Retail supply chain investments revolve around the consumer
- Consumer demand for real-time product visibility is the top factor driving retailers to invest in their supply chains, according to a joint survey from software company JDA and advisory firm KPMG.
- But retailers also face challenges to investing in their supply chains. They listed the top inhibitors as lack of commitment from management and lack of a sufficient IT budget.
- "It should come as no surprise that companies are investing in innovative technologies to remain relevant," Brian Higgins, U.S. supply chain practice leader at KPMG, said in a press release. Retailers said predictive analytics would be the most impactful technology for their supply chains.
"Retailers live at the frontline of customer expectations," JDA and KPMG stated in their report.
Consumers want goods delivered quickly — and if a shipment is late, consumers want to know why, how much longer and where in transit is the parcel. Retailers who can provide real-time visibility give valuable insight to consumers, who may be more likely to forgive an occasionally delayed shipment if they have the visibility.
Retailers also named end-to-end traceability and managing new distribution nodes as top investment drivers.
End-to-end traceability extends visibility past logistics and all the way to sourcing and many tiers of suppliers. Younger generations especially are more concerned with the sustainability and ethical origins of their products. If a retailer can't answer whether the cocoa powder in its product was sourced sustainably, it could alienate some consumers.
Investment in new distribution nodes are critical as retailers continue to tackle last-mile inefficiencies. Some retailers, such as Kohl's, use their brick-and-mortar stores to act as fulfillment center for online orders. Many logistics providers have extended hours and days of the week for deliveries to accommodate for high volume requests from shippers.
However, these innovative approaches won't advance at the rapid pace needed for the industry without support from the C-suite. 70% of retailers said their biggest impediment to supply chain investment is lack of management commitment.
"This is the time for the hard conversation, for retailers to take a step back and re-imagine the role the supply chain should play in the new retail business model," the report said.
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