Planning for the future (finally)

 By Scott Holland, Chief Product Officer, Kaleris

After two years of living in react mode, retailers can finally catch their breath. The reduced demand and at least some rebalancing of demand across the supply chain mean that, for the first time in a very long time, retailers have the chance to strategically plan their supply chains and distribution networks for their long-term business goals. It’s worth noting that these are active exercises – cutting-edge retailers aren’t resting on their laurels to “see what happens next.” They’re using this time to proactively enact operational changes that buoy them against future headwinds, whatever those look like. They’re aware of the potential economic challenges ahead and taking lessons from the pandemic on how to build resiliency into their operations.

In working with our customers, there’s a common thread running through their operational plans – how to achieve greater efficiency and productivity in more resilient supply chain operations. These customers include large retail brands such as a national shoe and accessory chain, a multinational appliance manufacturer and marketer, a grocery chain, and a global consumer goods company. While the operational mechanisms look different for each company, the results they want to achieve are possible with the same supply chain technology solutions.

There are substantial budget line items associated with efficiency improvements. For example, detention and demurrage charges related to inventory movement cost the appliance manufacturer $10-$20 million per year. (Yes, you read that correctly.) The amount is so high and the range so broad due to the wide variation in charges and the relative lack of precise visibility into the operational data necessary to manage them across execution nodes and modes. As a result, each year the company sets aside a sum equivalent to about the GDP of Iceland to cover the bill.

For savvy retailers, 2023 is the time to capitalize on this intersection of execution and visibility to build flexible and resilient operations for future success.

Another leading element in our customers’ strategies is how to deal with the ongoing labor shortage, and the realization that this isn’t likely to change in the near term. Retailers must find ways to be more efficient with the labor resources they have while also improving work environments to foster employee retention. One avenue most are heavily pursuing is increased automation, thereby freeing people from repetitive tasks so they can apply their skills to the areas of the highest value and return.

Productivity and labor challenges are both drawing retailers to leverage supply chain technology more heavily. Their 5- and 10-year plans call for continuous innovation along a compelling roadmap of technology that manages supply chain operations. Better management of inventory from the initial stages of the process creates better outcomes and experiences for customers, feeding back into long-term customer loyalty and retention strategies.

The retailers we work with are seeking solutions that connect inventory visibility at every stage of their operations into execution systems that enable them to take action when needed. These actions might include redirecting inventory from an over-supplied distribution center to one with low stock or preparing their network of yards to receive shipments just released at the port.

Savvy retailers are looking to launch technology platforms that connect the nodes and modes across their supply chains as soon as possible so they’re ready for whatever comes next. The last two years have starkly revealed how the connectivity of key stakeholders throughout these supply chains is key to achieving successful customer outcomes.

Going back to the experience of our appliance customer, they are solving for the $10-$20 million in wasted spend by leveraging technology that unites execution and visibility in one place, giving them a complete picture of where inventory is, when it’s ready to move, and empowering them to take proactive action to avoid delay or disruption. Delivering top-quality appliances to customers as quickly, efficiently, and cost-effectively as possible, regardless of circumstances is the outcome that matters.

For savvy retailers, 2023 is the time to capitalize on this intersection of execution and visibility to build flexible and resilient operations for future success.