[Digital Insights Report]
The Supply Chain Debrief: 5 Ways Retailers Can Conquer Challenges in 2022 and Beyond
Europe’s retailers are evolving, digitizing and strategizing at a pace never experienced before.This ‘retail reset’, fueled by 2 years of widespread supply chain disruptions, has left no sector unscathed. From fashion to homeware, consumer goods to sportswear, every product category is undergoing an accelerated transformation in order to safeguard margins and stay competitive.The emergence of new Covid-19 variants and fluctuating restrictions worldwide indicate that disruptions are likely here to stay, and European business leaders must prioritize agility in 2022 if they’re to navigate this changeable retail landscape.
To mark the beginning of this new era for European supply chains, the Centric Software experts have gathered insights from changemakers in the industry and identified 5 main categories driving change in retail operations right now. Keep reading to discover how your business can counter challenges, safeguard margins and deliver agile strategies that will stand the test of time – or should we say, the test of disruptions.Interested in a particular topic? Simply click the icons below to skip directly to that section.
Challenge 1:
shipping disruptions
64%
of retailers are now citing supply chain disruptions as their biggest challenge.
The past 2 years have highlighted just how precarious our global supply networks are. This 21st Century dilemma of managing a vast ecosystem of people and processes, spread across multiple locations and time zones, is known as ‘dark operations’. In many cases, reporting methods are outdated, creating knowledge gaps that leave businesses vulnerable to disruptions.Harbour shut-downs, port congestion, container shortages, and capacity issues for sea and air freight are just a few of the disruptions retailers have recently faced. The close of 2021 was particularly challenging for independent retailers, with 96% grappling with supply chain issues. Many business leaders are now reluctant to return to the pre-pandemic ‘norm’ of importing raw materials, samples and finished products from a mishmash of countries and suppliers.We’re now seeing companies trial out innovative strategies to help smooth out shipping and logistics issues, such as onshoring (moving manufacturing operations closer to home) or a ‘China + 1’ approach. Not only does this mitigate the spiralling costs and delays involved with importing goods from overseas, it also offers the opportunity for businesses to provide much-needed jobs to communities closer to home, something which many European governments are prioritizing to combat the economic costs of Covid-19 and record-high unemployment rates.
You can counter shipping disruptions by…
Introducing digital transformation tools which enable your business to effortlessly onboard new suppliers, fast.
Prioritizing 3D sampling which enables teams to bypass long waits for physical samples as well as elevating the quality of the finished product.
Connecting all of your suppliers in ‘one single source of the truth’, offered by tech tools such as Product Lifecycle Management (PLM)
"It's a strategic decision to have more control on our production process and also on transport costs… Today, a shipping container that used to cost €1,000-1,500 now costs in excess of €8,000, with no certainty of a delivery date."
Massimo Renon, Chief Executive at Benetton Group, interviewed for Reuters
Discover the power of digital transformation tools and protect your business against future shipping disruptions.
Challenge 2:
volatility of demand
Retail sourcing teams could save
50-75%
of time by automating tasks within digital tools, enabling them to focus on strategic demand planning.
The Retail Sourcing Reset’ report, Accenture
Demand planning has always been a delicate science, even pre-pandemic. Now, fueled by disruption and uncertainty, consumer behavior expands and contracts in sporadic ways. Retailers have had to learn fast and pivot product mixes to match the pace of the changing trends around us.In the depths of the pandemic, we watched luxury houses produce face masks and PPE and retailers rapidly switch from promoting office-based looks to loungewear.Wary of logistics issues and the unpredictability of demand over the past 2 years, many businesses also urged consumers to alter their shopping behaviours during 2021’s festive period, for example, almost 70% of UK retailers encouraged people to shop early to spread demand and avoid disappointment.However, despite the negative impacts of ongoing supply chain disruptions, data indicates that tough times are making consumers more conscientious. A recent survey reported that impulse-buying is set to decline and more than a quarter of the 2,000 respondents will start to 'make do and mend' instead of purchasing new products. This shift in behaviour could also drive a higher demand for classic, timeless styles rather than trend-led, seasonal products.2022 is surely a time for brands to audit their current product mix and question if it’s reflective of the way consumers are shopping post-pandemic.
