disappointing that shopper.”

Growing focus on the circular economy and sustainability

To no one’s surprise, sustainability and circularity are expected to be major factors in how retailers operate in the post-COVID era. Consumers will become even more conscious of a product’s origins and makeup, with 79 percent changing their purchase preferences based on social responsibility, inclusiveness, or environmental impact, according to the Capgemini Research Institute.

“If you’re a consumer and you want that product sourced from a place, then you want to be able to have that information,” Pichoff said. “It’s important for brands and retailers to share that information between each other and pass it on to the customer. It helps the customer make the choice in what they think is important, whether it’s sustainability or where the product is sourced.”

She noted that the GS1 team has various initiative workgroups designed to foster broad collaboration across the retail industry, with participants including retailers, marketplaces, brand owners, manufacturers, suppliers, distributors, solution providers and academic institutions.

Two of the GS1 workgroups, the Sustainability in Packaging Workgroup and the Raw Material Attributes Workgroup, are dedicated to identifying consistent standards and best practices in sustainability and sourcing. The latter recently published a guideline for the industry to create common language that enables the digitization of data to increase buyer decision speed and reduce product development cycle times.

“Overall, I think that there’s more information available across the board, and the standardization of data helps that entire process,” Pichoff said. “The interests in circularity and sustainability are married to that everyday ability to convey complete and accurate attributes that detail the characteristics about each item. An attribute can be ‘Where was this item created?’ Part of the attributes that we have, give you the ability to share that with your trading partners.”

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