Retailers can conquer supply chain woes by harnessing the power of data
Alongside the pandemic, 2022 continues to be marred by a significant and ongoing supply chain crisis. Disruption to shipping, increasing freight prices and shortages of everything from semiconductors to HGV drivers has led to empty shelves for consumers and rising costs for retailers.
For the last two years, with shattered supply chains and with key products stuck in transit, many retailers have struggled to ensure customers get their orders delivered.
Businesses across many industries in Saudi Arabia recovered quickly following the lockdown, mainly due to the dynamic transformation of their business models.
E-commerce sales also continued to gain momentum across the Kingdom, indicative of a step change in consumer habits brought about by COVID-19. The e-commerce market in Saudi Arabia witnessed an increase of 17 percent and generated total revenues of $8 billion in 2021.
To cope with the supply chain challenges, as well as other pandemic-induced issues of the past year, retailers of all sizes needed to be nimble and adaptable. Many merchants invested in alternative digital solutions to quickly respond to changing market conditions and offer shoppers the best possible service while driving further efficiency gains.
While reshaping business models and pivoting to digital-first strategies required a lot of energy and a significant financial investment at a time when both were in short supply, the good news is that these efforts were not wasted.
Retailers now have the option to capitalize on the accumulated customer data and further refine it to draw out useful insights to future-proof their strategies and emerge stronger and more agile.
Retailers capture all types of data — from inventory and pricing information to customer, transactional and operational data. These same retailers, however, often struggle to make practical use of this resource to drive decisions, support strategies to beat market adversity and identify opportunities to meet the ever-changing consumer preferences.
The key here is data science, which can be used to transform raw information from point-of-sale data or digital shopping baskets into dynamic insights on consumer consumption behavior.
By applying data science and analytics, retailers can generate data-driven insights that can help them better understand product line performance, create personalized promotions to boost sales or even create a more engaging and rewarding customer experience across their entire buying journey.
Ensuring that goods are delivered on time, every time, is now more important than ever considering recent disruption. To meet this goal, embedding analytics into processes and operations — all the way along the supply chain — is vital to ensure products flow from the manufacturer to logistics partners and to customers without delay.
These analytics can help predict whether a shipment will arrive at its destination on time, as well as provide recommendations and alternatives to improve delivery performance on both a micro and a macro level.
The last couple of years have underlined just how fragile global supply chains can be, and retailers now need to remain vigilant ahead of the next crisis.
Supply chain professionals are set to invest more in technology, prioritizing advanced analytics and artificial intelligence in the coming years to address this need.
But more can be done on the side of the retailers too.
By using software designed specifically to manipulate data to optimize their inventory or model and analyze their supply chain, retailers can access several advantages.
For example, they can use previous forecasts to generate predictive models that can optimize inventory and shorten lead times to increase efficiency throughout their supply chain.
Building this supply chain visibility can help retailers plan contingencies, such as finding alternative suppliers if something happens to their regular source. The core theme here is identifying and implementing strategies to drive resilience — their capability to assess demand in advance and improve their supply.
By combining internal data with external sources, such as real-time weather forecasts and shipping information, retailers can dynamically forecast demand to anticipate product shortages and buying trends.
Instead of hiring expensive data scientists or analysts, retailers can now provide their existing employees with smart self-service technologies to help them interpret this data correctly, and even automate these processes to drive that efficiency further.
Applying human intelligence to automated analytics is still necessary to produce valuable knowledge and, with retailers already motivated to improve the customer experience wherever possible, easy-to-use analytical software represents another string to their bow.
People remain key to the data-driven digital transformation and upskilling the workforce in data literacy and analytics is a critical part of any successful transformation strategy. The challenge for retailers is to empower their back-office employees with the right data tools.
Only when a retail employee can access the available data, analyze it and then suggest or implement an improvement based on the results can the company optimize its processes and assert itself against the competition.
By combining internal data with external sources, retailers can dynamically forecast demand to anticipate product shortages and buying trends.
In contrast, businesses that are not democratizing access to their data or upskilling their people to perform transformative analysis will struggle to anticipate changing customer needs, strengthen supplier networks and remain on top of logistics to respond quickly in a crisis.
Retailers hoping to emerge from the current crisis in a stronger position need to harness and leverage the power of their data into their decision making — assessing and identifying alternative suppliers, back-up strategies and demand peaks to succeed.
Many businesses may not realize it, but they are sitting on a goldmine of data. Once this data is accessed, analyzed and democratized, it will be the key to continually meeting the core agreement between consumer and seller — the reliable availability of product — even as supply chains continue to fracture.
- Karl Crowther is regional director for the Middle East and Africa at Alteryx.