Report: Retailers should focus on supply chain, technology in light of Covid-19

Retailers have had to rely on human intervention to make up for shortfalls in supply chain processes and systems in response to the Covid-19 pandemic, according to a recent global study from researchers at Britain’s University of Warwick and Arizona-based supply chain software firm Blue Yonder.

The study of 105 retailers across Europe, Asia, and the Americas identified human vulnerabilities across the supply chain and the need for investment in flexibility, visibility, and automation to improve future resilience, according to the authors.

Specifically, 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, but more than half (58%) of retailers said a high degree of manual intervention was required to respond to the fluctuation in demand and supply.

• Workforce issues were a problem for retailers, with 59% of warehouse and 48% of store employees affected by quarantine or illness. This often resulted in the closure of online operations and the need to recruit temporary staff.

• Retailers were polarized in their treatment of supplier payments, with 37% delaying payments and 30% making early payments due to the pandemic.

“Using inventory to buffer against the disruption of Covid-19 was the most common strategy deployed by retailers,” said Jan Godsell, professor of operations and supply chain strategy at WMG, a research department within the University of Warwick. “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, which is a potentially more resource-efficient and resilient response.”

Managing supply chain technology systems was an issue as well. Godsell added that the reliance on human intervention to manage demand fluctuations during the pandemic underscores the need for retailers to sharpen their focus on the supply chain in general, and technology in particular. 

“A critical learning for retailers is the need to invest in creating supply chains with greater flexibility, visibility, and automation,” added Wayne Snyder, Blue Yonder’s vice president of retail strategy for Europe, the Middle East, and Africa [EMEA]. “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.”

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.

For more coverage of the coronavirus crisis and how it's affecting the supply chain, check out our Covid-19 landing page.