Only 15% of retailer supply chains are autonomous

Most global retailers are only at an early stage of digital supply chain adoption, according to a new report from Blue Yonder and the WMG department at the University of Warwick.

Their report benchmarked the digital supply chain readiness of 104 global retailers, revealing that only 15 per cent currently have prescriptive or autonomous supply chains. However, retailers harbour digital transformation ambitions, with 61 per cent stating they want to achieve a prescriptive or autonomous supply chain by 2025.

Only eight per cent of retailers are currently refreshing demand planning processes on a real-time basis, while 22 per cent currently use spreadsheets for this process - but again, 74 per cent want to switch to autonomous technology in the next five years.

At present, 61 per cent of retailers manage omnichannel inventory as separate channels. However, three quarters wish to achieve full omnichannel capability in the next five years, with 41 per cent aiming to use artificial intelligence (AI) to evaluate optimum inventory locations for each customer transaction.

A quarter currently still use spreadsheets to manage replenishment analytics, but retailers know they need a more intelligent approach, with 46 per cent planning a fully autonomous approach in five years’ time.

When it comes to pricing, the majority of retailers work from a static promotional calendar, with only 13 per cent continually optimising prices dynamically. At present, just 11 per cent of retailers assess multiple factors, such as inventory, margin and waste for promotions, but 46 per cent expect to be doing this in five years’ time. Currently only 11 per cent use AI for markdown and promotion - but in five years’ time they said this will have increased to 43 per cent.

The report found that retailers know they need to include key metrics such as stock and margin for financial planning and strategy: only 11 per cent currently do this, but 40 per cent want to be doing so by 2025. Retailers also want to move financial planning and strategy away from a static to real-time approach. Today, only seven per cent have this capability, but 36 per cent have set themselves this objective for the next five years.

Jan Godsell, professor of operations and supply chain strategy at WMG, said: “The retail industry never stands still for long, and the impact of COVID-19 means it is currently going through a particularly disruptive period.

"At this time, it’s crucial for retailers to be able to manage multiple factors and complications across their supply chain in real-time - at the moment, however, an over-reliance on manual processes means too many retailers are taking time to adapt in line with this unique set of challenges."

Wayne Snyder, EMEA vice president of retail strategy at Blue Yonder, added: “Retailers recognise now is the time to significantly step up their supply chains, as many of the tools and processes currently used are no longer fit for purpose.

"They need to jump the digital gap, recognising that managing their supply chains ineffectively is costing them and not meeting their customers’ needs.”

The research was conducted by WMG between March and April among 104 respondents from Asia (China and Turkey), Europe (France and UK), Latin America (Argentina, Brazil, Colombia, Suriname and Uruguay), North America (Bahamas and USA) and Oceania (Australia, Tuvalu).

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