You can counter volatility of demand by…
Making accurate, instantaneous product information accessible to all teams - ensuring that only exactly the right amount of products are produced at exactly the right time
Integrating data from previous collections into one central database, such as PLM
Onboarding digital Retail Planning tools which power up analytical decision-making (both pre and in-season) to maximize omni-channel business performance, product sell-through and speed to market
Analyzing data to prioritize the production of classic, consistently high-performing styles in conjunction with seasonal ranges
"Retailers need to work out what needs to go where well in advance. Because it's not as quick as it was before to move products between different stores on a global basis."
Kathryn Parker, Equity Analyst at Jefferies, interviewed for Vogue Business
With help from cutting-edge tech tools, you can protect your business from fluctuating demand and stay one step ahead of your competitors. Want to find out more?
Challenge 3:
the raw material sourcing dilemma
Raw cotton and cotton yarn has seen a
20%
price increase in recent times.
'Supply chain disruption: Fashion’s Christmas concern’ article, Vogue Business
2022 could be the year that China loses its position as Europe’s favored supplier. Before Covid-19 , some industry innovators began to bring supply chains closer to home. Now, following power outages in Chinese factories, serious shipping delays, surging raw materials costs, and the media highlighting humanitarian concerns for workers, retailers are prioritizing onshoring strategies, as well as demanding ultimate transparency from their supplier network.Onshoring offers the tantalizing prospect of reducing lead times, but where it’s not possible, businesses should be able to have ultimate visibility on the origins of their materials in order to integrate accurate raw materials costs into their pricing – avoiding nasty surprises further into the production schedule. Transparency also opens up a dialogue with increasingly ecologically and socially-conscious consumers.Woolworths, the largest retailer in the Southern Hemisphere, is one of many businesses elevating raw materials sourcing and product traceability in their operations. Critical path visibility was boosted across multiple departments after introducing Centric PLM™, and they’re now able to measure the high sustainability standards they set for themselves.‘Green’ initiatives are increasingly being adopted worldwide, and sourcing teams should take note of the latest legislation being considered in America, which would require transparency of at least 50% of the goods sold from raw materials to shipping regarding their environmental impact, as well as the increasingly strict European regulations in which transparency and environmental impact are the core concerns.
You can counter sourcing challenges by…
Introducing a transparent business model that allows you to track each product from fibre to shelf
Quality-checking and certifying suppliers at a superfast rate
Promptly flagging supply chain issues within one unified system such as PLM so timelines are not impacted and quality is not compromised
Ensuring any updates to product data will automatically be reflected across all of your systems such as PLM and ERP
"We plan to further strengthen the role of our production site in Turkey, in the context of our nearshoring approach. Today we already supply over 40% of our global supply chain from the EMEA region… this helped us throughout the pandemic and it will remain highly relevant for us in the upcoming years throughout our Claim 5 growth plan."
Want to promote a profitable and transparent sourcing strategy with the help of next-gen technologies such as PLM?
Challenge 4:
the rise of online retail
Not only have the type of products consumed over the past 2 years changed drastically, but where and how they’re purchased is now influencing how retailers pivot their operations.Consumers are ordering online more than ever before, with a recent survey reporting that 40% of people preferred to shop digitally during the festive period to avoid crowds and queues. Fashion and apparel have officially been crowned Europe's most popular categories for online shopping, underpinned by the rise of young, digital-first retailers such as Boohoo, SHEIN, Missguided, ASOS and more.This surge in online orders adds another layer of complexity to supply chains for European businesses, with many now struggling to manage their inventories and connect existing technology systems to their e-commerce sites. Digitally-native customers have become used to items being delivered at breakneck speed (thank Amazon for introducing the concept of next-day delivery), and are demanding that products arrive in sustainable, easily recycled packaging. Any retailers that fall short are quickly called out and can lose credibility in the drop of a hat.Prior to the pandemic, a staggering 70% of retailers (particularly SMEs) had no e-commerce offering. Nowadays, a digital presence offers a vital lifeline for businesses across Europe facing repeated waves of Covid-19 infections and fluctuating restrictions. What’s more, growth rates for e-commerce are forecasted to continue their upward trend in 2021, with an expected growth trajectory of 12%. It’s clear the future is digital.
