Blue Yonder: retail supply chain challenges amidst COVID-19

Due to the impact of COVID-19, retailers have faced significant challenges during the COVID-19 pandemic. This involves a mixture of unprecedented demand for certain products, while none for others. A high proportion of stores worldwide have been forced to close or transform operations to ensure social distancing guidelines can be adhered to.

As a result, there has been a considerable rise in e-commerce as customers seek other methods in a bid to reduce the risk of infection.

WMG and Blue Yonder’s study gathered insights from 105 different retailers from Europe, Asia and the Americas who provided a glimpse into their survival and navigation of the COVID-19 crisis.

The study found that:

• 61% of retailers used inventory to buffer against the disruption of COVID-19. Supply chain processes and systems were proven effective, with over half (58%) of retailers confirming a high degree of manual intervention required to respond to the fluctuation in demand and supply.
• Workforce issues were dominant issues for retailers, with 59% of warehouse and 48% of store operatives affected by quarantine or illness. This resulted in the closure of online operations and the necessity of recruiting temporary staff.
• Retailers were polarised in their treatment of supplier payments, with 37% delaying payments and 30% making early payments.

Jan Godsell, Professor of Operations and Supply Chain Strategy at WMG, University of Warwick, commented: “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, which 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. Whilst 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.

“From warehouse and store operatives being affected by quarantine or illness to an over-dependence on human intervention within supply chain planning, COVID-19 has highlighted the human vulnerabilities across retail supply chains.”

Wayne Snyder, Vice President Retail Strategy, EMEA at Blue Yonder, added: “Early indications in Asia show that customers have been most supportive of those retailers they deemed to have responded best to the crisis and we’d expect that pattern to follow across Europe and the US.

“A critical learning 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, whilst still meeting customers’ expectations.”