Retail businesses of today are challenged by both internal and external factors. The key to resolve these obstacles is radically digitizing the supply chain through 8 important paradigm shifts and extending automation horizons through the application of complementary technology platforms.
Challenges in the retail industry
There has been a sequence of worldwide upheavals in 2021 with substantial effects on the global retail sector. Tariffs, protectionist policies, trade restrictions, or tax incentives for the domestic reshoring of countries have many indirect effects on the retail industry. These policies and tax policies affect customers’ needs and purchasing habits as well as push up production costs. Moreover, they have impacts on investment decisions and cause fierce competition among retailers.
Political, economic, social, and technological factors pose many challenges for the retail industry. Source: depositphotos.com
Short-term and long-term economic issues have significant effects on the global retail industry. A series of enterprise bankruptcies has resulted in the unemployment of a huge number of people, the phenomena of income disparity in many countries are on the rise, as well as inflation and a variety of other economics push consumers to change their buying behavior, causing significant impacts on the retail industry. Retailers are under greater industry pressure and face strong competition in order to obtain market share.
Furthermore, regions’ socio-cultural characteristics also have impacts on the retail industry. The retail business should quickly adapt to better fulfill the new demands of customers (e-grocery, BOPIS). The creation of a “conscious consumer” who is devoted to making purchase decisions that have a beneficial social, economic, and environmental impact, which drives enterprises to change and improve their business.
Finally, technological factors play a significant role in the retail industry’s revolution. The advent of a number of modern technologies, including automation, artificial intelligence, machine learning, cashless payment technology, and so on, brings numerous benefits to the retail industry. Retailers gain several advantages from conducting digital transformation. However, they also confront a range of difficulties, such as cybersecurity risks, technological risks, and so on, which necessitate proper actions.
Customers are the key factor in determining the survival of any businesses. In today’s modern world, customers have multiple choices, and their requirements grow in both quantity and quality as well as their expectations increasingly rise. Retailers should continue to enhance ways to meet their customer’s demands.
Along with growing and satisfying customer demands, retail businesses should find ways to overcome another internal industry challenge – competition. Despite the fact that a huge number of retail enterprises have declared bankruptcy as a result of the Covid-19 pandemic, the level of competitiveness in the retail sector remains quite high. Retailers should focus on enhancing competitive advantages in order to remain in a fiercely competitive market.
Retailers have a relatively high level of competition. Source: media.baamboozle.com
The challenges are escalating and accompanied by enormous risks, forcing retailers to radically digitize their supply chains. Retailers should effectively coordinate complementary technology solutions – applying hyperautomation while taking 8 revolution steps.
Important shifts in the supply chain
Important shifts in the supply chain Source: congtyxuatnhapkhau.org
Data transparency improvement
Improving data transparency means providing comprehensive supply chain visibility, which allows for data tracking across the supply chain as well as data access and usage from anywhere, at any time. Data transparency makes it easier for retailers to identify bottlenecks and take preventative measures to avoid interruptions in shipments clearances. The following are some examples of data transparency and accompanying efficiency:
- The whole data about expenses must be available to everyone from a single source because this allow retailers to identify savings potential;
- KPIs must be given in a transparent, unambiguous, and consistent manner so that every single person in the whole enterprise can follow and aim to achieve them.
Constant & data-driven optimization of infrastructure
Retailers’ digital infrastructure should be regularly updated as security requirements, industry standards, and data transparency are constantly changing. Updating to optimize digital infrastructure also guarantees that retailers remain efficient and competitive. Furthermore, retail businesses should optimize emissions treatment to minimize the negative impacts on the environment.
Autonomous & real-time management
Real-time automated management improves operational efficiency, lowers expenses, and eliminates waste. Today, modern technology machines can effectively replace humans in planning and management. In specific, technology machines have completely automated the calculation and analysis of both internal and external factors to combine into plans in real-time, faster and more accurately than manual work. A telling example of this new steering way is that some applications base on analyzing actual inventory data and intelligently forecasting demand over the following several days to provide drivers with real-time directions.