You can counter e-commerce headaches by…
Empowering meticulous inventory management within a centralized repository such as PLM
Ensuring teams can develop, iterate and approve packaging concepts and designs in one intuitive workspace
Pushing accurate product data from PLM to your e-commerce site therefore ensuring all information is accurate and transparent for consumers
"Our business has grown over the years from primarily wholesale to a multi-channel mix, incorporating branded retail stores, direct sales through partners, and recently a redesigned e-commerce platform and new B2B solution. We are a global digital company so managing and connecting data across these channels and multiple regions requires powerful digital systems."
Steve Chastain, Head of Global IT at Volcom, a Centric Software customer
Do you want to drive a digital-first strategy with the help of cutting-edge technologies?
Challenge 5:
optimizing assortments
As supply chain volatility and complexity increases, it becomes harder to get the right product to the right store at the right time and price. More than ever, retailers also need to streamline product assortments and avoid wasting shelf space on unprofitable products.Covid accelerated the rise of omnichannel and the consumer expectations that go with it, with many consumers now expecting ‘zero difference’ between channels and the buying experience. Consumers also have plenty of choice, with 120 new products launched onto the market in Europe every single day.If trend-dependent products are not available before competitors are selling them, consumers will simply get what they want elsewhere rather than wait for a delayed shipment. On the other hand, if too many products arrive in stores at the wrong time the problem becomes overstocking and the need for heavy discounting to clear excess inventory. In such a complicated and data-heavy supply chain and planning landscape, automated systems to aid decision-making are becoming critical.
You can counter assortment challenges by:
Implementing a planning software to gain early visibility of the entire product assortment and identify bestsellers
Forecasting with data-led tools from the planning stage to get the right mix of products in the right place
Optimizing inventory and on-time fulfilment to increase sell-through at full price to reduce discounting
"We needed a planning tool to have everything in one place and to get alternate views of the same picture. We deal with different currencies, different customer tastes, different trends by country. Having all the geographical variables plus the wide assortment and number of SKUs made the life of the planners here very, very tough."
Read full Guess success story
Daniel Botey, Vice President of Global Inventory Management at Guess Europe Sagl, a Centric Software customer
Want to optimize assortments with a next-generation planning solution?
The decisions that are made and strategies put in place over the next 6 months will be integral to how successful European retailers are in the next normal.It’s true that the industry has seen a promising shift towards digitalization, but many businesses are still playing catch up and must keep their foot on the gas to move with the times. Most companies are relying on outdated or homegrown PIM, DAM, ERP and PLM systems which are inhibiting them in an already challenging landscape. Data is often stored offline and many communications are manual or paper-based, which means teams are operating in the dark. The repercussions are great; margins have been hit hard and retailers have struggled over the past 2 years to meet challenges (such as the rising costs of raw materials and shipping) head on.However, many consultants and industry changemakers are identifying this ‘retail reset’ as a moment for business leaders to radically rethink their supply chain and operations.In moments such as these, inactivity is the most dangerous move. Decision makers must assume supply chain disruptions are here to stay, and set strategies accordingly. The time is now to onboard innovative and customer-driven technology partners to establish a solid foundation for managing product data, therefore maximizing supply chain visibility, boosting agility, reducing time to market and protecting margins.Are you ready to level up your 2022 supply chain strategy? Click below and start your digital transformation journey today.
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