The pandemic, Russia’s invasion of Ukraine, and climate change are fueling supply chain disruption. This has cost retailers as they struggle to get products to customers and optimize product distribution for demand. Better forecasting can help.
Tony Prothero, SVP of product management, supply chain solutions, at SymphonyAI, checked in with Street Fight to explain the scope of the problem and how AI can give retailers a boost.
How has recent supply chain disruption affected retailers?
Between consumer purchasing behavior, inflation, and geopolitical events, after two years of pandemic-induced stress testing, retailers still aren’t confident about their supply chains. They continue to fail to anticipate changes in product demand and velocity. Meanwhile, these changes continue to accelerate. As a result, retailers that forecast based on historical data can’t keep pace.
What are the metrics retailers can watch to understand how supply chain disruption affects them?
Savvy retailers are leveraging solutions that proactively alert them when a planned shipment is delayed or canceled, and track the frequency of those disruptions over time to understand whether they are growing more frequent. Tracking and reporting costs to mitigate those shifts with expensive expedited alternatives, or potentially worse, the lost revenues due to out-of-stocks, also give retailers insight into the true costs of supply chain disruptions.
What steps can retailers take to better handle future disruption?
Retailers must look to their demand forecasting technologies to ensure predictions are agile and data-driven. With machine learning, forecasts consider historical and current data, finding patterns that humans can’t detect as easily. This is the foundation to a successful supply chain – without an accurate forecast, every resulting link in the supply chain is affected.
In addition, as omnichannel shopping continues to grow, it’s essential to understand customer demand and needs across all channels. How can a retailer successfully meet the needs of shoppers if they don’t know which methods of purchase will be driving inventory, and where and when orders need to be fulfilled?
What role do accurate demand forecasts play in protecting retailers from supply chain turbulence?
By incorporating actionable AI in the supply chain, retailers can greatly improve their odds of creating more accurate demand forecasts and more precise replenishment decisions. In the event of any disruption, retailers can quickly react and respond accordingly. This leads to meaningful impact on overall supply chain performance and efficiency costs as well as satisfied consumers.
Anything else retailers should know about this issue?
The ongoing disruption in the supply chain woke the retail industry up to the need for quicker adoption of modernized processes and technology capable of fueling efficiency and agility. For example, at the center of the pandemic, disruption was needed to support click-and-collect grocery shopping not only for convenience, but also health and safety.
To truly be omnichannel-fluid, retailers’ technology and processes need to support all channels. This starts with the visibility to forecast demand across all channels for perfect order management. Next, it requires fulfillment engines that can dynamically understand available-to-promise inventory to execute that fulfillment. Finally, it requires efficient operations for execution out of the distribution center and into consumers’ hands.