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Technology Evaluation Centers / January 16, 2020

Retail Supply Chain in 2020 and Beyond: Musings by More SCM Software Vendors

Two recent blog posts, one with predictions about retail shelves and retail supply chain visibility and one covering trends and predictions about upstream supply chain management (SCM), have gained considerable attention and have prompted various market experts and executives at SCM software vendors to contact me and offer their own thoughts and predictions.
 
To that end, the contributors to this post come from two American Software-owned companies: Logility and NGC Software. The two sister companies have lately integrated their best-of-breed supply chain planning and execution as well as product development wares within a broader digital SCM software platform. Compelling dashboards and other visualization gadgets by another American Software sister company, Halo Business Intelligence, have also been incorporated in this SCM platform, but that will be the topic of a forthcoming blog post.
 
In the meantime, here are some predictions from Karin Bursa, Executive Vice President, Logility. Who was kind enough to discuss many relevant topics concerning retail supply chains. Her views are quoted below.

The Still Elusive Goal of Omnichannel Retail

Leading retailers have broken down old organizational barriers and now have the necessary visibility across all of their channels to understand where demand originates and the sale executes. However, despite all the conversation for the last decade about omnichannel, many companies still plan and manage each channel as a distinct business. Omnichannel, or unified commerce, requires seeing the business in a holistic way, which allows you to minimize pockets of stale inventory, grow margin contribution, and delight consumers with a consistent brand experience.
 
The importance of omnichannel will continue to grow in 2020, especially as more retail and brand owners implement systems that can harness the volume of data we now have access to and harness it in a timely fashion. Artificial Intelligence (AI)-powered planning systems are able to quickly and easily deliver the visibility required and can either provide recommendations for how to act on that data or autonomously execute changes to the plan.

AI in Retail Supply Chains Is Coming of Age, Slowly but Surely

The impact of AI and machine learning on the retail supply chain is significant. For example, one fast-fashion retailer uses the Logility Digital Platform to automate more than 80 percent of its replenishment to the store, with size-level priority. Use case scenarios like these help demonstrate how AI can augment and automate current processes to accelerate time-to-market and ensure the right merchandise is in the right place at the right time. Over the course of 2020, more and more retailers will turn to AI to improve the use of long-term demand signals to uncover insights on consumer patterns that will drive their forecasts and future product designs.
 

The Sustainable Supply Chains Imperative

Corporate Social Responsibility (CSR) is center stage for many millennial-friendly brands and that will continue throughout 2020 and beyond. Consumers are very interested in the story behind the merchandise they purchase and the brands they have an affinity for. Product lifecycle management (PLM) in particular will be tasked with helping brands improve their transparency and efficiency.
 
To support CSR efforts and consumer demands, retailers and brand owners are turning to a single digital platform that delivers visibility from product concept to customer availability. Access to quality and compliance in the same environment as their PLM, sourcing management, assortment, allocation, and replenishment planning, breaks down the traditional barriers between retailers, brand owners, and partners to significantly increase speed to market and reduce risk.
 

The Impact of E-commerce Item Returns

The cost of returns has become a significant and growing issue. Unwanted gifts, incorrect sizes, styles, and fits that didn’t match expectations are just some of the reasons for the growth of returns. To attract and retain customers, many retailers strive to make the return process as frictionless as possible. But at what cost?

The “bedroom” fitting room and services such as Amazon’s Prime Wardrobe mean consumers want the ease of returning online purchases since they now can purchase multiple variations of the same merchandise to “try on.” In 2020, this will continue to grow and consumer purchase decisions themselves are expected to be influenced by the ease of the return process.
 
This year will also see retailers and brand owners applying more science to the return process—with retailers placing emphasis on the ability to forecast returns and how much of that inventory can be quickly placed back into circulation.
 
Bursa also believes that 2020 will see retailers looking at their businesses in a much broader sense. Retail is a tough industry with fierce competition, shrinking margins, and increasingly more demanding consumers who want specialized merchandise that fits their specific needs.
 
Retailers must consider the full plan for their merchandise portfolios, from product concept to customer availability, and how they can accelerate time to market and reduce inefficiencies throughout that process. 2020 will be about speed, replacing inventory with information, reducing risk, and improving collaboration across their global networks.

More Predictions from 2020 from NGC Software and ToolsGroup

For his part, Mark Burstein, the President NGC Software, believes that retailers are now at a crossroads. They are facing three major challenges rising from trends that have been affecting and will continue to affect retail:
 

  • Consumers are demanding more environmental responsibility from brands, as mentioned earlier.
  • Trade wars and increases in tariffs necessitate changes in global supply chains.
  • The youngest generations desire the latest styles more than any generation before, and they want them faster.

Burstein adds that the pace of change will accelerate, making it essential for retailers to implement new digital solutions that will allow them to sense and respond quickly to demand signals and deliver the capabilities they need to thrive in the future.
 
Last but not least, David Barton and Joe Shamir, two experts from ToolsGroup, recently published their own predictions, and these coincide with some of our own as published in the TEC blog posts linked at the beginning of this post. The two ToolsGroup blog posts are:


In conclusion, it appears that we should all buckle up for an eventful year. We will reconvene in a year or so to, well, take stock (pun intended) of our predictions and examine whether they will have panned out for real.