Retail Supply Chain: Pandemic-Inspired Trends That Are Here to Stay

In late 2019, the world split into “before” and “after” due to COVID-19, and the logistics industry was no exception. Some of the methods that were deemed functional before no longer work in conditions of crisis, while the existing issues only intensify.

In addition to that, new problems have emerged: with retail supply chain and cold chain being crucial in the distribution of medical goods, the quality of logistics has quite literally turned into a matter of life and death.

Let us look closer at the three retail SC management offenders that were intensified by the pandemic:

• Cold chain risks
• TMS (transportation management system) imperfections
• Lean manufacturing problems

During “The Ultimate Utopia of the Extended Supply Chain” discussion at Innohub, Andrew Leto, Emerge Founder and CEO, remarked on the unique challenge posed by the inability of cold chain truckers to monitor the temperature of their cargo. Possible glitches become impossible to predict or even notice before reaching the destination. This could lead to great losses of vaccines and other temperature-sensitive medical goods. Since retail SC management deals in the optimization of delivery processes, the development of custom software for better temperature control is currently a big issue.

The flaws of transport management systems are currently prominent in the retail supply chain. Each TMS is imperfect in its own way, but even if the flaws start to seriously affect the company’s productivity, switching to a new TMS is a tedious process for a company to undergo. Among the many reasons, three stand out the most:

1. The change is slow, with the entirety of company staff forced to adapt and relearn.
2. The first year period brought very moderate results, thus looking bad in the modern fast-paced climate of the retail industry.
3. The cost of transition is too high, especially when paired with little to no returns in the early stages of the process.

Now more than ever, choosing a better TMS requires multiple sacrifices on the company’s behalf and offers few short-term profits. This creates a necessity for constant TMS optimizations and quick fixes that could help the retail supply chain function more smoothly because TMS with all of its nuances is crucial to the supply chain.

According to a May 2020 survey of 350 shippers conducted by Peerless Research Group (PRG) on behalf of Odyssey Logistics & Technology Corporation, TMS played a critical role in increasing shipping transparency, closing customer communication gaps, and helping shippers maintain remote work capabilities during the pandemic. With that prominence in mind, small tweaks targeting technology, visibility, and speed could become the temporary measures meant to patch up TMS imperfections.

Before the pandemic, lean supply chain and logistics management was all the rage. The supply and demand shock of 2020, however, has revealed the fragility of the entire retail supply chain ecosystem. Now, the companies that adhered to lean principles and kept their inventories low are forced to reckon with the hardship of saving when the pandemic-induced losses have already hit them, and when stock and distribution are critical to the well-being of others as an additional pressure point. From a retail supply chain standpoint, this means the necessity of change for once-lean businesses.

In order to face up to the changing realities of the retail industry, companies must be, first and foremost, forward-thinking. This means integrating innovative technologies and possibly taking some creative risks. Let us take a closer look at some of them.

AI and IoT—or AIoT—have been the buzzwords of modern logistics for years. Recently, their popularity has only increased as their benefits have proven to be even more tangible and crisis-resistant.

IoT gathers multitudes of data that can be a starting point for thorough logistics analysis. With that in the right hands, IoT turns into a multifaceted tool that can help with:

• Improvement of routes’ efficiency
• Damage control and risk identification
• Analyses and prognoses regarding demand

Where IoT deals with the more abstract concept of data, artificial intelligence becomes a concrete hands-on helper to the modern retail industry. Implementation of AI is an investment that frees up a lot of the company’s resources and minimizes the chances of human mistakes. The main benefits that can be derived from it are:

• Precise decision making
• Automation
• Efficient robotization

Against the pandemic backdrop, AI is as poignant as ever. According to Innovation Management, artificial intelligence models are known to be the first systems to have detected the COVID-19 outbreak. For example, the AI-driven HealthMap working in the Boston Children’s Hospital first registered the rising clusters of strange pneumonia cases earlier than the human researchers.

Blockchain is currently in its formative stages, but the technology has already proven to be a risk worth taking for savvy retail managers. Blockchain opens the doors to smart contracts that remove third parties from a given transaction and create a direct connection between the stakeholders.

For instance, True Tickets, a company specializing in digital ticketing, applies blockchain technology to make up and secure ticket authenticity by determining buy/sell sides and creating a ledger that allows artists, venues, promoters, and fans to monitor a ticket from creation to its ultimate use at an event.

Online retail gains a never-before-seen level of transparency, with a personal touch of a closer-knit collaboration. The latter is a pleasant plus, considering the recent prioritization of remote work, and the transparency is also true for the product lifecycle.

Blockchain technology implementation into supply chains is still a task approached cautiously, both due to its novelty and its complexity. However, its benefits are undeniable, and its integration into the SCM system is beneficial for the market, driving even faster growth through the years 2019-2023—the time period when the world will likely still see the ramifications of COVID.

Retail Analytics solutions are involved in several data-related processes. Namely, they:

• mix data from internal and external sources,
• drive insights from big data through visualizations and diagnostics, and
• help decision-making to happen faster and easier.

For employees of a company, the chief benefit from such analytics lies in the comprehension of their logistics network. This makes their responses to possible issues swifter and more specialized, tailored to handle a particular challenge. With the help of analytics, workers can analyze the data in real time and send out alerts to signal potential problems early on.

For example, a 2017 case study from the Transportation Research Journal determined the importance of multiscale bootstrap resampling for logistics. Used on a particular word cluster, it could become a powerful tool of damage control and risk prevention by providing supply-chain (SC) decision-makers with customer feedback. Down the line, it could also let them in on the possible problems with the food products. This type of risk management, applied and expanded to other areas, is going to be highly valuable as the world proceeds to recover from the pandemic.

Hopefully, this article has provided insight into the pandemic-induced risks in the retail supply chain industry, and the measures managers can take to offset the impact. Today, the right software is imperative to weather these supply chain challenges in retail imposed by COVID-19. A company could turn its attention towards technologies beneficial for the global retail SCM, such as:

• Internet of Things, a connective multi-purpose tool, making the logistics processes more transparent and unified
• Smart utilization of artificial intelligence for the purpose of automating menial tasks
• Blockchain for the protection of stakeholders’ personal financial information, and, as a result, insurance of international contracts’ safety
• Advanced analytics, processing large quantities of data, and creating precise prognoses for the future

To withstand these trying times and emerge victorious, retailers must create positive change within retail supply chain management. And to do that, one needs a reliable IT partner. Luckily for you, developing and customizing supply chain and logistics software is one of our many specialties. We have cooperated with a wide range of partners from all across the world, and, taking pride in our cross-cultural connections, we would readily expand our portfolio even further. Our team of development professionals can tackle a task of any complexity and help you quickly update your business in accordance with pandemic demands. Why not start now?