Effective assortment strategy development
A retail assortment strategy is a tool used by retailers to manage and grow sales. AI-driven assortment and order management at the store level help bridge the gap between centralized one-size-fits-all category demand management and decentralized owner-managed businesses. AI-driven order management and classification form a central system capable of calculating to optimize inventory levels or adjusting offers for each specific customer in order to maximize profit.
The supply chain of the future is built around on-point availability, which means retailers will need to guarantee that they are constantly ready for delivery in the future, and the gap between sales channels and customers will nearly disappear. To do this, businesses should create an efficient and effective omnichannel sales system with precise interconnections, servicing customers at every touchpoint smoothly from a single source.
Continuous goods accessibility
It should not matter whether the item is, what is important is that the salesperson or the customer in case of e-commerce, has digital access to the item and could order it. The customer also knows when and where their package will be delivered. Constant and convenient access to products aids in the accelerating of goods consumption and the satisfaction of consumers, hence boosting the customer experience.
Superhuman digital labor force use
Retailers are in an effort to lessen their reliance on manual labor and switch to digital labor systems – a superhuman digital labor force progressing from simple process automation to substitution for increasingly complicated duties. Smart robots can perform particularly difficult manual labor under unpleasant or dangerous conditions that few people are prepared to endure for an extended period of time, such as warehouse picking. The digital workforce can boost worker productivity while lowering labor costs or avoiding capacity shortages.
Taking advantage of the return flows for new business opportunities
Developing an effective return process will provide a competitive edge for retailers in terms of customer satisfaction and their revenue. While numerous strategies are taken to lower the return rate, the absolute amount of returns will keep rising due to the channel’s sales growth. Instead of discarding returned goods or rejecting them entirely, retailers can sort products based on disposal choices such as repair, recycling, resale as new, resale under returned goods, and so on.
The role of hyperautomation for an optimized supply chain
Only radical digitization of the whole supply chain will allow the movement of information and goods to become as efficient, flexible, rapid, and cost effective as the retail transformation needs. However, retailers should aim for a comprehensive combination – which means applying hyperautomation rather than adopting each technology individually:
- RPA: RPA bots could automate supply and demand planning tasks in supply chain management by identifying and matching essential data from suppliers, collecting market data, sales team’s data, and presenting data in a standardized format. RPA bots also reduce manual errors, which improves planning efficiency and ensures accurate predictions.
- Big data analytics: The Big Data management system includes real-time analytics solutions that can be used to improve delivery efficiency by optimizing delivery scheduling, tracking real-time packages and vehicles, automating notifications sent to customers in case of delays, and updating order status to customers in real time. Furthermore, big data enables businesses to create complicated mathematical models that anticipate profit margins, optimize expenses, predict selling prices, and so on.
- Cloud platforms: Cloud computing provides infrastructure, platform, and technology solutions for supply chain networks, resulting in several advantages. Forecasting and planning, logistics management, and sourcing and procurement are all considerably improved by cloud platforms. The cloud platform also improves real-time visibility, scalability, cost savings, and process acceleration.
- AI: Artificial intelligence leads to optimizing production planning, demand forecasting at a scale that wouldn’t be possible for analysis by humans, big data analyzing, and automatically ranking suppliers for recommendations, customer support,…
- Blockchain: Using blockchain in the supply chain has the ability to increase visibility and transparency even while reducing expenses. Furthermore, blockchain helps to optimize the supply chain by upgrading infrastructure, increasing liquidity to faster profit changeover, and so on.
- Internet of Things: IoT devices have completely transformed supply chain management. IoT devices provide efficient tracking and monitoring of goods, shipments, or the whole supply chain by utilizing GPS and other technologies. Furthermore, IoT aids in the early identification of product faults, easy supply planning, effective quality control, and smart product storage.
- Fully digitalized supply chains in response to retail challenges
- 2021 Retail PEST Analysis
- Optimizing Supply Chain Management with Robotic Process Automation
- How to Optimize Supply Chain Management with Big Data
- Cloud Computing in supply chains activities, benefits and adoption
- Expanding the Supply Chain: Using Blockchain to Optimize Storage Capacity
- Using blockchain to drive supply chain transparency
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