In a normal business environment, optimizing supply chain performance is essential for companies looking to maintain a competitive edge—and this is even more the case for global organizations dealing with the impact of the COVID-19 pandemic.
For the 2020 State of the Retail Supply Chain (SRSC) report published by Auburn University’s Center for Supply Chain Innovation, the Retail Industry Leaders Association (RILA), and DC Velocity, supply chain executives from some of the world’s top retailers provided insights into what they’re doing to improve supply chain performance.
Although there were a variety of takeaways, three “best-in-class capabilities” emerged that their companies are focusing on to drive both current and future success: “The supply chain executives at the forefront are working to leverage fulfillment automation tools, fortify their human capital, and digitize their supply chain ecosystems.”
Here, we’ll dig into how you can apply these three strategies to increase the performance of your organization’s supply chain.
Citing a 2019 report from research firm LogisticsIQ, the report underscores predictions that by 2025, warehouse automation spending is expected to more than double what it was in 2018: “Much of the spending will focus on fulfillment activities. Automated mobile robots, automated guided vehicles, and picking robots will account for 40 percent of the warehouse automation spend by 2025.”
Of course, all robotic systems aren’t created equal, and the leaders surveyed listed several top priorities for selecting them, including:
“Ease of implementation”
“Integration with existing systems”
“Scalability to handle demand spikes”
Although the respondents expressed confidence that robots are “game changers,” many indicated they were taking a measured approach that included starting on a smaller scale to test capabilities and applications.
In addition to robotics, artificial intelligence (AI) and machine learning (ML) are also expected to provide great results when it comes to solving “complex supply chain problems quickly.” With its value to help with demand forecasting and inventory management, ML is expected to play a much greater role in the years ahead: “By automating planning and administrative processes via ML and related technologies, supply chain leaders believe that workforce utilization will improve. In turn, SCM costs will be kept in check.”
Focus on Human Capital
In recognition of the ongoing need for supply chain talent, the authors of the report wanted to know what retailers were doing to “find, train, and retain” the right people for the right roles—particularly in terms of hourly workers: “Identified by 42% of the survey respondents’ as their biggest supply chain challenges for the next three years, the talent problem is most acute for hourly labor.”
In response, participants listed various approaches they’re using “to fortify their human capital,” including:
Using “proactive market analysis”—to ensure competitive starting wages and benefits.
Deploying “a wide range of tactics” to find applicants—such as employee referral programs, employment website listings, and postings on social media.
Implementing “multipronged retention strategies”—including higher wages, expanded benefits, flexible scheduling that aligns with employee needs, better working conditions, and an overall culture that supports retention.
Respondents emphasized the importance of focusing on the needs of managerial talent, too: “More than 60% of the study participants indicated that it is growing increasingly difficult to hire and retain strong supply chain leadership teams.”
Quoted in the report, one executive underscored the need: “Making sure we have the right people in those roles is critical. They create the culture and quality of life within the distribution facilities.”
Efforts cited in this context include:
Hiring the right people in the first place.
Providing the resources needed to “enhance their abilities to lead supply chain operations.”
Optimizing “skills of most importance”—identified as communication, problem solving, and relationship management.
Focusing on managerial retention with offerings such as “salary bumps, along with career paths, and work culture initiatives.”
Offering advanced training programs—which the report authors say is “an underutilized high impact method for retaining and developing the next generation of leaders.”
Consulting firm Gartner agrees with the need to focus on having the right talent in the right places—noting that talent capability gaps can be an obstacle to delivering business impact through change initiatives.
The firm recommends companies close these gaps through specific talent development programs that start with identifying current status and then determining next steps to deliver the desired supply chain performance and business impact. Gartner says doing so involves embracing “three pillars for building the next-generation workforce”:
Agile, collaborative leadership—that embraces an “enterprise leadership approach” to overcome organizational siloes; builds “cross-functional savvy in teams;” and gives employees the confidence to act autonomously.
Continuous workforce transformation: “It’s much better to build a workforce that can adapt, rather than a workforce that depends on leadership to dictate changes.”
Innovative talent sourcing and development plans—through the use of talent analytics and with a prioritization on “digital dexterity, a combination of analog and digital skills and traits.”
According to the SRSC report, the third best-in-class capability that emerged was “Digitizing the Ecosystem.”
While some of the participants noted that their organizations only had “pockets of digitization,” most recognized the need to embrace more comprehensive digitization due to the drivers behind this increasingly important capability, which were referred to as the “driving Cs – customer sophistication, channel complexity, and core service requirements.”
Going digital is an important way for companies to stabilize their supply chains—as underscored in the World Economic Forum’s (WEF) post-pandemic predictions about global supply chains, in which there will be a shift from the “predominantly paper-based” relationships between buyers and suppliers to those which are digitally oriented: “Digitizing the buyer-supplier relationship is a fundamental element for building sturdy supply chains, and will make identifying and recruiting new suppliers far less time-consuming.
With technologies like artificial intelligence and the Internet of Things, supply chains could quickly switch to alternative providers when regular suppliers face disruption.”
Consulting firm PwC agrees, recommending that digital capabilities be used to improve supply chain visibility and to model new risks and costs: “Deploy supply chain visibility tools that provide line of sight to capacity constraints into first-, second- and third-tier suppliers.
By going further into their supply chains, global manufacturers can get a more complete profile of where components are coming from for their sourced sub-assemblies.”
The authors of the SRSC report note that although tools such as these are often described as “emerging” or “disruptive” technologies, this type of future-focused mindset is no longer a luxury supply chain executives can afford: “Delaying adoption for clearer proof of concept or a more financially feasible time to implement ML technology is a recipe for falling further behind the competition. These tools are actively deployed with success across best-in-class retail supply chains for enhanced planning, productivity, and customer service.”
Increasing the performance of your supply chain requires a strategic approach to better embrace best-in-class capabilities such as these.
Finding the right partner can help you do it.
At CLN Worldwide, we’re that kind of partner—one that’s committed to meeting your supply chain needs and helping you to improve its performance both now and in the future.