Global crises such as the Red Sea incident and the ongoing conflict in Ukraine present unprecedented challenges for retailers. Supply chain disruptions, unpredictable consumer demand, and logistical complexities have become the new norm. In such a turbulent environment, businesses urgently need stability and adaptability.
Ecommerce solutions have emerged as powerful tools for businesses navigating these uncertainties. Unified platforms capable of centralising operations across multiple sales channels offer retailers the visibility, agility and flexibility needed to thrive amidst the disruption.
As global crises persist, having access to an overview of these elements of a business in one place is a powerful tool for businesses seeking resilience and assurance. With innovative approaches and adaptable strategies, retailers can withstand the adversity and emerge stronger in an increasingly volatile world. Georgia Leybourne, Chief Marketing Officer at Linnworks, explains more….
Opportunity Brings Pressure
Retailers of every size now have unprecedented access to new customers across the globe. The extraordinary expansion of marketplaces over the past decade has transformed customer reach and enabled retail entrepreneurs to scale up at pace. This opportunity, however, places new demands on retail organisations to deliver top quality customer experiences every time – and the implications of failure are extremely severe. A supply chain glitch in the past might have led to one or two disgruntled customers whose products were delayed or unexpectedly unavailable. Today, that same glitch can mean a retailer fails to hit its marketplace Service Level Agreement (SLA), risking cutting off an entire revenue stream and potentially devastating the business.
And these supply chain glitches are hitting retailers thick and fast. The crisis in the Red Sea has added up to two weeks to shipment time for ships rerouting via the Cape of Good Hope and seen costs soar. The damage to the Baltimore Bridge has required a rapid rethinking of supply chains as goods are diverted to other ports. On-going uncertainty regarding inflation and interest rates continues to affect the retail cost base, from transport and goods to staff. And those are the big-ticket items. Every day retailers are facing seemingly random decisions that can have unforeseen consequences – such as a change to cycle lanes in London that interferes with regular delivery routes adding cost and delays; or a new sustainability regulation introduced in another country that can affect product manufacture or even the ability to sell in that geography.
Yet many small to medium sized retailers are completely blind to the potential impact of these events. The reality of the situation only becomes apparent when suppliers fail to deliver, 3PLs confirm contracts cannot be fulfilled or customers complain – often loudly and publicly. Which is, more often than not, far too late.
Achieving Immediate Visibility
Technology has a vital role to play in enabling retailers of every size to improve their resilience. Real-time inventory management allows retailers to identify and respond to supply chain events. With up-to-date information, a retailer can confidently and quickly take the decision to relocate inventory to counteract blockages in the supply chain, for example, find a new source to replace missing inventory or swivel to a drop ship model in certain geographies.
The speed with which a retailer can identify a problem and quickly understand the business implications is key. Alternative routes and suppliers will have finite capacity and, while the enterprise sized retailers will already have supply chain contingencies in place, the rest of the market will be scrabbling to access both products and shipping capacity. The cost of these contingency strategies will, of course, be a key consideration. Retailers need not only real time visibility of logistics and operations but also finances.
This is where the increasing sophistication of technology is providing a compelling solution. By integrating Connected Commerce Operations systems, retailers can seamlessly integrate and automate all their commerce operations across multiple sales channels, from inventory management to order fulfilment. This additional insight improves financial governance by providing both day to day insight into profitability and a rapid understanding of the costs associated with risk mitigation strategies when a supply chain event occurs.
Collaborative Approach
Being part of an ecosystem is enormously powerful, facilitating both the collaboration between partners required to quickly identify supply chain contingency options and, increasingly, the interplay between organisations that is reducing empty miles and improving fulfilment performance. With the right technology stack within a connected ecosystem, within moments of a supply chain problem occurring, a retailer can discover alternatives, highlight the associated costs and take a decision.
This insight also supports the proactive customer communication required to avoid the negative feedback that could affect marketplace ratings and overall reputation. Customers generally respond well when a retailer not only explains the reason for a delay but also simultaneously outlines its response and confirms when the product, or replacement, will be available.
Technology alone, however, is never a panacea. People and processes are also key. To avoid the risk of an internally created crisis, a retailer must also ensure everyone is not only using consistent information but also sharing that information. A marketing team should never embark on a massive sales outreach campaign without checking warehouse operations are ready, for example. Warehousing should always inform the rest of the business when it decides to relocate or replace racking to ensure any possible customer impacts are managed and mitigated. Without strong internal communication a retailer will undermine its resilience and agility.
Conclusion
Supply chain resilience is now a core component of retail success: companies simply cannot assume goods will be delivered on time. With the complexities created by ecommerce and the rapid rise in customer demands, the supply chain has become an integral part of the overall customer journey – and one that no retailer can afford to take for granted.
The only way to mitigate against the risk of potential devastation is to recognise the strategic importance of the supply chain. By implementing operational visibility and creating a collaborative model where the supply chain works hand in hand with the revenue and commercial side of the business, and with a wider ecosystem, a retailer can create the agility required to overcome each new challenge as it arises.
