How Traditional Retailers Can Adapt Their Supply Chain to Suit the New E-Commerce Environment

Madeleine Streets

Many companies experienced significant supply chain disruption this year as a result of pandemic restrictions impacting different regions at different times. Production has resumed in multiple areas and supply chains are running again — but some footwear companies are still seeing reduced capability, particularly if they are new to operating e-commerce.

Previously, traditional retailers may have created a fully functioning supply chain that was suited to their existing sales channels, but the growing role of e-commerce has changed the game. Keeping track of inventory and forecasting sales across channels have become more complicated as consumers are buying online more than ever. Yet they expect the same standard of service wherever they shop, making it critical that retailers adapt quickly.

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“The astounding quarterly results this week posted by Shopify and Amazon are both signs that COVID has caused a massive acceleration in the shift to e-commerce,” said Rob Bailey, CEO and founder of data-automation company BackboneAI. “If they want to maintain or strengthen their market positions, traditional retailers must now compress a decade of supply chain transformation into the next 12 months.”

Bailey outlines the most overlooked supply chain capabilities as being the ability to collect and integrate data from multiple parties and the ability to harness insights and pivot on inventory availability, in order to communicate back to consumers. Retailers without these capabilities are likely to convey incorrect information to shoppers about product availability, restocking times and delivery estimates — all of which could turn away customers for good.

Optimizing the supply chain is not a new goal for retail, but most enterprise solutions still require a significant lead time to implement. This is not a practical option for businesses that may already be struggling due to lost sales and that need immediate impact. Fortunately, AI-supported solutions could be the answer, due to their shorter onboarding process and ability to respond to changing circumstances in real-time.

“Retailers no longer have the luxury of waiting to derive value from major ERP [enterprise resource planning] upgrades,” said Bailey. “Instead, they need to operate with nimble automation, and AI companies can seamlessly deliver that value in a fraction of the time.”

Having a clearer understanding of the supply chain and the activity taking place within it can also help retailers to share this information with their customers. The consumer interest in sustainability has continued through 2020, and the pandemic has also created a deeper interest in transparency about how products are made and delivered.

Brands and retailers that are able to share the provenance of their goods, in addition to details about the materials and manufacturing, are likely to foster trust with their consumer base and reap the financial rewards. This transparency also extends to information about product availability; alternative ways to receive products, such as picking up from an alternate location; and up-to-date notifications on restocked inventory.

“Retailers can more effectively communicate supply chain transparency to their customers by providing more product information and product availability,” said Bailey. “The more product information a company provides, the greater the revenue acceleration.”

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