The COVID-19 pandemic has changed the retail sector claims a new study by WMG, University of Warwick, and Blue Yonder. The research examined how retailers have responded to the situation. It identified the human vulnerabilities across the supply chain. It also recommended investment in flexibility, visibility and automation to improve future resilience.
Retailers have faced multiple challenges during the COVID-19 pandemic. Some retailers have experienced a combination of unprecedented demand for particular products while no demand for others. Many stores have remained closed or adapted their operations to accommodate social distancing. Where possible, there has been a shift to online shopping. But this is not always possible and presents its own operational challenges.
The study gathered insights from 105 different retailers from Europe, Asia and the Americas who offered a glimpse into their survival and navigation of the COVID-19 crisis.
The study found that:
- The majority (61%) of retailers used inventory to buffer against the disruption of COVID-19. Supply chain processes and systems were effective. However, 58% of retailers said a degree of manual intervention was required to respond to fluctuations in demand and supply.
- Workforce issues were the dominant issues for retailers. Fifty-nine percent of warehouse and 48% of store operatives were affected by quarantine or illness. It often resulted in the closure of online operations and the need to recruit temporary staff.
- Retailers were polarised in their treatment of supplier payments, with 37% delaying payments and 30% making early payments.
Resource-efficient and resilient response
Jan Godsell, Professor of Operations and Supply Chain Strategy at WMG, University of Warwick, comments: “Using inventory to buffer against the disruption of COVID-19 was the most common strategy deployed by retailers. This provides the greatest certainty of supply but comes at a cost. In contrast, only just over a quarter (29%) of retailers relied on suppliers with more agile manufacturing and distribution networks. This is a potentially more resource-efficient and resilient response.
“With 75 to 80% of products seeing a demand fluctuation. Retailers were slightly better at responding to decreases rather than increases in demand. While retailers found that their supply chain processes and systems to be effective in responding to the demand fluctuations. Many were still dependent on the human touch.”
Wayne Snyder, VP Retail Strategy, EMEA at Blue Yonder, suggests: “Early indications in Asia show customers have been supportive of retailers they deemed to have responded best to the crisis. We expected that pattern to follow across Europe and the US.”
The survey was administered online by Qualtrics in late April 2020. It was targeted at senior executives in retail supply chains, in Europe, Asia and the Americas. 105 responses were received with relatively equal distribution across the regions.
Enterprise Times: What this means for business?
COVID-19 has highlighted the human vulnerabilities across retail supply chains. From warehouse and store operatives being affected by quarantine or illness to over-dependence on human intervention within supply chain planning. A critical lesson for retailers is the need to invest in creating supply chains with greater flexibility, visibility and automation. Here technologies such as artificial intelligence and machine learning will play a key role in helping retailers navigate future disruption, while still meeting customers’ expectations.