Meeting demand surges with supply chain agility

Matt Gregory at Körber Supply Chain Software explains how to avoid a sudden surge in popularity becoming a logistical nightmare

 

Today, social media is having a significant impact on the retail supply chain. The latest viral trend can transform demand for a product – and create huge opportunities for retailers. TikTok suggests that the social commerce industry is worth £7.4BN in the UK, and this doesn’t account for the additional retail demand driven by viral product videos.

 

Retailers need to optimise their supply chain operations if they hope to leverage the revenue driving opportunities these moments represent. Failure to do so can negatively affect business – from reduced brand loyalty to increased operation costs, as retailers seek to quickly order additional product.

 

A sudden surge in popularity is a huge opportunity. However, supply chain agility is crucial in ensuring this doesn’t become a logistical nightmare.

 

Facing supply chain challenges

Improved oversight is a key factor in optimising supply chains to meet viral demand. According to research from Deloitte, only 13% of companies can map their entire supply chain – creating huge blind spots in resilience. Complexity is a fundamental part of the modern supply chain and addressing this is critical to improving resilience and ensuring agility. 

 

A major source of complexity is the fundamental change in customer expectations in the last few years. Today, consumers expect deliveries to be quick and tailored to their preferences. Fulfilment, at this speed, requires advanced data management and flexibility – which adds a layer of additional complication.

 

Continued geopolitical disruption is adding to instability in global supply chains. This is compounded by continuing labour disputes and the more recent threats of trade wars. Meeting the challenges presented by  modern supply chains to ensure the delivery of viral products, requires new strategies. For example, the diversification of suppliers to accelerate procurement efforts and the use of technology to track orders and anticipate delays.

 

Ensuring supply chain agility

At its core, supply chain agility is the principle of reacting to a changing environment before it impacts the customer experience. The recent shortage in Huy Fong Foods iconic rooster-labelled sriracha is a perfect example of how broken supply chains, that create delays or shortages for consumers, can impact customer loyalty. Not only that, but these types of incidents invite competitors to try and fill the void. Retailers must be able to react to potential disruptions. Pivoting quickly is key to survival in today’s difficult business environment. This means actively monitoring stock levels, having strong supplier relationships and building visibility across full supply chains wherever possible.

 

Technology plays a fundamental role here. Warehouse Management Systems (WMS), for example, connect every aspect of warehouse operations. Real-time data ensures coordination between goods, people and processes, resulting in more accurate stock management. This reduces the risk of over or understocking. Improved flexibility also helps with agility, as businesses can optimise inventory placement in warehouses for faster picking and streamline labour to ensure operational flow.

 

Technology is the driving force behind more coordinated responses to demand spikes. Using technology, organisations can operate with greater efficiency, reduce complexity and create better customer experiences.

 

Beyond technology

While technology is vital, there are additional considerations.  Real-time data is needed to fully optimise operations and overcome issues like supplier communication or transport inefficiencies. Without this, even the best supply chain technologies can’t maximise agility.

 

Relying on a diversified network of suppliers can help to reduce the risk of transport delays or unforeseen supply shutdowns. Unlike relying on a single source, this helps protect companies if a supplier is unable to meet demand, by having another ready to fill the gap. This ensures business continuity and helps meet a sudden spike in demand more easily.

 

Equally, expanding the breadth of regions that goods are sourced from can reduce the effects of geopolitical instability or natural disasters. This empowers companies to quickly shift suppliers if the transportation of goods from a region becomes impossible. This level of resilience helps to reduce business disruption and   potential loss of income – particularly during demand spikes.

 

Creating a ‘let’s do’ environment

The Christmas period was the latest in a series of moments throughout the year that sees demand for certain products surge – and this will only be exacerbated by viral social media moments. As margins continue to be squeezed, retailers need to seize every opportunity.

 

Moving forward, supply chains will be shaped by data and smarter decision making. Businesses must embrace technologies and strategies that maximise agility. 

 

In a world where a single video can create mass popularity, agility is no longer a choice. Proactivity is needed to anticipate and prepare for challenges to maintain continuity and efficiency. This approach allows companies to mitigate disruption and maintain a competitive advantage over those who fail to adapt. 

 

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Matt Gregory is Managing Director Northern Europe at Körber Supply Chain Software

 

Main image courtesy of iStockPhoto.com and avierarnau